High cost and uncertain returns of TV ads are top drivers
A new survey of local ad agencies by advertising analysts Borrell Associates finds that larger media buyers that have traditionally preferred broadcast TV, radio and OOH advertising are now moving ad spend to targeted ad forms like Over The Top (OTT), social media and addressable advertising.
If some of those terms are new:
- Over The Top (OTT) refers to any streaming service that delivers content over the Internet. Streaming video services like Hulu and Netflix are important examples of OTT. OTT advertising has the advantage of being able to reach consumers who have "cut the cord" from network or cable TV.
- Addressable advertising can show different ads to different households while they're watching the same TV program via the internet, enabling advertisers to deliver more relevant ads that produce higher conversion rates.
Borrell Associates found the #1 driver of these changes to advertising to be the relatively high cost and uncertain returns from network and cable TV ad spend.
75% of agencies reported that clients shifted some budget to OTT, largely at the expense of broadcast TV.
Media reported to be most popular with ad buyers in 2020 were (top 5):
- Social media, mentioned by 79% of respondents
- Banner ads on general websites (74%)
- Radio (70%)
- Search engine marketing (i.e., paid search, PPC) (70%)
- Events and sponsorships (65%)
Most effective media
Agencies said that online video, addressable ads and social-media ads showed largest gains in effectiveness in 2020, but that clients spent less on print, radio and OOH.
One-third of respondents said their clients are underusing digital media.
Use and effectiveness of social media platforms
- Facebook, used by 91%, found effective by 59%
- Instagram (77%), found effective by 49%
- YouTube (65%), found effective by 44%
- Linkedin (46%)
- Twitter (45%)
- Pinterest (23%)
Media rated least effective
- Print directories
- Events and sponsorships
- Outlook for network and cable TV looks dire.
- Agencies need to do a better job of selling digital media to ad buyers.