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How Ad Spend Will Move From TV to Digital Media

How Ad Spend Will Move From TV to Digital Media Richie Hyden
By now we've all heard the proclamation that television is dying, dead, done, or finished. But that's a rather irresponsible and premature assessment in my opinion. While online ad sales rose 17 percent to hit $42.8 billion in 2013, cable and broadcast ad sales are still substantially higher at $66 billion. But one thing there's no denying is that online media has astonishing potential. The big question is how do we get digital to be as large and sustainable an industry as television? The answer may lie not in further disruptive innovation but in traditional techniques that have proven effective for decades.

Traditional television is an established and prestigious form of media whose business has long been about servicing advertisers by providing them audiences to watch their commercials. Viewers know where to go to consume their favorite shows, or genre of shows. But what’s more, advertisers know where to go to reach a demographic, and know the audience scale is there for profitable advertising. Digital video, on the other hand, is still an emerging media. Right now, companies are still trying to figure out how to not only drive, but keep viewers on their owned & operated sites. Not being able to do so presents a huge problem for advertisers, whose ultimate goal is to reach a large number of relevant users in one location.

In an expanding total TV universe, audiences are everywhere and nowhere. Challenges in content and audience curation as well as discovery underscore why video is not seeing TV money yet.

Traditional television has guaranteed scale, which is why most of the advertising dollars are going there. In order for advertisers to allot more of their ad spend to digital video, video has to capture, or at least offer comparable value to the scale and reach of television. To do this, they need sustained growth of engaged and targeted viewers. Digital media companies may own their content, but they don’t necessarily own their audience. A social link may drive a viewer to a piece of content on your site, only to bounce back or be recommended to consume content on another site. It is also possible that you have no relationship with viewers because they watching your content through other sites.

Video wayfaring is daunting and content owners are offering viewers a compass when they need GPS.  Regardless of their size, media companies must be sophisticated enough to organically drive and retain viewers on their owned & operated properties.

Think like TV

Media companies need to think of the digital space from a programming perspective. Two things traditional television has that digital media is lacking is continuous play and focused content. While networks build mass premium brand experiences around “primetime,” video is a-la-carte, personal, and not bound by traditional scheduling. However the principles behind broadcast scheduling techniques such as tentpoling, hotswitching, and stripping are valuable and can be applied to video to create a digital premium brand experience. This can be achieved by recommendation technology, continuous play, personalization, user authentication, social syndication and a programmatic approach. The companies that start to deliver their digital media in intelligent ways that keep users on-site are the ones that will begin to see sustainable growth and more ad dollars.

It may seem that digital media is a mouse that’s fighting a mammoth, but digital has already proven  it’s a contender. In 2014, digital ad spending surpassed 25% of all media ad spending for the first time. Yet, it can do better. The industry is still in disarray, but advertisers clearly see the potential. Brands know exactly who they want to target and digital is the best option for that. You can’t target on television as well as you can on digital because digital creates a more hyper-focused option. But right now the audience on digital is too small, too fragmented, and can’t compare to a television audience. Until the publishers provide viewers with a premium brand experience, advertisers won’t put their billions of dollars of ad spending into digital.

Richie Hyden is the COO of IRIS.TV and runs the day-to-day operations. He is an expert in video optimization, workflows and internal operations. Prior to IRIS.TV, Richie ran operations and marketing strategy for Jukebox TV.

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