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Ready to Knock TV Off its Pedestal? Join the Club

Written on
Feb 5, 2014 
Author
Ashwin Navin  |

ADOTAS – There’s a super-hot club in town and you’re not invited (sorry, Buddy). This club has a big sign on the door: “Reserved for TV Advertisers and TV Networks Only.” The club is bigger than ever, but they aren’t letting anyone else in. The guests are comfortable because they’ve learned to ignore the hipsters outside trying to break in.

These hipsters aren’t without influence; they are Silicon Valley and Silicon Alley netizens with a battle cry: “Stop spending money on television, you dinosaur! Use our data and start spending on digital ads!”

As the reach and engagement metrics of the new mediums continue to grow, these hipsters have formed a new club. And as they rake in more revenue year after year, their Wall Street valuations soar. As a result, it is becoming increasingly difficult to ignore them.

Making matters worse, “experts” have declared that, in time, the traditional TV club will fade into obscurity like Studio 54 and other hot spots of yesteryear. In other words, the explosion of DVRs, place shifting devices, over-the-top video and second-screen apps has given TV viewers control of how they experience TV, and as a result, they can decide whether or not they see a TV advertisement at all. So why aren’t marketers simply cutting their TV advertising budgets? Because then they would lose their spot in the club forever, and another advertiser would gladly take their seat. As expensive as TV advertising has become, nothing comes as close to a Super Bowl ad or primetime spot in its ability to tell a brand’s story.

Furthermore, industry experts have declared that more than 80 percent of Americans today are engaged with other content on another device while watching TV. And yet in spite of this trend, advertisers are spending about the same amount or more than what they paid 10 years ago for the same 30-second ad. Essentially, TV advertisers are paying the same amount for TV time in exchange for a fraction of the viewer’s attention.

This type of fragmentation is the largest threat to traditional marketing investments. But I believe the TV advertising industry is ready to go to bat. The fact is that of the 240 million households with multiple devices, 254 minutes are spent watching TV every day, compared to the 19 minutes spent browsing the web. There is nothing online comes that comes anywhere close to the level of engagement that TV provides. So, why aren’t marketers bringing digital ad dollars in sync with TV ad dollars? Because they have yet to tap into what has captivated consumers’ attention: the second screen.

Smart TVs, smartphones, tablets and other consumer electronics are increasingly becoming enabled with technology that enhances the user’s environment by analyzing ambient audio or video signals to identify content. Parks Associates found that in 2013, 36 percent of smartphone owners and 35 percent of tablet owners search for product/service information on the device while watching TV, which has obvious implications for advertising. The Interactive Advertising Bureau (IAB) even suggests that multi-screen users can recall TV advertisements better than when watching the traditional one screen.

The second screen will bridge what industry observers have dubbed the “digital divide,” a separation of the powerful, world of television mass media from the tremendously vast, “on demand” digital realm. For TV-centric advertisers and content producers, second screens provide a channel to test out digital strategies that extend the capabilities of TV advertising. Giving consumers the seamless ability to access relevant information to what they are watching via the second screen – just one of the many things consumers can do with second-screen capabilities – presents advertisers with the opportunity to extend their ad platforms. For instance, when a viewer sees a trailer for an upcoming movie on the TV screen, they will have the ability to locate the nearest movie theater, share with friends and even purchase tickets instantly on their phone, tablet or laptop.

Ultimately, the “second screen” bridge will allow us to better measure the effectiveness of marketing investments. A key factor in achieving a high return on investment will be the ability to provide real-time information about the behavior of TV viewers. This paves the road for direct-response, tailored advertisements. For example, if a channel-surfing viewer stumbles onto the TV show “New Girl,” and whether or not they skip the ads, watch them live or consume the same advertisement across multiple channels, all three of these situations will influence the online inventory that viewer sees. Online media buying synchronized with TV viewership can eliminate the duplication and redundancy of messages to achieve a pre-defined frequency and reach target. Data-driven, multi-screen advertising is rapidly becoming the cornerstone of a cohesive, holistic strategy for major TV advertisers.

So, what is the best way for advertisers to dive into multi-screen advertising? Making TV ads Shazam-able isn’t the long-term answer. Although these technologies can manually identify content on the TV from a second screen, they just won’t operate at scale because they don’t provide instant, synchronized content across all screens. Alternatively, if consumers experienced synchronized content from live television to the web and mobile apps automatically, we would be much more likely to engage with television on a consistent basis.

Advertisers were recently advised by a recent Nielsen report to move 15 percent of their TV budgets to online video, citing evidence of growing effectiveness of online versus traditional TV spots. My contention is we need to stop thinking of the world as “TV vs. digital.” Instead, we need to start thinking of it as “digital in sync with the TV.”

There is no doubt that TV advertising is changing. Soon, traditional TV viewership data will directly influence marketers’ digital media strategy. TV marketers have an opportunity to grab the second screen and run with it, and go head-to-head with any data-toting digital marketer. Given the amount of money at stake in this battle, I fully expect them to do so.





Ashwin Navin is CEO and co-founder of Samba TV (formerly Flingo). He is also the co-founder of I/O Ventures, an investor and accelerator for early-stage technology companies.  Ashwin was previously the Co-Founder and President of BitTorrent, the largest file-sharing network in the world. By the end of his time with the company, Ashwin’s BitTorrent software was being used to deliver one million movies to viewers per day between over 110 million people world-wide, every month.

Before BitTorrent, Ashwin worked at Yahoo! in its Corporate Development group which handled corporate strategy and acquisitions. Before Yahoo!, Ashwin worked on Wall Street with Goldman Sachs and Merrill Lynch both as an investment banker and equity research analyst. In 2000, he helped start a technology-based financial services company called Epoch Partners. Epoch was essentially the investment banking arm of several online stock brokerages including Charles Schwab, Ameritrade, and TD Waterhouse. Epoch Partners was eventually acquired by Goldman Sachs in 2001.

Reader Comments.

Ashwin, great piece. But I don’t think the TV industry is any where near ready for (interested in?) your new paradigm. They are a mass medium and have done little to no research into the true engagement and/or effectiveness of their ads for years for a good reason. They rely on a revised version of the original “spray and pay” model used since the early days of TV. Anyway, I agree with your premise and like it or not, TV will have to face the music sooner or later. Thnx

Mike

Posted by Mike Lynn | 1:35 pm on February 5, 2014.

Mike,
Keep an eye on the upfronts this year. I think we’re going to see a lot of discussion of integrated sponsorship spanning TV to digital. Furthermore, Twitter and Facebook have completely positioned themselves to capture TV dollars, using the parlance of GRPs and “amplification,” the TV marketer either for offensive or defensive reasons has no choice but to approach TV in a 360 degree fashion.

Posted by Ashwin | 11:01 pm on April 8, 2014.

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