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Advertising Returns to Local TV
Spending on TV advertising is expected to soar, despite the trend to cut the cord
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Ad spending targeting local video audiences will grow from $32.6 billion in 2016 to $37.6 billion by 2021, according to a forecast by BIA/Kelsey. The research attributes the growth to increased spending in digital video and, perhaps surprisingly, local television.

Furthermore, BIA/Kelsey expects that as programmatic advertising increases on broadcast and multichannel video programming distributor (MVPD) platforms, some of the advertising spend on linear video platforms could spill over to digital video.

“Over time, one could expect more local TV and local cable advertising being sold programmatically,” says Mark Fratrik, senior vice president and chief economist at BIA/Kelsey. “Even though there is a movement toward more viewing on streaming services and advertising migrating to other digital, mobile platforms, local TV stations and network and cable TV still deliver mass audiences, still provide interesting programming, valuable programming, that large masses of people want. Even the regular series programs still get a sizable audience.”

Advertising on linear TV—defined as broadcast and MVPD (video programming provided by cable or satellite TV companies over more than one channel, usually for a subscription fee)—predominantly trades on Nielsen gender and age audience data in the local marketplace. Services such as Deep Root Analytics, Videa, WideOrbit, and Lotame are bringing more innovation to this local TV marketplace by adding more audience targeting data beyond gender and age to develop indices for custom audience segments.

“The infusion of data beyond standard Nielsen audience data allows marketers to identify and target their consumer segments much more effectively and efficiently in local TV programming,” explains Rick Ducey, managing director at BIA/Kelsey. “Essentially, when adding more data infusion, marketers can make much better decisions about which networks, stations, and programs to buy based on how their target segments index across multiple targeting criteria. Similarly, local TV providers can more properly value their ad inventory based on the actual value of the audience segments they deliver to marketers.”

However, Ducey notes that there are a number of challenges around data in the local television ad space. “A core issue is where the data comes from to define and value the creation of audience target segments and then determining what impressions, including targeted reach and frequency capping, were served. The methodology behind the data, which data sets are used, and ultimately the set of decision-making processes and trade-offs made along the way, are the kinds of things that need to be transparent,” he says.

Nevertheless, Ducey says the new Advanced Television Systems Committee standards, ATSC 3.0, will provide more opportunities for advertisers. “The new standard, just starting to hit the marketplace, offers personal content targeting, including advertising content, to over-the-air viewers not possible in the current TV standard,” he explains.

“It’s an advertising mix; you have certain types of advertising that work better for mass audiences. It’s obvious that the online and mobile advertising platform has become more competitive and is grabbing a larger share of the advertising budget,” Fratrik adds. “On the other hand, local TV is still an important part of the advertising mix. We see advertisers, both large and small, turning to video advertising at a pretty good rate; a lot of companies have sprung up doing video advertising, making it easier for even small businesses [to do]. Video is an important part of an advertiser’s mix. If you can’t afford to buy a spot on local television spaces, you may buy spots on elevators or in taxicabs or in kiosks or right before you watch a movie in a movie theater.” 

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