After decades of focusing on blue-chip brands, TV ad sales executives are starting to sweat much smaller stuff.
TV has long attracted the world’s largest sponsors, like Procter & Gamble, Coca-Cola and General Motors. This year, TV networks are chasing upstart advertisers such as the makers of Casper mattresses, Peloton exercise equipment and Warby Parker eyeglasses.
No one is abandoning the nation’s ad giants. But sales executives are increasingly interested in harvesting the new money they believe will flow into the industry’s annual upfront market. Any recent viewer of CBS, for example, might have seen commercials from Angi, Chewy, Etsy, Hotels.com, Match.com, Ring, StitchFix, Tripadvisor, and Wayfair. “There are so many of them, and in so many different categories,” Laura Molen, president of advertising sales and partnerships at NBCUniversal, tells Variety. “It really has changed the playing field.”
The challenge? Smaller sponsors are “digital first,” and accustomed to the reams of audience data they receive when advertising via social, mobile and web-based techniques. “They definitely lean more on the direct-response advertising and analytics,” says Mike Menkes, a senior vice president at Analytic Partners, a marketing-industry consultant.
NBCUniversal has in recent weeks unveiled new data efforts that help advertisers understand which programs will draw viewers most likely to be interested in a specific pitch or product. A+E Networks in March introduced a suite of tools aimed specifically at helping small- to medium-size advertisers do business with its TV networks. “It would be great to welcome some businesses that have grown up in the digital world that maybe have been a little scared to dip their toe into TV,” says Peter Olsen, executive vice president of ad sales at A+E Networks. “This might be a way to do that.”
To be sure, the new advertisers still aren’t as important as TV’s more traditional clients. Procter & Gamble, Coca-Cola and General Motors combined spent nearly $3.95 billion on TV advertising in 2018, according to Kantar, a research firm that tracks ad spending. A random group of the newer digital companies — Wayfair, Peloton, Warby Parker, Blue Apron and Casper — spent just $139.2 million on TV commercials last year, Kantar says.
Still, TV may see companies like shirt retailer Untuckit as more than a just source of money. The networks are likely betting that tech-savvy advertisers will serve as replacements for some traditional sources of Madison Avenue cash in an era when technology threatens those firms’ viability. One of the new and growing ad spenders might just turn out to be the next Amazon or Google.
Digital innovation has roiled many Madison Avenue stalwarts. Big retailers like Sears and Kmart are shadows of themselves, and some traditional chains — think Toys R Us — have shut down. The auto industry is in the midst of what even its own executives are predicting will be a revolution: an emerging focus on electric vehicles and on forging relationships not with individual consumers but with operators of large fleets. Ford Motor, for example, has recently placed more emphasis on mobility services and autonomous vehicles and worked to phase out certain North America car models.
Other factors bolster the new players’ appeal. Decades-old clients like Procter & Gamble or General Motors typically carve out long-lasting relationships with the TV networks that sometimes include better-than-market rates for ad inventory. The emerging digital advertisers don’t have that kind of leverage — at least not yet.
The hope is TV will help them grow in a different way. It’s one thing to get a specific customer to click on an offer. It’s quite another to get millions of people to remember a slogan or a product. Television networks have long argued their programs help make commercials a lot more memorable than short YouTube snippets or on-demand video streamed on a smartphone. The upstarts “see us as an on-ramp to taking their business into a growth trajectory,” explains Sean Moran, Viacom’s head of ad solutions. “We are doing business with clients we’ve never done business with before.”
Yet in some ways, the smaller sponsors are no different from their larger contemporaries. Madison Avenue has grown acclimated to digital, where a consumer’s response to an ad can be tracked and analyzed, and the information available about the customer goes well beyond the broad age and gender markers provided by linear TV.
With that in mind, the TV networks have rushed to provide strategies such as “attribution modeling,” which seeks to tie exposure to video ads to an actual customer action, like visiting a marketer’s website or taking a test drive of a new car; “audience segmentation,” based on narrower definitions of consumer behavior or attributes; and even “business outcomes,” such as movie ticket sales.
In decades past, ads aimed at spurring a quick phone call or web click were considered second-class. So-called direct-response ads continue to run all over TV — usually in lower-rated programming and in the wee hours. But they no longer just hawk “hair in a can” or a versatile Ginsu knife. Thanks to digital tracking and the rise of new kinds of consumer data, every ad can be a direct-response ad. If the networks want to keep marketing dollars flowing, they’ll have to work harder to bring the upstart companies into the tent.