Television Ads Evolve to Face New Challenges, Formats and Online Competitors

Many consumers are dropping their costly cable and satellite TV subscriptions and relying heavily on internet-based streaming instead. These consumers are called “cord cutters.” This trend creates significant challenges for cable/satellite firms and broadcast television, along with the advertisers that pay for ads on these traditional TV platforms. The fact that new TV sets are internet-ready is adding fuel to this trend.

More and more, consumers are relying on non-TV sources for entertainment, such as Netflix and Amazon Prime. All internet-based entertainment platforms may come under some pressure to sell advertising, regardless of whether or not they also receive subscription payments.

The world’s largest advertisers are reallocating a major portion of spending from TV ads to online ads. Concerns about audience size, the amount of time spent viewing TV, as well as the amount of attention paid to commercials continue to nag the television industry. Viewing-on-demand is another issue. Many television viewers skip at least some ads by channel surfing during commercial breaks. The network television business model is facing a need for radical change.

Data analysis tools from firms such as Nielsen Holdings NV can help advertisers target audiences and save costs in the process. As more data is collected and thoroughly analyzed, media companies can isolate very specific buying groups such as high-income business travelers or female gamers and pinpoint the shows that they have watched in the past.

Advertisers and networks alike are creating new ways to present advertisements and keep viewers engaged. Among the panoply of interesting strategies are new takes on product placement and sponsorship, mini-movies and situational commercials.

Advertisers are experimenting with different types of product placement on television, ranging from the visual placement used in the example above, in which the product merely appears on a show, to more complex (and expensive) types of product placement, such as spoken/verbal product placement, in which an actor mentions the product by name, or usage product placement, in which the actor directly engages with it.

Some advertisers are blending their strategies by placing traditional ads for brand recognition and targeted ads to promote specific products. Targeted ads are significantly more expensive per view than traditional ads.

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Television Ads Evolve to Face New Challenges, Formats and Online Competitors, Business and Industry Trends Analysis

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