With Iffy TV Ad Market, Digital Video Tries To Entice Traditional TV Marketers

The TV advertising market may have been wavering a bit in recent months. Some warning signs exist, especially when it comes to falling viewership -- not just among broadcast networks but, more alarmingly, cable networks.

For example, MoffettNathanson Research says broadcast networks were down 2% in third quarter Nielsen C3 ratings among 18-49 viewers.  Cable networks dropped 8%.  

In September alone, ad-supported cable networks were down 7% among all viewers -- with English-language broadcast networks virtually flat (off 1%). 

But what about advertising demand -- especially for the fourth-quarter scatter market? The jury is out, though many are counting on the period to be strong, especially in comparison to the mostly weak 2014-2015 upfront.

So digital video providers might find another crack in the TV advertising wall as they look for ways to entice traditional TV marketers, via either soft or hard sells.

Former Hulu executive Jason Kilar’s new digital video company Vessel looks to price pre-roll commercials -- perhaps the premium digital video format/platform for marketers -- at around $30 to $50 CPMs, with overall out-of-pocket packages in the $250,000-$500,000 range.



That range is good for digital video providers, even though prices have dropped somewhat recently t0 around $35 to $40 -- about the same as charged by broadcast networks.

While the pricing against TV is comparable, that is not Vessel’s main effort, according to The Wall Street Journal. The company is thinking more about targeting YouTube, though getting dollars intended for traditional TV players would surely be a nice coup.  Vessel is looking to launch next month.

All this occurs as media agencies increasingly look to revamp some TV media planning -- in terms of the rough percentages that clients should spend on digital video.

Not that long ago, certain media executives looked at pushing clients to shift 15% of TV dollars to digital video. Now Omnicom Media Group believes some of its clients should shift as much as 25% of their video budgets.

If you think this sounds like something media agencies did in the late ‘80s and early ‘90s concerning growing cable networks, you wouldn’t be wrong. Media agencies then talked about setting aside 15% of TV dollars for up-and-coming cable networks.

After that period, as cable’s penetration of TV homes climbed steadily, those networks saw an almost too easy, smiling-ear-to-ear, run of ever-higher ad revenues.

New digital video platforms can only hope for a similar performance -- complete with online selfie grins.

1 comment about "With Iffy TV Ad Market, Digital Video Tries To Entice Traditional TV Marketers".
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  1. Ed Papazian from Media Dynamics Inc, October 13, 2014 at 5:17 p.m.

    Assuming that the "premium video" CPM, as quoted above, is actually around $35-40, which sounds right to me, this is roughly twice the primetime CPM charged by the broadcast TV networks if, in both cases, one is counting all viewers. It's not fair to compare primetime demo CPMS for TV with total user CPMs for online videos unless 100% of the latter's "audience" is in the particular demo used for the comparison. Also, Cable prime CPMs are about 50- 55% of those charged by broadcast and, to be fair to TV, why are online video CPMs being compared to primetime TV, but not to other, much cheaper, forms of TV? Do online video ads appear only between the hours of 8 and 11pm? Finally, just because there is continued audience fragmentation in television, this does not mean that advertisers are suffering a loss in audience. Their audience tonnage is guaranteed. If a network can not deliver all of the rating points that were promised, make goods are given in compensation. I'm not saying that online video ads are not a worthwhile media buy but one needs a better reason to go in this direction than fears that TV is losing its audience.

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