Commentary
How Can TV Companies Win In Ecommerce-Centric World?
- by Dave Morgan , Featured Contributor, October 29, 2020
Evans is the super-insightful venture capitalist, pundit and media and tech analyst who regularly writes on industry issues.
Essentially, he argues that we’re seeing a significant acceleration in the growth of online commerce. Further, this growth creates flywheel effects for physical retail: The more people shop online, the less they go to retail stores and malls; the less they go to those stores and malls, the faster those stores and malls go out of business; the faster those stores and malls go out of business, the more people need to shop online; etc.
What does this mean for advertising? For sure, companies dependent on advertising from physical retail companies need to watch out. Even more interesting is Evans’ observation that scaled online commerce models won’t have the benefit of saving companies the money that would have gone into physical store rents and dropping it to the bottom line. Any savings will almost certainly have to be spent on delivery and advertising.
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Advertising? Yes. Something is going to have to replace the customer acquisition role that foot traffic along the worlds’ main streets and shopping malls delivers for the physical retail world.
So does this just mean more money for Google and Facebook? Maybe not. They are increasingly facing pressures from regulators on critical issues like market dominance and privacy, which could impede their growth here. And some of the benefits for online advertising could be blunted, since so much of it today is pinned on the use of cookies and some other unique identifiers that could be going away.
Could television win this shift of customer acquisition money from real estate to advertising? Evans poses the question at the end of his piece, but doesn’t answer it.
My point of view on the question is a big maybe. TV has certainly been resilient in the face of decades of digitization of the media world. It still delivers unmatched audience and impact. And it has already proven itself to be an effective channel for many digital marketers and direct sellers.
However, TV also has some big challenges to overcome to win in an online-commerce-centric world. It operates under a wholesale business model, when this new market demands retail.
Just think about it. TV companies sell ad spots in bulk in advance to agencies who then work with the TV companies -- in human-managed processes -- to break up those big bundles of units into smaller bundles of units to be allocated to individual advertisers.
Since most of those individual advertisers are wholesalers themselves -- selling pallets of soap to retailers, not bars of soap to consumers -- those buyers aren’t that particular about making sure that those bundles of ads spots are super-targeted, that the buying and trafficking systems are automated and nimble, and that their measurement systems are tied in real time into sales systems with the capacity to optimize on the fly.
Is TV ready to embrace -- and invest in -- the kind of improvements in targeting, automation and measurement that online commerce sellers will increasingly expect as table stakes? I don’t know. What do you think?
Cable TV and Streaming video already embraces, automates, targets and measures. It effectvly drives Internet traffic. As mentioned "It still delivers unmatched audience and impact." It's the full sales funnel. Directly and organicaly.
Brad, I agree that TV has proven that it can effectively drive Internet traffic. I think that one of the big questions is whether it has the tooling to meet the needs of e-commerce companies going forward - flexible, fast linkage to first party data targeting; automated, spot level buying just-in time; and real-time measurement tied to real-time attribution. The industry has some huge gaps in these areas with the offerings of Google/YouTube, Facebook, Snap, etc.
That sounds like a PC. I'm sure some day the TV & PC will be more married, but they do complement each other and some streaming is clickable/direct as you know. However, when watching a show, do people really want go down the purchase funnel? I have my laptop & cell in hand to do that.
Brad, I'm not suggesting that the TV device needs to support commerce, but that the TV ad ecosystem needs to support performance-focused ad buying as the digital ad platforms do. For sure, many viewers will use phone and laptops to browse and purschase in the same viewing sessions, but also attribution systems today are good at attributing digital interaction spikes to TV ad spots. The challenge for these e-comm marketers is that TV likes to sell packages of spots accorindg to demos or content, mostly hand sold and managed, well in advance of the campaign with very late reporting, none of which is dieal for them.
Hmm. I hear ya. I think. Instant vs. trend or pattern. In the short to long run should be the same outcome. Bigger issue I think is data resistant ad buyers. AKA old school, opinion, personal bias. As I like to say, people are predictable and habitual. That’s how stereotypes came to be. For that reason, I see patterns as more valuable than what happens in the moment when it comes to audience addressability. But there is value in both.
What is being suggested is that "TV" may become a direct marketing vehicle on a far larger scale than it is now. Maybe, but most TV ad revenues are for branding, not DM, efforts---like 90-95% branding. And only 10% or so of commerce is currently conducted online. Of course, this may change, and if ecommerce suddenly grows to 25% and then 50% it's a pretty sure bet that TV will adapt in whatever ways are practical. But the sheer weight of branding advertising---which motivates consumers to want a product---though not necessarily to buy it online the very instant a commercial is seen--- must also be acommodated by "TV" --both linear and streaming/OTT. As regards targeting, I have no doubt that more refined methods will be introduced for TV---but only when brands are permitted to buy their own ad schedules --which, at present, happens only 25% of the time for national advertisers.
Ed, totally agree. TV has the chance to substantially diversify as both a substantial branding and direct marketing channel, with a far better user ad experience than DR TV today. Fortanutaly for TV companies, many performance marketers can pay substantially higher CPM's at the spot level than the legacy rates they have in place today for many brand advertisres. However, the brands will have to be able to buy at the producct, brand, campiagn level, not just corporate or agency level.