What does TV fragmentation mean for US marketers?

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ECI Media Management’s US Business Director, Victoria Potter, looks at the changing TV landscape and explores the ramifications.

This week, eMarketer released an article stating that this year, there will be about a 3% decline in TV ad spend from 2018, and that trend shows no signs of slowing. By 2022, eMarketer is predicting that TV ad spend will drop below 25% of total us ad spending. Of particular interest is that, the typical “political year” bump that has been prevalent in previous years will not be as great in 2020, only accounting for about a 1% increase, followed by steady 1% decreases in the following years. Contributing to this decline is steady growth in cord cutters and ratings decline.

Nielsen is showing steadily declining ratings over the past few years. In the desirable Prime daypart, C3 ratings have seen a 33% decrease from 2016 to present.  While ratings are declining, networks continue to show increases in pricing – with Nielsen reporting a 7% increase in spend during the same period. And, coming out of the latest Upfront, networks were seeing low-double digit increases, despite lower audiences.

What does this mean for marketers? Linear TV still provides efficient reach build. However, the days of one-size-fits-all tentpole events are over, and not coming back. It is important to adjust the media mix to account for audience erosion and fragmentation.

Connected TV increases

Meanwhile, as we see Linear TV spend decreasing, another eMarketer report out this week predicts Connected TV spend will reach around $7 billion, a 38% increase vs. 2018, and projected spend of over $14 billion by 2023. Connected TV is defined as TVs, smart TVs and TVs hooked up to the internet via a set top box, game console or similar device.

A reminder: the day is still 24 hours long

The amount of new content available is staggering: Hollywood Reporter stated in June that 2019 was on track to top the 2018 year-long high of 495 scripted series. To add to the proliferation of streaming services already available (Netflix, Amazon, Hulu), this month sees the launch of Amazon TV Plus and Disney+, the latest, but not last, entries into the streaming world, with PeacockTV (Comcast/NBCU), and WarnerMedia (HBOMax) to follow next year. However, the day is still only 24 hours long, meaning that all the new content is vying for the same attention, creating more fragmentation. It leaves many asking – what will the new TV ecosystem look like? Subscription services are currently ad-free, but there’s a big question on how much of an appetite consumers have to create their own “bundles” with so many standalone options. While cord-cutting was once thought of as a money saver, it is now a trade-off between the channels in the cable bundle vs. a personally curated streaming bundle.

How do we measure it all?

With the myriad options available to advertisers and consumers alike, the question becomes – how do I evaluate my reach across platforms? Many companies are proposing their solutions, most recently Roku and Innovid, which launched a combined solution currently being tested by several Innovid and Roku clients.

It can be difficult to navigate the changing video landscape – to determine the right balance between scale and targetability. Here is some advice from ECI Media Management’s experts:

  • Establish clear Reach and Frequency goals, and put in place a standard for measurement
  • Be clear about target(s) and ensure your agency is prioritizing goals when putting together plans; keep fragmentation in mind and make sure your media mix is broad enough to adequately reach the audience, building reach and not just frequency.
  • Ensure you account for transparency within your agency agreement, as more media dollars are allocated to principal agreements.
    • Most of these principal-based buying situations are done as a service to clients, offering flexibility. However, a lack of transparency requires a great deal of trust, as clients do not fully know where, or even when, their ads are running.

Image: Shutterstock

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