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Expanding the Universe of Television Advertisers

October 11th, 2019   ||    by Alan Wolk

One of the more interesting points made during the Future of Television Show last month was that the ability to run addressable advertising will result in a dramatic expansion in the number of brands that are able to afford to advertise on national TV, bringing that number from a few hundred to a few thousand.

That’s a huge leap and it can only but help the television industry as it continues to fight off the threat from digital.

It’s also a challenge, because many of those brands will be unfamiliar with television advertising, how it’s bought, sold, planned and created, and so there will be a significant need for education to bring them up to speed.

Why will addressable open the door for so many new brands to advertise on television?

By allowing advertisers to use data to target specific customers, addressable can bring down the price of a linear national ad buy. When several different brands share the cost of a thirty second spot, the result is greater accessibility. That’s true even though the network or platform will make money off the split (e.g., they will not take the price of a single :30 and divide it neatly by three in order to accommodate three advertisers.) The thinking is that lower costs combined with the ability to reach a more targeted audience will prove compelling to many advertisers.

 TV Commercials Are Not Cheap

For many brands, the biggest shock will be the actual cost of a TV commercial. While digital campaigns can be created for well under $10,000, a single TV commercial can cost over $1 million.

Now granted that figure is what it costs to make a cast-of-thousands Nike or Pepsi spot, but even for smaller advertisers, a well-produced spot that looks worthy of the brand is easily $100,000, if not more.

That means brands will need to get additional value from those TV spots to justify the additional production costs. Complicating the matter is that much of the value of a TV spot is not immediately measurable, coming, as it does, from the emotional impact of a thirty second film that stays with the viewer for years, versus a web banner that is forgotten in moments.

 Why Are We Running This Commercial?

The other question that brands will need to answer is why they are running a TV spot, what their KPIs are.

Are they looking to enhance the brand’s image, to get viewers to keep the brand top of mind when they think of the category? Are they looking to launch a new product or service and want to create awareness for it? Or are they looking to actually drive sales, either at a retail or direct response level?

Regardless of their reason, their results will need to match their goals.

 Local Provides A Clue

Local advertisers, many of whom are also smaller and don’t have massive production budgets can provide some great lessons for brands new to national TV advertising. Their challenges are often the same and learning the ins and outs of television can be equally as challenging.

Local brands have also been learning the benefits of automated delivery, something national advertisers will be relying on with addressable too, as many addressable ads are now being delivered by automated systems. In both instances, the ease of use and accountability the automated buying provides should prove to be a boon.

The move to the automated buying and selling of local television advertisements is being led by companies like Videa who are moving real dollars through their platform on behalf of major station groups and advertising agencies. Even today the company is in 169 markets, 636 stations and 48 states – numbers that prove the value of automation for local.

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