The television industry is being shaken by rapid changes in technology, consumer tastes, and demographics. For decades, the role of television in the marketing environment was assured--to reach a large audience with a branded message that appealed to the emotions, you used television. The combination of universal reach, barriers to entry for competing networks and media, and video delivery assured television of its lucrative place and caused the media mix to change very little for many years.
But in recent months, we've seen a series of news reports that validate what we already know: Television is losing viewers and thus its confident place atop the marketing portfolio.
In February came news of a new IDC study of consumer online behavior found that the Internet is the medium on which online users spend the most time (32.7 hours/week), almost twice as much time as spent watching television (16.4 hours).
In April, Microsoft announced it would take advantage of the Internet's growing power to deliver video to broadband-connected consumers and offer its own original slate of programming via its Web properties. Also in April, the New York Times featured an article about Naked Communications, a new type of agency that helps brands determine their appropriate media mix; one brand executive praised Naked's "media agnostic" mindset and said it was a fresh approach to "not presume that you have to have a 30-second TV spot."
In May, Forrester released a report that showed that consumers ages 18 to 27 are spending less time with television and more time online. The reported showed that in just three years, time spent using the Internet has risen 80% while time watching TV is down 15% among this demographic.
In June, MediaPost shares a study from Ipsos MediaCT revealing that among those who have streamed or downloaded video content, which is 52% of Americans age 12 and older, the share of video viewed on television dropped while the video viewed online had grown from 11% to 19% in just one year. The study found that consumers age 12 to 17 view just 55% of their video on TV and 24% on a computer. Also in June came a report from Magna Global USA that noted that even though just 25% of TV homes have a DVR, "the current impact of DVR viewing on ratings is twice as high as the impact of VCRs when they were in 90 percent of TV homes." What this means is that ad-zapping DVRs already account for 9 percent of the Big Five networks' TV ratings, and 15 percent of viewing by adults 18-49.
The adquake continues this month with a study released by Magna Global that demonstrates TV is no longer within its own target demographic. Television has long bragged about its ability to reach the 18-to-49-year-old demo, but "the five broadcast nets' average live median age (in other words, not including delayed DVR viewing) was 50 last season". (The median age for U.S. households is 38.) Such is the impact of gaming, the Internet, cable, and DVRs, that network television is losing its ability to reach its traditional core audience.
The adquake is already being felt in the network's pocketbook. The big network's ad revenue fell two percent in 2007 while all ad spending was up slightly (0.2 percent). Internet ad spending was up 15.9 percent last year, but the shift in media spend is nowhere near complete. Despite the demographic and TV viewing changes noted above, ad spending on network television was 135% greater than on the Internet, and the ad revenue for all television was almost seven times that of the Internet.
The adquake presents real challenges for marketers. As has been noted on this blog, online display advertising isn't much of an answer for marketers seeking to shift dollars out of TV advertising. Online ads are seen as untrustworthy, annoying, and ignorable; plus, ad blocking software threatens to decrease ad viewership on the Internet in the same way the DVR is used to screens ads by those who time-shift their TV.
Despite the challenges both online and on television, I think these are exciting times for marketers. The old way of marketing had become stale and--let's face it--boring. There were few challenges to advertising on TV and in print; with demographics, media outlets, and technology stagnant, the focus was entirely on the message and not the medium. There was a belief back when I started in marketing that a brand only needed to find the right tagline to create relevance to an audience.
But today, marketing is so much broader and deeper than it was 20 year ago. Rather than focusing on just the graphic, headline, or copy, we marketers have become as creative as film makers, theme park designers, and game developers. Successful campaigns aren't simply about finding the right ad to place in the same old spots; it's about finding the right combination of strategy and experiences to engage consumers in fun, interactive, and fascinating ways.
We've gone experiential, and its a change to be embraced! The adquake will continue for years to come--probably for our entire careers--as mobile, social, and other media we cannot yet imagine change consumer media habits, expectations, and relations to brands. The marketers who succeed will be the ones who learn to shift as quickly as the adquake changes the world around us.