Why TV Advertising Hasn’t Moved Into Digital As Fast As It Should

By Christopher Martin, Co-founder and Chief Operating Officer of MightyHive

The consumer is changing. We all know that consumers are getting younger, more digitally native, more tech-savvy, and more invested in the quality of their experiences. Logically speaking, that means that the method by which brands appeal to those consumers should change as well.

In some ways the marketing and advertising methods are already chasing those changes; we’ve witnessed the relatively recent rise of influencer marketing, social media, and digital advertising, among many other modern iterations of brands reaching out to and interacting with their target audiences.

But, TV advertising and offline media budgets have yet to change much. The advertising budgets certainly haven’t fully transitioned into the digital arena as quickly as they ought to be to match consumer behavior migration. Even in the midst of a pandemic that has seen a 95% growth in year-over-year streaming viewership during the 2020 Covid-19 crisis, the ad dollars aren’t following. “Roku recently reported that more than half of TV viewing time among adults aged 18 to 34 is now devoted to streaming, and yet CTV ad spend is only about 10% the size of linear TV ad spend,” according to Mike Baker, former CEO of dataxu.

So why are so many advertising dollars still stuck in the archaic modalities of yesteryear? Through my conversations with industry leaders, I’ve been able to narrow down five main reasons.

TV feels like a sure bet until it isn’t

Television, video, and the cable industry have been optimized for the highest reach and frequency for the lowest cost. Upfront ad buying at the start of the year ultimately saves money when compared to buying at a per month or per show cost, so to marketers, it seems like a logical and savvy investment, and in exchange for the discount, the ad dollars are tied up for some entire length of time. While it’s true that traditional TV offers wide consumer reach, digital channels—when given the added effort—offer what I call relevant reach. Relevant reach applies a deep understanding of culture to deliver more meaningful experiences to consumers, often playing off of user behaviors unique to that channel for added relevance.

One format is simpler than many

Television advertising has been the standard for so long that other formats can seem much more complex. The complexity of digital advertising production varies so much with such a diverse range of formats and options that it can seem too complicated to transition from the straightforward traditional model to something new and less defined. Where on television you have the choice of a 15 second, 30 second, 45 second (etc.) time slot for video and audio. But when it comes to digital, you can choose from in-banner or skippable, to programmatic to influencer videos and many, many more consumer interaction variants. It’s easy to see how this boggles the mind (and the media plan). But brands will surprise themselves by the volume of formats they can easily support through an integrated approach.

Agencies have a vested interest

Another reason why brands stick with traditional ads is that the ad agency itself usually makes money or gains economic benefit when selling traditional ad placement. There is a standing foundation of decades of economic incentives for ad agencies to push TV campaigns that land nice commission checks in their own pockets. These ongoing relationships and incentives don’t leave a lot of wiggle room for innovation in the structure that currently stands. This highlights the need for a new partner model that can help brands evolve in lockstep with audience behaviors and provide the guidance needed to solve pressing challenges—like the integrated approach mentioned above.

The data is easier to follow

The traditional advertising model relies on proven data metrics that people trust. When it comes to viewership per dollar spent, you tend to know what you’re getting with television ads. Digital advertising has many different types of measurements that can be altered seemingly easily and is less proven to be effective. For example, there is no set guideline on how many Instagram likes will consistently lead to sale conversion, and that doesn’t even take into account whether or not there are bots and fake accounts intentionally or unintentionally skewing the numbers. With so much historical data on TV ads, a brand can generally predict the conversion rate from the viewership data that they already have on hand. When it comes to CTV, advertisers don’t have precise information about where their ad is going. There is a very real risk that an ad could appear next to content that is not brand-suitable.

Agencies lack the skills to truly innovate

There is a current lack of skill set in many agency offerings. It can be challenging to find media partners that can do all of these things well. The agencies that push TV ads don’t have many incentives to work in the digital realm, or at least to do so in a creative and innovative way that can compete with the digital agencies. Many digital agencies don’t have the relationships with top ad buyers or TV channels to make the best deals. So ultimately it can be challenging to find one company that can take your brand and put it in all the mediums, in front of all the right consumers, in one seamless offering. Again, this a shortcoming of the traditional agency model that must be rectified in the coming years if they are to survive.

‘Going digital’ certainly can seem trendy and cutting edge, but it will be so much more than that. Linear consumption of media and traditional 30-second spots are going to be under a lot of pressure as the very medium in which they are experienced, is no longer consumed. As we know, the consumer has changed—and is continuing to change—and to make the most of advertising dollars, you have to put the ads in front of the right consumers in the best way to encourage them to interact with your brand, product, or services. I can understand the reasoning behind holding on to the ways of traditional linear advertising, but ultimately the reluctance to move forward will leave many brands behind. I anticipate that you’ll see a continued rise in full-service offerings: smart consultancies and in-house capabilities that can do a bit of everything and in addition to that will provide experts that can advise on which types of ads will work best for your brand and your goals.

Christopher Martin is a lifelong entrepreneur and currently the Co-founder and Chief Operating Officer of MightyHive, a global leader in advanced marketing and technology services that deploys and supports enterprise software for real-time, data-driven marketing. He also sits on the executive board of directors for S4 Capital, one of the largest and most successful digital advertising consultancies worldwide.