TV Advertising Isn’t Dead: The Power of Incremental Reach
Verto values transparency, openness, structured innovation, independence, and constructive dialogue within the advertising and technology industry. I find these values especially relevant in the context of this week’s AdWeek in New York City, where executives from the likes of YouTube and Unilever discussed the need for more accountability and cross-platform measurement – and by extension, better measurement tools.
I believe the only way to build better products – those that help boost ad revenues and improve ROI, keep the “traditional” and “new” media domains balanced, and take consumers and privacy seriously – is to make sure that companies and brands talk to each other. With that in mind, I recently had the opportunity to meet with a group of industry executives – agencies, brands, advertisers, and publishers – while visiting London, and the evolution of our collective industries was the inevitable topic of the evening.
London and New York: Comparing Two Advertising Giants
London is not only the media and advertising capital of Europe (at least from our executive team’s point of view), but it is also the fourth largest hub in the world in terms of cities where advertising dollars are being spent in targeting consumers. It trails behind only New York City, Tokyo, and Los Angeles, according to Digiday UK’s latest rankings. In fact, based on my work with Verto, I’ve observed that the advertising markets in the U.S. and UK share a number of similarities with each other. While New York, of course, is the epicenter for advertising spend (and obviously the original home of the AdWeek event), London holds a strong role place especially with global agencies (especially compared to the U.S., which is a more publisher/tech company-driven market), which is partially why Verto decided to locate our commercial European headquarters there.
The Death of TV Has Been Over-exaggerated
Digital advertising has already surpassed TV advertising in some markets, but at the same time, TV advertising continues to grow. In fact, it is increasingly challenging to differentiate the two from each other. Within digital, about 3 out of each new 4 GBP of ad revenue comes from mobile. This lies in stark contrast to my experience in the UK 10-15 years ago. Before the introduction of the iPhone, most of the mobile industry’s revenues were related to device sales, SMS/voice/data revenue, and very simple add-on services (like ringtones). Today, revenue from mobile advertising is nearly on par with these traditional revenue streams in the telecom industry. And internet and media companies as well as adtech platforms have joined carriers and device makers in playing a vital role in the ongoing evolution of the mobile industry.
But one of the most important topics we discussed in London is the over-exaggeration of the death of old media. Yes, it is true that consumers are increasingly engaged and active with our digital screens, and some of us are quite addicted to our mobiles (I’ll be the first to admit that I’m guilty of this). However, I still read my weekend Financial Times in print, and I still watch the BBC and CNN for news in the morning. While in some ways digital is replacing print, radio, and TV consumption, it also plays an additive (and perhaps unanticipated role) in many ways, as Verto Analytics has discovered through our research in both the U.S. and UK.
I showed the above chart to some of my colleagues, which provides an hour-by-hour breakdown of incremental device reach for TV audiences in the UK (among adults ages 18 and above), and illustrates how PC and mobile devices add into that reach. During the prime time, TV manages to grab almost 25 million users per hour in the UK. About 10%-15% of that TV watching time goes into second screen usage – people using tablets, smartphones, or PCs at the same time. This is both an opportunity (for advertisers, brands, companies looking forward to gain from mobile engagement) and a challenge (for TV networks, TV content owners), but it is at least a fact based on Verto’s measurement of consumer cross-device behavior. However, desktop and mobile online usage also have an incremental boost for reach: the total reachable UK adult population goes beyond 35 million users per hour during prime time when we include mobile and desktop screens.
Another interesting and striking point: during daytime hours, the incremental impact of both PC and mobile are much more significant. Between 11am-12pm, the average TV audience is only 5 million adults in the UK, while PC boosts the net addressable reach of TV during that time to 17 million (an overall boost of 12 million). And when we add incremental mobile reach on top of that, we see a further boost of 9 million unique users, resulting in a net reachable audience of 26 million users per hour. Please note that while many people use TV, PCs, and mobile devices during the same hour, the numbers cited above provide unduplicated reach numbers – showing the “incrementality” of PC and mobile platforms on top of TV.
And so, while the so-called “death” of the TV advertising industry may make for compelling editorial content, it’s not quite true. And as advertisers and brands fight for better accountability and cross-platform measurement tools and standards, understanding subtleties like the incremental impact that different devices have upon each other (and upon audiences) will become easier to understand.