Reports of the Death of TV Advertising Are Greatly Exaggerated
Against a jet-black background appears the familiar outline of the continental United States. An enormous watch face rests on top, dead center, with 12 o’clock at South Dakota, 6 o’clock deep in the heart of Texas. The time is 8:00. After five seemingly interminable seconds of silence, a male voice speaks: “America runs on Bulova time.” Two to three more moments of silence follow. The entire thing is over in just nine seconds.
The date is July 1, 1941. This is the first commercial that ever legally aired on television anywhere in the world. Specifically, on WNBT New York, an NBC affiliate, during a baseball game between the Brooklyn Dodgers and the Philadelphia Phillies viewed by 3,339 viewers. The advertiser, of course, is the Bulova watch company and the spot cost them $4 in air time and another $5 for station charges. That’s $4 total for air, not CPM.
For the following 60 to 70 years, American television would be predicated on a simple value exchange: studios and networks provided entertaining and informative programming in return for viewers spending increments of their time viewing commercials for goods and services.
Then came the rise of premium cable, the creation of DVRs and time-shifting, the internet revolution, the spread of social media, the advent of subscription-based streaming and, most recently, the changes in consumer behavior caused by the COVID-19 pandemic. And if you believed the breathless reports from the press and certain analysts, this inexorably led to one conclusion: not just the end of TV commercials as we knew them, but the end of television itself. So we endured years and years of headlines and hot takes like these:
- The Death of Television
- “Brands will finally realize the diminishing value of TV”
- Television Advertising: Has It Died?
- Are We Witnessing the Death of TV Commercials?
- Why Digital Media Is Killing TV Advertising
- TV Advertising Has Hit a Wall Thanks to Streaming Options Like Netflix
- “Consumers have an aversion toward commercials. It’s one of the reasons they’ve run to Netflix.”
But a few funny things happened on the way to the ash heap of TV advertising… The costs of digital ads skyrocketed, ROI plummeted, the depreciation of third-party cookies upended strategies and – above all – it turned out that viewers actually preferred the value exchange that dominated media for decades.
The latest evidence for what some of us never doubted in the first place: the Activate Technology and Media Outlook 2022 report from Michael Wolf and Activate Consulting. As ever, it’s an incredible, indispensable and inspiring analysis of where we are and where we’re going, but in particular, two insights stood out to us:
“While digital is growing rapidly, most of the dollars in video will remain in traditional media."
“Less expensive, ad-supported tiers [are] favored by consumers.”
The trend line is clear and getting even clearer. Cross-channel advertising – spanning broadcast, cable, and connected TV – is the most viable means for brands to reach audiences at national scale. And it’s not only the team at Activate that sees the big, wall-mounted, high-def picture:
- "Nearly 128 million people in the US will watch advertising-based video-on-demand (AVOD) this year, a growth of 17.6% over 2020. This means over 50% of all digital video viewers in the US are watching AVOD,” eMarketer reported.
- "Consumers consider ad-supported services a good way to reduce subscription fees, with 35.5% of respondents saying they plan to decrease the number of services they pay for," Cynopsis Media wrote.
- “A primary beneficiary of Facebook's troubles would be the connected TV (CTV) advertising marketplace,” said Joe Mandese of MediaPost.
- "Free streaming has opened up a significant new spigot of cash... and because streaming viewers tend to be younger and more valuable to advertisers, that income is not insignificant," reported Josef Adalian in Vulture.
It’s no wonder Simulmedia CEO and founder Dave Morgan predicted that total TV ad spend would reach a jaw-dropping $130 billion by 2030. That was months ago. And now that the industry is catching up, Q4 inventory is still up for grabs, and a New Year beckons, you don’t need a Bulova watch to know it’s time. Time for brands to shift their digital dollars to linear and CTV.
But be warned: spots may cost more than four bucks.
Download our Cross-Channel TV Playbook for a detailed guide on how to unlock audiences on both linear and connected TV.
Want to see what Simulmedia can do for you? Request a demo.
Want to learn more? Contact us or email us at email@example.com.