COMMENTARY

Is The Future Addressable TV Advertising Or Nonlinear TV Advertising?

• by Wayne Friedman , Staff Writer, June 18, 2019

Big-time linear TV advertising remains in the sights of competitive media platforms. But what about new media platforms in which traditional TV networks have a financial interest?

Consider current addressable TV advertisingon traditional linear TV platforms and premium “non-linear” TV platforms on digital platforms.

It turns out that both growing TV platforms (also factoring in probable overlap) account for around $3 billion each.

For example, U.S. addressable TV ad spending is projected to grow to $3.3 billion by the end of 2020, according to eMarketer -- growing more than 30% over 2019. This compares to the traditional TV total advertising -- national and local --  mostly stagnant at around $70 billion.

Some 15% of advertisers are now including addressable TV regularly in their buys -- while 35% have tried it. To some, this indicates a technology moving beyond its infancy.

Still, in perspective to the broader market overall, addressable advertising is slower-moving. Why? Marketers are still leery about the cost -- what this ad “tax” it will mean to their overall media costs.

Now let’s look at “nonlinear” TV advertising on Hulu and full-episode players. Magna, the IPG Mediabrands unit, says this advertising will climb 15% next year to the same level as the addressable advertising -- $3 billion in 2020. Magna says it will represent 7% of the overall TV ad marketplace.

What is the downside with “nonlinear”? Many say the lack of unified TV measurement and metrics — viewers, key performance business indicators, or other comparative data — is a major factor. “Reach” for this specific platform is also an issue.

Magna says national TV will sink 3.3% this year, dropping $1.4 billion from the 2018 level of $42.7 billion, and another $170 million in 2020 — a smaller decline due to rising political and Olympics revenues that year.

Local TV is sinking 18% this year from $22.1 billion -- down $4 billion from 2018.

So where does all this money go now? For many, conventional wisdom says it continues with competing digital platforms — including digital video. Magna says digital video will grow another 20% this year to $13.7 billion.

The real question: If future wisdom — and actual ad dollars — shift to more friendly, TV company-focused addressable or nonlinear TV advertising, is that a positive message for both TV owners and their advertising clients?