TV’s Landscape Is Evolving, and Marketers Need to Adapt

CTV and traditional are on path to collide

The TV industry is split between thinking viewership is either dwindling or booming.
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Three years ago, our management team was debating how we should enter the television space. At the time, the majority of our revenue was in digital and programmatic. We were trying to answer the questions, “How does a demand-side platform add value for TV buyers?” and “Where would programmatic and TV intersect?” Should we aggregate local spot inventory? Generate media plans to help buyers allocate national TV dollars? Try to reshape the Upfronts?

Along the way, we had a conversation with an agency buyer at one of the largest media agencies who had been buying TV for decades. “The thing is,” he told us, “the Upfronts are one of the most efficient transactions in media. They work for the buyer and the seller to allocate billions of dollars. The system isn’t broken.”

At the time, that agency buyer was right. We took his advice and focused our strategy on connected TV (CTV) and over-the-top (OTT) where we could use the same data and decisions to evaluate every single ad we bought, household by household, and bring programmatic and audience buying to CTV. Fast forward to today, and connected TV and traditional TV are on a collision course.

The growth in connected TV has been explosive and largely driven by a rapid consumer shift in viewing behavior. By some accounts, CTV now accounts for over one in five hours of all TV viewing. With younger demographic groups, that shift is even more pronounced. If you listen to some digital-first analysts, it sounds like the end is nigh for broadcast and cable.

Meanwhile, on the TV side, things still look rosier than ever. Upfront sales in 2017 were up 4 percent across five broadcasters. Some networks were up big; for example, NBC was up 9 percent. And cord-cutting could be overblown, according to some analysts who suggest that the rise of internet-connected skinny bundles is just cable by another name.

So, headed into the 2018 Upfronts, how should one reconcile these seemingly conflicting narratives? How should a marketer make sense of the seismic shifts affecting the TV industry right now? Here are a few ways that programmatic and connected TV can shape the next year of upfront commitments.

TV viewing is not binary

It’s a great headline to pit TV against digital and say, “No one is watching cable anymore; they’re only watching Netflix!” But the truth is that a lot of consumers are doing both. About 74 percent of U.S. households have cable. That’s the same number that are streaming content to connected TV. Many households, like my own, are watching broadcast cable and streaming. If you’re a marketer, you need to find the consumer in both places.

Connected TV is operating at scale

With the share of viewership that connected TV now commands, not allocating sizeable budgets to this channel is the equivalent of not buying one of the big three broadcasters in the 1970s. That was how Americans watched TV then, and CTV is a big part of how Americans watch TV now. In my conversations with marketers, many still believe that households with Apple TVs or Chromecasts are early adopters. They’re not—CTV technology is now in the late mainstream phase of the adoption curve.

Audience buying is now possible

Many advertisers have strategies where they target their customers on every digital channel using programmatic technology, often merging together first- and third-party audiences. That’s now possible in connected TV as well. A marketer can use an identity graph to link the same consumer across devices, which applies to any CTV or OTT device. We’re seeing more and more of our clients headed into this year’s Upfronts saying, “We want to buy 10 percent–20 percent of our network commitment programmatically, using the audience we’ve defined, instead of age or gender.”

GRPs can still be the currency of record

We have other clients who are transitioning to audience buying but still want to look at the GRPs they get from CTV alongside their broadcast buy. In other words, they want to understand the total and incremental reach CTV provides in combination with their traditional TV buying.


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