The future of the cable business may not include TV, says one television executive.
Predicting that transmission of TV will move to the Internet eventually, Cablevision Systems Corp. Chief Executive James Dolan says “there could come a day” when his company stops offering television service, making broadband its primary offering.
We’ve already noticed the shift of TV ad dollars online in our ZINC business, where TV networks are promoting their fall shows guess where? Online. They’ve begun to run our inArticle video format, which expands to fill the screen for a TV-like appearance, with our online publishers. And the CPMs are much higher than our publishers have been getting with more traditional ad units.
Part of the shift of ad dollars from TV to online video is the stratospheric rise of mobile; for the first time last year, consumers spent more time playing with their devices than watching television.
Digital agencies are shifting the dollars first
Digital ad agencies believe that the effectiveness of TV advertising is on the decline, and are making a move to online video, according to a survey conducted by Rocket Fuel among 149 digital agency professionals, the majority of whom directly authorize media spend. 8 in 10 respondents plan to spend more on online video this year, even as 60% recognize there are serious barriers to shifting money from TV to do so. Chief among those barriers? Building reach (58%) and prior budget commitments (56%).
As soon as they’re told they can reach their target audiences online, and as soon as their prior budget commitments expire, we look for TV dollars to shift even faster, following the audience online.
Even Variety has noticed the shift in momentum:
… advertising on digital media is primed to explode, according to projections from Magna Global. The media research firm expects digital ad revenue, cobbled from a variety of areas, to rise 13.4% to $113.6 billion in 2013. Meanwhile, TV ad sales are projected to increase just 2% to $196.5 billion.
To be sure, TV remains the biggest recipient of ad dollars, but winning cash is growing more complicated, as advertisers yearn to test out social media and mobile devices.
And here’s another ingredient in the new media mix: online outlets can do more accurate targeting than TV, and can run contextual or native ad formats, which is difficult to do on TV (although Mad Men tried it). In study after study consumers have indicated a willingness to see ads they believe are relevant to them, and an almost rabid intolerance for irrelevant ads. TV’s mass broadcasting model makes it far more difficult to target with online’s precision.
So we will continue on our path to develop innovative formats for online video advertising, and perhaps hasten the shift by providing better ROI for advertisers and more sustainable income for publishers.