Mark Ritson is right about a lot of things. His weekly column in Marketing Week is a breath of fresh air in the marketing world, and full of insight and objective, clear, salient discussion on what's going on in marketing. However, his take on TV advertising, and in particular, its future, is overly optimistic.
Mark celebrated TV advertising's anniversary by declaring it still the 'most effective tool in a marketer's arsenal'. Yes, TV advertising doesn't yet deserve the death knells that are being sounded by digital paradigmists, but neither does it necessarily deserve the praise that Mark gives it.
Is TV advertising effective?
First, we need to understand what is meant by 'effective'. The term is somewhat nebulous. Is it related to revenues and profits? Brand development? Consumer reach?
Spend may be increasing, year-on-year, and set to reach $214.7 billion in 2018. Yet recent years have seen increasing concerns about TV ad reach, meaning, if anything, its effectiveness is declining, as costs rise per viewing of a TV ad.
Add to that the increasing disengagement from people from their TVs as they become more attuned to multi-screen media consumption. A study by Google and IPSOS touted that 77% of TV viewers simultaneously use other screens during their viewing. The legions of people flocking to Twitter to engage in hashtags related to their favourite shows is testament to that.
So-called 'second screen' activity can provide synergy when used effectively by advertisers, but is otherwise detracting from TV advert effectiveness.
I'm not going to spend time here engaging in debate about digital media vs. TV - unlike digital paradigmists, I don't think the two are at odds with each other - there's room for both on this planet. However, what is clear is that they're being used simultaneously, and thus diluting TV ad effectiveness.
If we look at companies and marketing spend, there's also a shift. P&G, the world's biggest advertiser, is dropping its budget for TV and shifting to digital, claiming a higher return.
The TV industry is changing
Perhaps even more pertinent is the shift we're seeing in the TV industry. The TV industry is, in classic Five Forces methodology, experiencing a rise in substitutes. Namely Netflix and YouTube.
Netflix
These guys need no introduction at this point. However, over recent years, their growth has beaten even the most optimistic analytical projections. Incredibly wise plays (a personal highlight was snapping up the final season of Breaking Bad, a show that had near legendary status) and international growth have led to this, and Netflix is steadily shifting from a content distribution platform to a content creation platform, churning out critically-acclaimed series after critically-acclaimed series. All this is available on demand at the price of a couple of coffees per month.
And there's no advertising to be seen. Nada.
Why does this matter for TV? This little chart from Samuel W Bennett should illustrate the point fairly well.
Netflix and cable subscriptions side-by-side
Yep, Netflix's growth is staggering, whilst cable subscribers are drip-drip-dripping away. It's hard to tell when Netflix will reach a saturation point, and whether the decline in TV subscription will be expedited or halt. Sport services continue to prop up the need for subscriptions, but will Netflix make a play here too?
Still, the point is, despite spending on TV ads remaining strong, the audience is dissipating slowly, whilst its main substitute, Netflix, shows no sign of stopping.
Youtube
No one wants to watch shoddily produced videos of tweens showing off their latest batch of clothing from Primark, right? No one would want to watch screengrabs of gamers playing through sections of old videogames whilst narrating a little too closely to a microphone and making juvenile jokes, right? Wrong.
Legions of people are replacing TV with the likes of YouTube. In fact, YouTube's been so popular for the latter example that it recently released YouTube gaming, where you can watch said screengrabs by gamers live.
This is obviously targeted at certain younger age groups, but other growing channels aren't. Take Veritasium, a science channel carrying close to 3 million subscribers. Or perhaps 30 year old Rosanna Pansino's Nerdy Mummies cooking show, sporting over 4.7 million followers. Or TED Talks, providing varied nuggets of interest and wisdom, and a channel sporting 3.8 million subscribers. And to hammer home the point, Jamie Oliver is steadily making YouTube his primary distribution channel. The list goes on. And on. And on. But the issue is clear - we cannot ignore the potential of YouTube.
Millenials vs. Baby-boomers
Mark's piece highlighted that millenials are still engaging with TV. However, this is the demographic that TV is haemorrhaging the most. Firstly, they are spending far less time than their parents watching TV (despite, arguably, having more time available).
Nielsen analysis shows the limited and declining place that traditional TV holds in young consumer's activities.
Secondly, they are the most affected demographic segment by the industry changes mentioned above. 85% of YouTube's UK users are under 35. Meanwhile, 50% of millenials in the US use Netflix, whilst 28% of baby boomers do.
We are, to some extent, creatures of habit. Baby boomers continue to while away their hours on traditional TV watching, whilst millenials and Gen Xers are attracted to new ways of consuming video media. The big question is whether the younger generations' habits will shift towards traditional TV as they age. Subjectively, I'm inclined to say no, however, as the service and product that the likes of Netflix offer is unparalleled (advertising free, on demand, and indeed cheaper if TV licenses are factored in in the UK). Time will tell.
The future of TV
So, is TV the most effective tool in a marketer's arsenal? Nope. It's a tool. Just a tool. The effectiveness comes down to the marketer themselves, and how they use said tool. Does the brand warrant TV advertising? Why is it being used? How good is the creative and the message? Marketers should continue to understand the goals and strategy behind why a channel is being used, regardless of where it sits in the communication mix.
I'm not heralding the end of TV by any means. Its reach and the time spent watching by older generations is unparalleled. However, its future is becoming questionable year on year. As baby boomers shift towards their twilight years and generation X and Y age, it'll be interesting to see where the industry goes.
Will we see TV advertising in 2075, as Mark suggested? Quite probably, but the wrinkles are already starting to show.
