TV ad spending: back to the future?

Reams have been written about the steady decline if not eventual demise of advertising spending on television. Just earlier this month Forrester Research reported on how internet ad spending will overtake TV buys in little over a year.

While acknowledging that TV remains the biggest advertising platform in terms of money spent, Forrester's report noted that "online marketing is expected to reach $103 billion in 2019 thanks to a 13 percent average annual growth, compared with $86 billion for TV. In all, digital ads by 2019 will account for 36 percent of all ad spending, above 30 percent for TV. 

Forrester's report also  pointed out that "audiences now want more on-demand options for watching videos and listening to music, helping newer services like YouTube and Spotify grow.  Furthermore, "adults in the US already spend 52 percent of their total media time on the Internet during a typical week (including personal and work), up from 45 percent in 2009. Comparatively, TV time is down to 32 percent this year from 34 percent five years ago."

If the foregoing sounds like settled wisdom a new report in the Wall Street Journal on how targeted Television ads are not only possible but are actually being used by a number of companies including Choice Hotels seeks to upend that line of thinking.

The Journal notes how Choice used to consider "ABC’s “Good Morning America” as the prime spot for advertising to would-be travelers. Whereas, the company now also likes to advertise on reruns of “Big Cat Diary” on Animal Planet, where they can reach a similar audience for a lot less. In the former a 30 second ad typically costs $43,000 as compared to a mere $650 for the latter.

The shift back to TV spending, albeit of a different kind, is based on changes on tap from rating company Nielsen and its merger with digital media company Catalina and is called Nielsen Catalina Solutions. By merging shopper loyalty-card data with TV viewership sample, Nielsen is able to "give clients a better picture of what kind of viewer is buying; that is, an improvement on the past where age-and-gender formed the basis of the data on offer.

Nevetheless, the effort seems more like one directed at staving off an eventual mass migration to digital than one that is going to keep TV ads at the top of ad spending budgets. As the Journal article notes "advertisers aren’t using the tools to change how much money they spend, but rather to help decide which shows certain ads should run on." 

It is unclear that TV advertising can ever can reach the depths of knowledge of consumer behaviour that digital can plumb which apart from including their precise geographic location can supply eerily precise and prescient messages to consumers using near-field-communications and biometrics; something which Apple Pay is likely to only enhance once they get past some of their present hurdles with regard to retail acceptance.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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