Approximately 1 million people watch each episode of “The Big Bang Theory” each week without tuning in to CBS Thursdays at 8 p.m., estimated CBS’ top research executive, offering ample digital reach for advertisers who may be contemplating other methods of talking to consumers who are consuming their favorite programs with all kinds of new technology.
“Should advertisers be investing in a full array of new digital media options? Absolutely,” said David Poltrack, the CBS executive. “Should they be funding these investments from their TV advertising budgets? Absolutely not.”
Poltrack’s spirited defense of what has long been Madison Avenue’s most widely-used means of promotion only spotlights how many marketers are considering new-tech alternatives. One-time TV viewers are becoming users of video-streaming mobile tablets or new services like Hulu, Netflix and Amazon that are often not counted in the traditional Nielsen ratings measures that form the bedrock of how TV networks get paid by sponsors. Indeed, Poltrack suggested that the flow of money advertisers put into TV is starting to narrow: He called for TV advertising to be flat in the first half of 2015 and then increase 2% in the second half, with broadcast TV working to take share away from cable in the next “upfront” market, when TV networks try to sell the bulk of their advertising inventory for the coming season.
His efforts, made at an investor conference held Monday by UBS, come as several ad forecasters call for a much tougher ad market in the months to come. Magna Global, the media-services firm owned by Interpublic Group, predicted U.S. TV ad spend in 2015 would fall by 1.4%, while digital ad spend could rise 15.5%.
In his remarks, Poltrack took care to make plain the idea that old-school TV has its new-school aspects: More TV once consumed in “linear” fashion by people watching in primetime is now available to be watched as they wish via video streaming and video on demand. CBS will use its Sunday-night drama “Madam Secretary” as a proxy next month in Comcast’s effort to pair current ads alongside multiple episodes of a series, an initiative known as “on demand commercial ratings.” And he noted that newer players in the programming arena may yet need to hone their chops. “It’s been more than one year since Netflix introduced a true new hit program,” said Poltrack, alluding to series like “House of Cards” and “Orange Is The New Black.” He suggested that company’s “batting average” was well below that of cable networks’ or broadcast outlets. “Netflix is a player in the original content business, but they do not appear to have found any magic formula,” he said.
He also suggested that the digital video recorder, the ad-skipping device that has become the bane of TV sponsors, was losing some of its bite. Many of the early adopters of the device are now making use of video-on-demand and other kinds of viewership that contain advertising that cannot be zapped past with the touch of a button, said Poltrack. Still, he noted that older audiences were making more use of DVRs.
The TV networks will face stronger headwinds than in years past. Big ad categories like pharmaceuticals and consumer packaged goods are embracing digital media more widely, according to Magna Global, using new technology not only for direct-response advertising, as has been the norm, but also to generate awareness for products and names – a technique that was once mainly the province of television. TV’s pitch will be to stick with the medium that has long helped boost sales and consumer recall.
“Why would you fund your new experimental work with money from the element of your marketing program” that has proven to lift return on investment higher than other parts, Poltrack asked, particularly when new digital outreach “may not even be used yet to its full advantage.” As more advertisers embrace new technology and grow more familiar with it, broadcast-TV’s pitch will have to evolve.