Are TV ads still worth it?
May 6, 2019
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But what killed the TV star? Or more importantly, did anyone kill TV ads?
As some would argue, digital marketing did. And it’s true that digital marketing provides cheaper, more scalable, more targeted, and much more measurable advertising opportunities for businesses than classic TV ads.
But does that mean TV ads are dead? Or, more appropriately, is TV advertising still worth it?
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TV ads at a glance
For a long time, TV ads were marketers’ best option to reach a massive audience. Although businesses could never be sure if their ads reached the target market and how exactly they influenced sales, there were simply no better options.
Whether viewers liked them or not, TV ads became a part of our culture. Phrases (“Whassup?”) and jingles (“I’d like to buy the world a Coke”) made their way into people’s everyday lives, keeping the brands that made the ads fresh in consumers’ minds.
However, just like in many other areas of life, the advance of the internet changed the status quo. First and foremost, this sentiment refers to digital marketing that brought a new era for advertising. But the internet has affected a lot more than that. How?
For a long time, television used to be the main channel of information and entertainment for many people. Nowadays, the internet has somewhat muddied the picture.
That being said, TV is not dead. Far from it.
TV in the internet era
You’d think that since the arrival of Netflix, Amazon Prime, and Hulu, nobody watches TV in the traditional way anymore. Well, you’re wrong.
According to a recent Nielsen survey, the average American household watches about 7 hours 55 minutes of TV per day. While that’s an hour less than the impressive 8 hours and 55 minutes measured in 2010, it’s still an astonishingly high number.
Based on that number alone, TV advertising is still worth it. So much so that surveys predict a significant growth of spending on them. By 2020, global spending on TV ads is supposed to reach $191.36 billion, up from $180.55 billion in 2014.
Although digital spending is projected to top that by far ($238.82 billion in 2020, up from $125.73 billion in 2014), TV ads are still a force to be reckoned with.
But watching TV doesn’t necessarily mean turning on the huge box in the middle of the living room. At least, not for the younger generation.
Millennials, for example, prefer time-shifted TV content to live programs. This means that 55% of the 18-35 crowd watches VOD or programs they recorded. In contrast, 66% of the older generations still prefers live TV.
The only exception is sports programs (obviously). People, regardless of age, tend to watch sports games live.
This puts some pressure on advertisers. After all, the commercial breaks of pre-recorded programs can be fast-forwarded, not to mention the fact that many VOD providers don’t even feature commercials.
But just like Don Draper from Mad Men said: “Change is neither bad nor good, it simply is.”
The question is: how do marketers react?
New and improved TV ads
While targeting TV ads and measuring their impact used to be largely based on estimations, today’s marketers have more options when it comes to calculating their return-on-investment (ROI).
Addressable TV is on the rise. According to Google, “addressable TV advertising is the ability to show different ads to different households while they are watching the same program.”
This means that, similarly to personalized online ads, certain smart TVs are able to show a product ad to an individual who has previously shown an interest in that kind of product.
While this sounds revolutionary, addressable TV ads currently represent only 4% of all ad spending. The reason for that is most likely their newcomer status and their relative expense to nationwide, non-targeted TV ad campaigns. However, experts count on this method to grow exponentially.
That sounds great, but how are addressable TV ads different from targeted online ads? And why should marketers invest in them instead of (or in addition to) already well-working and highly targeted digital ads?
The answer lies in the target market and its preferences. While the internet today is almost omni-present, TV is just as important (as shown by the statistics above), especially for the older generation. Big, nationwide brands with large target markets (e.g. supermarket chains, clothing and auto brands, etc.) can’t afford to lose the attention and recognition they gain through TV ads. It’s as simple as that.
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Measuring the success of TV ads used to be very difficult. People who watched an ad rarely had the opportunity to buy the product right away. And by the time they made it to the store, days or even weeks could’ve passed since seeing the ad.
In addition, the customers’ choice to buy something or not could’ve been influenced by a zillion other factors that marketers simply had no way to measure.
However, this is about to change. Addressable TV, for example, provides a much clearer picture of which consumer saw which ad and how they responded to it (provided they use the same identification data when completing the purchase).
Additionally, companies like Adobe provide tools for brands to measure the effects of their TV ads. Marketers can have access to data like which ads are working and which are not, how store visits spiked after seeing an ad, etc. In a nutshell, this means that TV ads can provide similar metrics to online ads.
Conclusion: Is TV advertising still worth it?
To answer the titular question in short: it depends. There are industries, brands, and target markets that still get the best ROI on TV ads, while others should turn to alternative options.
But this was true for the so-called golden era of TV ads as well. For example, expensive nationwide TV ads never made sense for a small business targeting a very niche market.
Big, household brand names with wide target markets, on the other hand, can still greatly benefit from TV ads, along with industries where a single purchase brings a high profit margin.
At the end of the day, it depends on your industry, budget, and target market whether TV advertising is worth for you. If you decide to go for TV ads, make sure to do your research and choose the channels and technology that bring the highest ROI for your business.