Anyone with experience in digital advertising knows the industry is in a constant state of flux. This is especially true of digital video, where the maturation of phone and tablet hardware, dependable 4G broadband and the penetration of OTT services have created a dynamic mobile environment that is fueling continued growth.
Because digital video ad spending is accelerating so quickly, eMarketer’s latest “Q2 2018 Digital Video Trends Report” has issued revisions to estimates made as recently as the third quarter of 2017. These revisions represent a 21% upward correction in projected digital video ad spending for 2021 and a 6% downward correction in projected TV ad spending for 2020.
Notably, it’s also the first time since November 2008 that eMarketer has forecast a decrease in TV ad spending.
While these projections reflect the increasing importance of a digital strategy in an era of fragmented viewership and other challenges for conventional TV, it’s also likely that they reflect the increasing convergence of traditional TV and digital video — projected at a roughly 70/30 split by 2022 compared to a roughly 80/20 split this year according to the eMarketer report.
Digital solutions such as advanced TV continue to blur the lines between conventional TV and streaming video.
Some of the increases in spending on the digital side are coming at the expense of linear TV budgets. Still, there is less of a feeling of us vs. them between digital and traditional planning and buying teams on the client/agency side and more of a joint understanding that video can be effectively planned for at a holistic level across platforms.
To this end, advanced TV solutions have seen traction with both digital and traditional teams working in silos.
The cliché goes that imitation is the sincerest form of flattery. From a strategic perspective, it’s likely the flow of dollars from linear to digital environments is, in part, a reflection of digital’s increasing imitation of and parity with the way linear TV has been sold and measured.
The audience experience of advanced TV is similar to linear TV. Avanced TV in many cases incorporates linear TV — and the ability to complement a linear TV buy with the power of digital has served as low hanging fruit for brands looking to make a bigger impact outside of their traditional buys.
There is a clear demarcation between these increasingly convergent spaces on the tactical execution side.
While the ad experiences may feature a number of similarities, there are some fundamental differences in how inventory is perceived and how brands and agencies execute buys.
According to eMarketer, programmatic spending as a percentage of digital video is already at 74% and is expected to climb to nearly 80% by 2020, whereas programmatic TV currently sits at 2.8% of total TV ad spending (expected to rise to a 5% share by next year).
Upfronts spending also continues to reflect a different tactical approach. With upwards of three quarters of national TV ad spend occurring during the upfront period, the world’s major brands are setting strategy and locking in inventory nearly a year at a time.
On the digital side, even with the rise of the newfronts and an increasing push for parity with TV, eMarketer forecasts a mere 6.6% of digital video ad spending is expected to occur in the upfront period next year.
While the buying and measurement models for advanced TV still need to come up to speed with those of the linear environment, advanced TV itself offers a host of measurement opportunities above and beyond what has been available for TV advertisers.
As viewers continue to flock to digital viewing platforms, advertisers must continue to increase their investment in the space in order to take advantage of the enhanced engagement opportunities with their target audiences that digital video provides.
However, rather than eschewing TV for digital video, smart brands and agencies will arm themselves with research, strategy, and measurement tools to take full advantage of digital video’s convergence with linear TV.