Thursday, November 6, 2014

Ad Spend Shifts To Reach Consumers

Today's Wall Street Journal reports on the shifting dollars of ad spending.  The concern is that ad dollars are flowing away from television and toward digital content.  And while it is described as shaky, it is hardly earth shattering.  Truth be told, these shifts are simply part of long term trends that have affected media buying for quite some time.  And those media that don't remain flexible to changing viewership patterns eventually become irrelevant. 

Old technology gets replaced by new technology; the horse drawn carriage by the automobile or the train by the jet.  For those that can predict the shift comes the ability to take a product or service from birth to maturity.  And while old technology like the train may lose some market share to the jet, it still can survive as a mature business.

Back to advertising, media has watched audience usage shift from print to radio to broadcast to cable to digital.  All media platforms remain available, but start to be used differently.  Radio is no longer the home for 30 minute sitcoms or dramas; today they are music, news, talk, and sports.  Those long form shows shifted to television as audiences demanded first video, then color over black and white.  Today those viewers now want portability, personalization, and on demand, something that digital can do very well.  But TV is not dead or even on shaky ground.

According to the research from MoffettNathanson, broadcast and cable are still growing, simply at a slower rate.  It is the maturation of the TV platform as another takes over.  Viewers are a fickle bunch; one year they love the content you offer on your broadcast or cable or theatrical platforms and the nest year, interest has waned with your content and moved to another content creator.  And digital platforms like Netflix and Hulu and Amazon and others let viewers watch shows and movies on their terms.

Still this shift of viewership from TV to digital could change the cable landscape.  In the beginnings of cable television, networks were created to reach segmented interests.  You had an arts channel, a sports channel, a comedy channel, a movie channel, and so on and each channel had a clear segmented identity.  Where broadcast networks reached a broad audience base, a cable network could reach a smaller, albeit passionate viewer segment.  But as cable grew up, it started to want a bigger share of the pie.  Those individual identities began to soften as networks widened their reach with more varied programming categories.  Today, most cable networks look like broadcast networks.  And with so many lookalike networks, segmentation turned into fragmentation.  It seems the next step for cable TV may be for consolidation as smaller networks get dropped off the line-up.

TV ad spend will continue to shift as new platforms emerge and audiences embrace these new ways to interact with content.  Broadcast felt it as cable networks gained better programming and more viewership.  And TV as a whole will feel it as digital gains better programming too.  The shift is inevitable and like before, the trend will only continue.  The smart content distributors will embrace digital and capture the dollars regardless of the platform its content is on.  HBO and CBS offering unique digital subscription models is one such example.  Hulu Plus, a consortium of broadcast media ownership is another.  Their is nothing wrong with TV ad spend, it is just following the same trends that have affected it before. 

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