Why Big Tech Spends Big On TV

Ariana Javidi

Marketing

If you read the trades regularly, there’s a good chance you’ve read that TV is dying. It’s less likely you read that Google, Netflix, and Amazon collectively spent more than $1B on TV advertising in 2017.1

Can both of those things be true? Why would tech giants spend so much on a dying medium?

At times like this, it’s best to fall back on the old maxim that says “don’t believe everything you read.”

During October 2017, Google spent $17M more on TV than Target and Walmart combined.

For years the headlines have been telling us that TV is dying, and as a result, many people believe it. In fact, according to the Video Ad Spend study released by the IAB in April of this year, 66% of advertisers are shifting funds from TV to cover increases in digital video spend.

As we’ve written before, however, headlines don’t tell the whole story. And in this particular case, even a cursory look beneath the surface shows that TV is not even close to dying. On average, Americans spend 4.5+ hours watching TV a day.2 That’s over four times more than they spend watching YouTube, Twitch, Netflix, Hulu, Amazon, and all other digital video combined.3

Thought millennials were always on their phones? The generation proclaimed to be cutting the cord en masse spends 2.8x more time watching live or time shifted TV than they spend engaging with social media on their phones.4 And, out of their total TV usage, only 18% is spent streaming video.5 Again, don’t believe everything you read.

Now, about that claim that Google, Netflix, and Amazon spent $1B on TV advertising. Given the numbers above about how much time people actually spend with TV, it probably won’t surprise you to learn that this is actually true. In fact, during October 2017, Google spent $17M more on TV than Target and Walmart combined.6

But is the fact that people watch a lot of TV enough to demand such a massive expenditure from just three companies? Not anymore. The reach and scale of TV has been unmatched for decades, but in this era of fragmentation, where audiences have become spread out across hundreds of channels, it’s become harder for brands to reach large portions of their audience with traditional advertising methods.

So why do the tech giants spend so much on TV? Because they know it works, and they can prove it. Digital-native companies are hyper-focused on being able to prove their return on ad spend (ROAS). This knowledge helps them determine which channels to invest in, where to allocate resources, and how to optimize future campaigns. Until recently, digital was the only channel that offered this level of measurement.

Today, advanced TV platforms can help brands reach their target audience much more efficiently, with media plans often featuring thousands of spots across upwards of 50 networks. What’s more, some platforms have measurement capabilities that allow brands to know exactly who saw their ad and what action they took as a result. The learnings derived from this data, as well as those from subsequent campaigns, can be applied to make TV advertising more efficient than ever.

It’s not just the tech companies that are taking notice, either. Unlike most companies who are moving dollars from TV to digital as noted above, last year, Procter & Gamble—citing wasted impressions and questions of brand safety—made news when they announced that they’d be taking $200M out of digital and putting it into TV. What happened? They increased their reach by 10%.7

Traditional brands and digital-natives alike can take a cue from these giants of industry. They know that with the right advanced TV platform they can reach more of their audience, more efficiently than ever before. And they know that by proving the impact of their campaigns on business outcomes and optimizing accordingly, they can turn TV into a growth engine for their companies.

Not bad for a dying medium. Remember, don’t believe everything you read.


1 Based on Kantar/Ad Intel data.
2 Nielsen Audience Report Q1 2018
3 Nielsen Audience Report Q1 2018
4 Nielsen Audience Report Q1 2018
5 Nielsen Audience Report Q1 2018
6 Based on Kantar/Ad Intel data.
7 AdWeek, When Procter & Gamble Cut $200 Million in Digital Ad Spend, It Increased Its Reach 10%

Interested in getting the latest from Simulmedia?

News, insights, and events sent straight to your inbox!

Calling all direct-to-consumer brands! There's a new TV advertising product just for you.

Learn more