The End of Primetime

All signs indicate that 2015 upfronts will turn even softer than the previous year’s. The overall share of TV in budgets is decreasing as advertisers keep shifting that money toward online video, search, mobile, and display. Although viewers of all ages are still getting the vast majority of their video entertainment and news from TV, there are fewer people watching than two years ago. And even more importantly, the way people watch TV has been changing radically.

The upfronts traditionally centered on primetime TV; with the advance of DVRs, they started to include time-shifted viewing as well. Well, now the viewership of both live TV and time-shifted content is on decline; homes turn toward watching online video and streaming services such as Netflix and Amazon. Even traditional TV companies such as HBO, NBC, and CBS reinvent themselves into on-demand streamers. At this point, about a quarter of US households have Smart TVs — and on a Smart TV, live programming is just another video app. Even older viewers are spending less time watching live TV.

This is both good and bad news for the advertisers. The good news is that digital modes of video delivery to the audiences bring individual addressability, allowing advertisers to reach exclusive target audience segments. Not the abstract Nielsen’s “Females 25–34” anymore — but expectant mothers, first-time home buyers, life insurance shoppers, foreign-made car buyers, etc., pinpointed with the help of various analytic and research instruments such as IRI, Shopcom, and Polk. And that is not the limit; connecting CRM databases with streaming services registration databases allows a relevant ad to be served exclusively to the advertiser’s very own existing customers and prospects. Think Facebook Custom Audiences level of targeting. What, until now, was only possible on PCs, tablets, and smartphones is finally coming to the largest glowing rectangle in the room.

The bad news is that the upfronts were never intended for selling or buying granular audiences. Nielsen ratings, the traditional currency of TV networks and advertisers buying in advance, are invented to measure mass tune-in scenarios: how many people watch the same program at the same time. When the viewing is fragmented and on demand, the model breaks.

There are talks about new currency that would replace Nielsen numbers — potentially powered by more granular viewership data through Rentrak or comScore, matched with various other third-party sources. But the real solution for the TV companies is to give advertisers flexibility to use all data at their disposal to define custom audiences — and then negotiate guarantees against reaching those audiences in advance. That will be a different model altogether, but there is no return to the golden standard of Nielsen ratings. In order to advertise effectively on the new TV, each advertiser will have to create their own internal currency informed by the unique economies of their specific products and brands.

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