The Shift of Video Advertising

From broadcast commercials to instream ads, the shift of video advertising continues to evolve.

The Early Dominance of TV Advertising

Before the arrival of the World Wide Web, video advertising found its reliable home on the television screen, nestled in between programming for a targeted demographic, derived by Nielson ratings. Television claimed a monopoly on a broad scope of advertised content, including but not limited to careful product placement, election ads, public service announcements, and ads for new and upcoming shows broadcast on their very same network. 1 In the last decade, despite the rise in Subscription Video on Demand (SVOD), or streaming services, television advertisements airing during major events such as the Academy Awards, the Grammys, the Olympics, or the Super Bowl have continued to air at an increasing premium. For instance, advertisers continue to spend over one million dollars to air commercials during the Grammys, despite its viewership falling by over thirty percent in recent years. 2 The general decline in viewership of “traditional ad-supported broadcasts” is the root for a transition in ad spending away from television, since at present “cyclical events…are not enough to fully stabilize national TV ad revenues.”3

One Screen to Another: TV to the Internet

The online ad market, in this context compared separately from ad content on online streaming platforms, underwent its own stratification between desktop advertising and mobile internet advertising. Today we are observing a plateau in desktop advertising revenue around the $38 billion mark, which has been profoundly surpassed by mobile ad revenues.4 The dominance of mobile ad spending today boils down not only to the fact that most, if not all, capabilities of a desktop computer are enabled by smartphones, but also that smartphones allow for marketing specific to the mobile medium. App-based marketing, including “in-game mobile marketing,” has enhanced the ability to target ads based on location and the online behavior of one’s social network.5 Mobile devices today demand a new kind of immediacy from digital advertisers, whose created content is accessed and assessed on the spot by customers as they stand in store aisles and hover their fingers over “add to cart” buttons.

Streaming Networks: TV Meets The Internet

Roku players, which stream content through an Internet connection and present multiple streaming services as channels on a single interface, provide a specific lens through which to understand advertising in the age of TV streaming. When viewers of Showtime watch premium content off of broadband video hubs such as Roku, they aren’t subject to ad content–but they also don’t benefit from promotions sponsored by brand partnerships. For example, Roku built a brand partnership with Heineken that allowed subscribers to access previous seasons in anticipation of the upcoming release of a new season – content that was not accessible by viewers outside the hub.6 With the knowledge that younger viewers (in other words, valuable audience members for marketers) value the absence of ads on services such as Netflix, marketers today are creatively adjusting ad formats to be as least intrusive as possible. Among the new formats include “pause ads” that play when users pause the show, as well as commercials that allow users to learn more about advertised content using their remotes. 

Advertising for the screen was once exclusive to the television set. Marketers targeted ad content based on aggregate data on consumer watch behavior. Today, recurring events in sporting or entertainment continue to offer premium commercial spots, but are not enough to compensate for the loss of viewership to smartphone and streaming-on-demand entertainment. Advertising has evolved to keep up with the app-based immediacy through which information is transferred from smartphone to user. With the rise of subscription cable and streaming services, which have made thousands of T.V. shows and movies accessible anywhere with an internet connection, advertisers are finding ways to reward viewers who do watch ads with exclusive content and engage them with interactive commercials.

The Shifting Medium of Video Advertising Infographic

 

  1. Lazzari, Zach. “The Influence of Television Advertising.” Chron, Small Business Advertising & Marketing. https://smallbusiness.chron.com/influence-television-advertising-64010.html.
  2. Guttman, A. “Average cost of a 30-second TV commercial during the Grammy Awards from 2010 to 2018.” Statista. https://www.statista.com/statistics/260164/average-cost-of-a-tv commercial-during-the-grammy-awards.
  3. Salkowitz, Rob. “New Data Shows Why TV Ad Spending Had Its Biggest Decline In A Decade.” Forbes. https://www.forbes.com/sites/robsalkowitz/2019/12/09/heres-why-tv- ad-spending-fell-off-a-cliff-in-2019/#75a7f1f468bd.
  4. Team, Trefis. “How Has The U.S. Online Advertising Market Grown, And What’s The Forecast Over The Next 5 Years?” Forbes. https://www.forbes.com/sites/greatspeculations/2019/06/11/how-has-the-u-s-online- advertising-market-grown-and-whats-the-forecast-over-the-next-5-years/#58ae45556607.
  5. 365 Digital Marketing. “Different Types of Mobile Marketing.” https://www.365digitalmarketing.in/different-types-of-mobile-marketing/.
  6. Steinberg, Brian. “TV Fans Stream Video to Escape Ads. Madison Avenue is Racing to Catch Up.” Variety.   https://variety.com/2019/tv/news/upfronts-streaming-services-advertising-pause-ads-  1203198280.