The fallout from the linear TV apocalypse is starting to materialize.
Consumers are frustrated by a fragmented landscape, TV networks and applications are scrambling to add value and advertisers have been stuck between investing in the waning linear TV space and shifting budgets to streaming.
While television goes through growing pains, how can advertisers win? We must understand the past before we jump into the future.
How We Got Here
In the heyday of linear, multichannel video programming distributors (MVPDs) — the cable operators — appealed to consumers by expanding content choice. To scale, they offered “programming bundles” — service tiers that included multiple cable networks at a relatively reasonable cost. The MVPDs paid the networks low monthly license fees per subscriber.
Over time, consumer-advocacy groups demanded the offering of networks on an “a la carte” basis. The MVPDs and programmers, citing complex outcomes (e.g., increased consumer pricing), successfully rebuked these demands and the bundle, it seemed, was here to stay.
And along came streaming.
Tech companies and consumers latched onto the promise of “what you want when you want it” content. They promised content control. Netflix and free ad-supported TV (FAST) channels launched, while traditional TV networks built strategies to adapt, netting Disney Plus, Max, et al.
Digital technology seemed to win the streaming wars. U.S. cable subscriptions, which topped out at 97 million households in 2016 (plus about 20 million satellite subscriptions), have precipitously declined and are expected to bottom out at 43 million. To maintain revenue, content providers and MVPDs must increase subscription pricing for those who remain.
These trends have resulted in a doom loop — the more linear players increase prices, the more subscribers leave cable with those departing subs forced to redirect their entertainment dollars to a la carte studio streaming services — whose prices are going to increase to offset the losses in cable distribution and advertising revenue, as well as cover production costs from the streaming wars.
So the MVPDs and content providers were right: a la carte does not work for consumers!
Predictably, to maintain or boost subscribers while individual app costs increase, the streaming services are bundling. Showtime is now included with Paramount Plus. Disney Plus, Hulu and ESPN Plus offer package deals. We may even see applications license their exclusive content elsewhere (imagine Ahsoka on Paramount Plus after a six-month run on Disney Plus), reinventing the syndication market.
How We Get Out of Here
While digital technology helped create this doom loop for consumers, linear players and streaming platforms, it creates solutions for advertisers.
Connected TV (CTV) ads, which are delivered on a one-to-one basis via internet protocol and digital technology, provide more comprehensive — and prospectively valuable — audience insights than traditional linear. By marrying first-party data to other interesting, privacy-compliant data sets, advertisers can better define and reach their target audiences.
For example, let’s say Beyoncé drops a “surprise” album. In the peak days of linear TV, one ad announcing the album could reach millions on, say, a live Seinfeld episode. That’s a lot of prospective buyers. However, via streaming ads on CTV, she could use today’s digital advertising tools to ensure her ad reaches her target audience that has a greater likelihood to purchase.
Measurement, too, offers richer insights into consumer absorption of a campaign, such as incremental lift across all channels in which the user was exposed to the message, or attribution for the album download on a phone, after seeing the ad on CTV.
Importantly, advertisers must consider the CTV ad placements. Quality is not consistent across the thousands of CTV apps and some digital pathways allow for fraud. Advertisers should use the same discretion in selecting CTV partners as they exercised in selecting linear partners, and encourage their technology partners to remove intermediaries who do not add value.
The right technology platform partners — those with strong data-matching capabilities, quality inventory access and comprehensive advanced reporting — can help bring deduplicated scale across the various CTV platforms and applications.
While the streaming wars continue, fragmenting consumer eyeballs, marketers can nonetheless use the latest digital advertising tools and win in television’s evolving landscape.
