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Local TV Advertising…2020 Elections and Then What?

October 2nd, 2019   ||    by Gary Milner

Local TV advertising is a big business. With 20 billion dollar spend (29% share of the US TV ad business) and a looming election that will drive, at least in the short term), 6.55 billion dollars on local political ads with almost 60% of that going to local TV buys. 3 billion dollars will go to local TV stations (a 47% share), and a further 919 million dollars will go to pay TV providers serving local ads. These political ads have helped to keep spend to around 20 billion dollars, a little less than the 22.5 billion in the early 2000s. A great business but barely growing.

However, there are headwinds and opportunities forming that require local TV advertising to change:

1. Audience decline and aging

Local TV is the trusted and preferred way of getting local news (mainly due to 50+ audiences) but viewership continues to decline. Pew Research released data in June showing late and evening live news declining from 8.4 million to 6.6 million from 2016 to 2018 with morning declining from 2.9 million to 2.3 million.

2. OTT and local ads

As the streaming services gain momentum, the ad supported (Tubi, Pluto, etc.) and subscription services like Hulu will be able to scale local TV ads providing targeted, digital-like capabilities, often driven by outcomes. If local TV stations cannot match the capabilities that these outlets offer, budgets may shift. Frequently the demographics are younger, unlike traditional local.

Local TV stations are fighting back and launching their own OTT channels, ad supported. Sinclair Broadcast Group launched a new streaming service called STIRR that aims to bring local TV news and other content to the growing number of cord cutters across the U.S. The company today owns more than 190 TV stations, which it’s leveraging in order to create its own “skinny bundle.”

 3. Antenna growth

This changes the point of distribution for local along with OTT. The number of antennas in the US is growing from 16% of households in 2015 to 20% in late 2017. In addition, 15% of all broadband homes use only an antenna for TV, no paid TV at all. 40% of antenna owners are reportedly 18 to 30, a key demographic. So, the market is significant and likely to continue to grow.

This represents an opportunity for local ad reps to sell in key audiences that may not reachable on traditional pay TV.

4. Advertiser demands on targeting, speed and measurement

To get share of wallet, local TV advertisers will need to be able to launch, change and report results quickly and offer data enablement to compete against digital enabled OTT. Brands want to see omnichannel reporting and optimization. Legacy systems will increasingly be left off the spend plan.

This was confirmed by a survey from Videa advertising and marketing executives confirms what we already know when it comes to ongoing media-buying/selling issues: Everything is too slow and cumbersome — and in danger of haunting the business for years.

What Are the Top Concerns?

  1. Giving marketers the ability for an agency to launch campaigns in three days or less.
  2. Getting rid of slow-moving make-goods and approval process.
  3. Speeding up final reconcile adjustments between pre-invoice activity and invoice delivery.
  4. Emerging competitors, fast local channel start ups in the digital age.
  5. Smart TV and OTT are creating the ability to launch new local channels, often targeted at younger age groups than those who typically watch local. This may draw money from traditional, “older demos” that advertisers typically do not prioritize.

In North Carolina, 7.7 million are smart TV viewers, 2.3 million use them daily instead of cable. City News Beat even launched a Roku channel and Tar Heel News Beat targeted the RDU/Chapel hill area to bring local news. Different type of content, gritty by design, short stories, music beds and no commentary. Bay Area, Seattle and NYC versions are planned on more platforms like Fire TV.

This type of new channel may emerge and form a long tail of local TV, much like the internet where portals created the opportunity for long tail content, enabled by broad available internet access.

 What’s Next?

Top of the list are aging audiences, new competition, brands and advertisers starting to demand digital age measurements and different distribution points for advertising.

The whole business is in flux, with one thing that is certain: automation is needed in the local TV business with stations through to agencies allowing dollar capture of the right audience at the speed that modern day marketing desires. This is the foundation for everything else, otherwise the streaming channels will slowly migrate spend as their audiences increase

That is why Videa is an important part of this. The desire to automate local TV buying was already evident through their platform and now with the recent announcement of open data exchange API’s, digital like local TV ad buying is accelerated. Videa’s published APIs include specifications for inventory, RFPs (avail requests), proposals (avail responses), orders, makegoods and pre and post logs. The inventory API automates the flow of inventory, rates and ratings between systems and provides agencies instant access to broadcast inventory without duplication of work.

So, the message to local TV broadcasters is to automate now or risk being left behind by the digital bullet train.

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