December 13, 2018
To better understand this post, we recommend the reader to first familiarize him/her self with the basics of TV media buying.
Marketers who are considering TV as a potential advertising channel sometimes ask: “Why should we even go into TV?” A common misconception is that TV advertising has become a defunct marketing channel with the rise of digital platforms. According to Nielsen, however, 226 million people watch TV on a monthly basis and spend approximately 5 hours a day on TV. With such audiences, TV advertising is not dead and can be an incredibly effective marketing channel for companies in all stages, from early-stage advertisers to marketing veterans. There are three reasons for this: reach, scale, and the power of TV ads.
Reach is a direct consequence of TV’s longstanding presence in the majority of US households. As mentioned earlier, despite the rise of digital advertising, the reality is that that millions of people in the US regularly watch TV. For marketers, this means they can easily reach a large number of people with a single advertising channel. Another distinct feature of TV is that it’s not restricted to a particular audience demographic. Whereas some of the newer advertising channels (like Instagram and Snapchat) appeal solely to younger audiences, TV viewers come from all demo groups. That doesn’t mean marketers cannot target specific audiences with TV—by selecting for specific networks or programs, marketers can always reach their core target demo via TV.
TV also excels at scale. In general, as marketers spend more money on a particular channel, it becomes increasingly more expensive to acquire additional customers. While this is true for TV (as it is for all other marketing channels), the cost of acquiring additional customers does not increase quickly on TV. This is not the case with digital platforms, which typically suffer from rapidly-accelerating customer acquisition costs at higher marketing spend. For advertisers who have maxed out their marketing spend on digital channels (i.e. doubled spend does not lead to doubled sales), scale can be one of the most attractive features of TV.
Finally, beyond reach and scale, TV can be effective because TV ads hold a degree of quality and prestige that cannot be replicated in other advertising channels. Audiences are accepting of TV ads and can connect with them easily while watching their favorite shows, news programs, or sports games. Furthermore, especially in the case of longer TV ads (like :30s creatives), marketers can share the full story around their product in creative and captivating ways. Even if only :15s in length, a TV ad can tell so much more than a still image or an Adword.
It is therefore not surprising that advertisers who have invested and mastered TV will easily spend more than 40% of their marketing budget on TV (see Media Post). In the US specifically, TV advertising is a $70 billion annual business, and unlike some suggest, the market continues to grow. All of this confirms that TV advertising indeed works.