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Television advertising has been around since the early 1940s, but the ads of today are much different from what was displayed on the television screens of 80 years ago. Even in just the last five years, the landscape has shifted dramatically. The type of content, the needs of audience members, and the brands have all changed. Advances in technology have made it easier to reach millions of viewers, but the process of segmenting an audience, producing targeted advertisements, and displaying those advertisements is more complex than ever.
Whether you’re a CMO looking to strengthen your brand’s competitive advantage or a head of media who needs to quickly and easily verify reach, it’s important to understand how the TV advertising landscape has changed. This guide provides an in-depth overview of modern advertising strategies and explains how to use a variety of metrics to track the effectiveness of TV advertising across platforms.
What Is TV Advertising?
In simple terms, TV advertising is the process of sharing a brand’s message to members of a well-defined audience via live television or streaming TV platforms. When most people think of advertising, they think of international brands promoting their products and services. While most TV advertising is done by for-profit companies, it can also be an asset for all types of organizations. Nonprofit organizations that want to raise money, for example, can leverage TV advertising to spread awareness for their cause.
Shriners Hospitals for Children is a great example of a nonprofit organization that’s using TV advertising to raise awareness and persuade viewers to donate. From May 22-June 21, 2022, TV spots for Shriners Hospitals for Children ran nearly 1,900 times. During that span, the organization ranked 306 on est. national TV ad spend out of all the advertisers tracked by iSpot.tv — meaning that this one hospital network spent more than all but 305 organizations across that time period. When you consider just how many companies, campaigns, and products are being advertised on TV, it becomes clear from that number just how much value Shriners sees in TV advertising.
Main Advantages of TV Advertising
Although television advertising has been around for a long time, it’s still a highly effective marketing method. One reason this type of advertising is so helpful is that it allows brands to tell compelling stories through sight, sound and motion in a matter of seconds. When an audience member views a TV ad, they don’t have to read large blocks of text or think about whether words match a set of accompanying graphics. They can listen to the background music or hear real people talking about how a product or service has improved their lives. If the ad is for a nonprofit organization, viewers can see exactly how their donations will be used to support charitable programs.
Another advantage of television advertising is that some ads are highly memorable. Not many people talk about the sales flyers they get from local stores, but it’s common to discuss popular television ads at social events and around the water cooler at work. Think about how iconic Flo from Progressive has become, or remember the last time the McDonald’s “I’m lovin’ it” jingle popped into your head — if an ad is memorable, people are likely to talk about it, expanding the brand’s reach without a significant increase in advertising expenses.
When brands advertise on television, they also have less competition for viewers. On social media, it’s easy for users to scroll past dozens of ads without even glancing at them. Website owners tend to put as many ads on a page as possible to maximize their digital advertising revenue, forcing dozens of advertisers to compete for attention at the same time. TV networks and streaming platforms only play one advertisement at a time, so even if the viewer is looking at their smartphone or tablet, there won’t be quite as much competition for their attention.
Main Disadvantages of TV Advertising
One of the key disadvantages of advertising on television is that it can be difficult to measure TV advertising effectiveness. Even the biggest brands have a limit on how much they’re willing to spend to promote products, services and charitable causes to a specific audience. Advertisers don’t want to spend money unless they can be sure their messages will reach the right people at the right time. Fortunately, TV networks and streaming platforms are taking steps to improve accuracy regarding viewer counts and ad delivery statistics. This increased transparency is likely to increase confidence among brand representatives.
Advertisers are also concerned about the number of viewers who skip ads or avoid ads completely by paying for premium SVOD (subscription video on demand) services, like YouTube Premium. Viewers watching live TV may use the commercial break as a chance to get up and stretch or grab a snack before the show resumes, while viewers using streaming platforms may simply hit fast-forward through each ad block or hit the mute button if the service doesn’t let them skip ads. To increase transparency, networks and publishers are working to make sure that television ads are only counted if viewers see them.
Types of TV Advertising
Linear TV Advertising
Linear viewing refers to the practice of watching a television show while it’s airing on a specific channel at a specific day and time. A viewer who sits down on Thursday at 9 p.m. to watch Grey’s Anatomy on ABC is engaging in linear TV viewing. Although advertisers still benefit from linear TV advertising, incorporating other advertising methods is essential for reaching audience members who watch their favorite television shows on streaming services or connected devices. Linear advertising is most effective for optimizing your ad schedule based on the composition of the audience.
Connected TV Advertising
Thanks to the rise of streaming services and the use of over-the-top devices, many television advertisers struggle to connect with audience members, leading to fragmented brand engagement. Additionally, it is challenging for marketers to track the performance of their campaigns across all channels.
Connected TV (CTV) advertising solves these problems by allowing advertisers to reach audience members using OTT devices. With this type of advertising, it’s possible to share your message during premium television shows, expanding your reach and increasing brand awareness. CTV advertising is such an important activity that several major networks — including Paramount and Disney — have committed to working with advertisers to ensure that ads are only counted when they’re delivered to screens that are on and have viewers in front of them.
Addressable TV Advertising
Addressable TV advertising allows brands to tailor their messages to specific households, increasing brand awareness among consumers in the most desirable audience segments. Software inside the user’s connected device makes it possible to deliver custom ads, making it easier for advertisers to control their costs without sacrificing the opportunity to expand their reach. To make addressable TV advertising even more effective, brands typically segment their target audiences by location, demographics or psychographics.
Programmatic TV Advertising
Programmatic TV advertising combines traditional (linear) advertising with precise automation tools, making it easier for brands to share their messages with the world. Traditional TV advertising is time-consuming, partly because brands have to wait for show or network ratings to come in before they can define their audiences.
With programmatic advertising, brands and advertising agencies use audience data to optimize their messaging. Instead of buying ads based on what show is airing and how well it’s doing in the ratings, the brand buys ads based on who is watching, making it more likely that each message will have its intended effect. Rather than negotiating with networks, brands purchase this type of ad via a programmatic platform, saving time and making it easier to be strategic about media buying.
Streaming TV Advertising
Streaming TV advertising makes it easier to reach “cord cutters” who’ve canceled their cable subscriptions in favor of signing up for Netflix, Hulu and other streaming platforms. This type of advertising gives brands additional flexibility when segmenting their audiences and determining which viewers to target with their ads. If you decide to advertise on streaming platforms, you’ll need to decide if you want to pay for ads on subscription video-on-demand services, ad-supported video-on-demand services, or both.
Subscription video-on-demand (SVOD) services are platforms that charge a fee to access a library of content. Once the user pays the fee, they can view the content with limited or no ads. Ad-supported video-on-demand (AVOD) services are free to use, but viewers understand that they’ll see ads during each show in exchange for the free content. Some platforms use both approaches, making it even easier for brands to reach their target audiences. Hulu, for example, has an ad-supported tier and a no-ad tier.
Many advertisers are now incorporating AVOD into their strategies, as budget-conscious consumers are changing their viewing habits to save money. Instead of paying for several SVOD services each month, these consumers are using AVOD platforms to access interesting content without paying a fee. Thus, AVOD advertising is expected to grow faster than SVOD advertising in the coming years.
TV Advertising Costs
Although TV advertising is highly effective, it’s also one of the most expensive forms of marketing. During the 2021-2022 television season, the cost of a 30-second commercial increased for 19 returning shows. When you advertise on television, you need to account for the costs of producing the commercial and the cost of presenting the commercial to your target audience. Production costs typically include videography, video editing, graphics, music and payments to actors or voice-over artists. You may also need to rent a shooting location or pay for costumes and props. The longer the ad, the more you can expect to pay for services that are charged by the hour.
The cost of airtime depends on the length of the ad, the time of day it airs and the size of the target audience. A local television commercial may cost as little as $5 to $10 per 1,000 views, while a national TV spot is likely to cost more than $100,000 for 30 seconds of airtime. If the ad airs during a special event, such as the Super Bowl, expect the cost of airtime to increase significantly. In 2022, NBC charged advertisers $6.5 million for each 30-second ad spot.
TV Advertising Metrics
Once you define your audience and choose an advertising platform, you need to track several metrics to calculate your return on investment. These TV advertising metrics can help you determine if your current approach is working or if you need to rethink your advertising strategy to increase your reach. Tracking metrics can also help you determine if ads are performing well with your target demographic.
Reach
Reach is one of the most basic TV advertising metrics, which measures the number of people who have the opportunity to see an ad during a specific time. Stated differently, reach measures program viewership then extrapolates that reach to all ads that aired during that program. While traditional measurement solutions use program reach as a proxy to measure a program’s ads viewership, innovative measurement solutions measure the actual ad performances, giving advertisers a more precise understanding of their TV ad performance. This allows advertisers to go beyond reach and utilize additional metrics to determine the effectiveness of their ads.
CPM
CPM is defined as the cost per 1,000 impressions. For the 2019-2020 television season, the average CPM for an ad shown on a broadcast network was $36.19, while the average CPM for ads displayed on cable networks was $19.45. To calculate your CPM, you must know the total cost of the ad and the total number of impressions delivered. You can also use CPM to determine your national ad spend for a complete advertising campaign.
Web Traffic Data
If you mentioned your brand’s website in a recent TV advertisement, one way to determine if the ad was effective is to use web analytics to determine how many users have visited your site since the ad aired, what pages they viewed and how much time they spent viewing your content. This is commonly known as spike analysis. If you notice a big bump in traffic after the ad starts airing, you’ll know you’re on the right track.
Web Conversions
Web conversions from TV advertising are a powerful and effective way to measure the success of a television campaign. With modern measurement providers, such as iSpot.tv’s TV Attribution product, advertisers are able to directly tie TV ad impressions to web visits, giving them a more accurate understanding of the business impact of their television advertising. This is a much better method than the traditional spike analysis, which can be misleading and not give an accurate representation of the success of a television campaign. With web conversions, advertisers can see exactly how many visits their TV ad generated, and can better understand the performance of their campaigns. Additionally, they can also gain insights into how their audiences are reacting to their ads, and can adjust their campaigns accordingly.
Spend
Spend speaks to the total cost of the impressions you actually made, and it can be measured and characterized in multiple ways. For example, on iSpot’s Top Spenders page, the metric used is estimated national TV ad spend. These figures are obtained by multiplying the total impressions by the cost per 1,000 viewers (CPM) divided by 1000 (e.g. the cost per single viewer), allowing for direct comparisons across all media units and advertisers.
Airings
A fairly self-explanatory metric, airings for TV ad refers to how many times it was actually broadcast. Airings tend to be better for providing context than for drawing conclusions directly, as they can be compared to other metrics (i.e. reach or impressions) to get a sense for how many times an ad needed to air in order to make the impact that it made.
Local versus National Impressions
This metric refers to a geographic comparison of viewer locations. Whether the impressions made by your ad are likely to be local or national can be of huge importance, depending on your target audience. National advertisements are also costlier than local ones, so there’s a question of cost-effectiveness here, too.
In-home versus Out-of-Home
A comparison of in-home versus out-of-home viewership tells you the environment in which people are more frequently viewing your ad — either in their own homes, or out at bars or restaurants, for example. For ads broadcast on marquee sports matchups, there’s a high chance that many of your viewers are out-of-home at the time they are watching.
TV Advertising Effectiveness
As the cost of TV advertising increases, many brand representatives wonder if this type of advertising is still effective. The answer is a resounding yes. TV advertising produces a greater return on investment than many other marketing methods, due in part to the amount of time people spend watching their favorite shows. According to the University of Maryland Robert H. Smith School of Business, adults spend 23 times as many minutes watching videos on their TVs as they do on their mobile devices. This gives brands plenty of opportunities to share their messages with audience members.
Comparative effectiveness between different ad lengths is a salient question here, too — in particular, between 15- and 30-second ads. An iSpot study found that, broadly speaking, 15-second commercials are more effective for getting and holding audience attention than longer formats are. This rule of thumb can be dependent on the type of ad, though, so it’s important to make sure your strategy best fits your content.
TV Advertising Trends
The advertising industry is always changing, so it’s important for brand representatives, network executives and advertising professionals to keep up with current trends. These four trends are currently shaping the industry as we know it.
Pairing Mobile Ads With Television Ads
Approximately 97% of Americans own a cell phone of some kind, according to the Pew Research Foundation. One of the main concerns about the ubiquity of these devices is that TV viewers will be too busy checking their mobile devices to pay attention to the advertisements displayed on their TVs. That’s why some brands are now pairing mobile ads with television ads. Consumers are especially receptive to mobile ads while they’re watching TV, so displaying one ad on television and another ad on a mobile device can help advertisers reach additional viewers.
Automating Advertising Decisions
Programmatic advertising makes it easier to optimize messages for a specific audience, making it a popular option for advertisers. In the next few years, brands are likely to take advantage of the opportunity to automate some of their advertising-related tasks, reducing costs without giving up opportunities to connect with as many potential customers as possible.
Ramping Up Addressable Advertising Efforts
Due to the increased use of OTT devices, advertisers are also investing more in addressable advertising efforts. OTT used to refer to set-top cable boxes, but it now includes streaming devices and smart TV sets, giving brands more opportunities to launch OTT campaigns. Because addressable advertising allows brands to share content with specific audience segments, it’s going to be easier to deliver ad content that engages viewers and persuades them to take the desired action, such as visiting a brand’s website or going to a local retail store.
Increasing Advertising Interaction
With Hulu and other streaming platforms rolling out interactive advertisements, interaction is going to be more popular in the coming months. One of the most common forms of interaction is the opportunity to choose one ad out of two or three options. This allows viewers to determine which television ad they see, increasing engagement.
Roku has also introduced direct-to-product, direct-to-store and polling ads on its streaming devices. Direct-to-product ads can be used to display discount offers or provide more information about the featured product. Direct-to-store ads are programmed to show an ad overlay that displays the physical address of the retail store closest to the consumer’s location. Polling ads ask viewers to use their remotes to answer questions. Brands can use polling ads to get feedback about existing products or determine if there’s a demand for new products among members of the viewing audience.
The only sure thing about the advertising industry is that it’s always changing. Fortunately, media buyers, brand managers, CMOs and other industry professionals have plenty of tools available to help them make better decisions and optimize their marketing efforts. iSpot.tv makes it easy to measure ad performance across all platforms, giving brands better insight into how well they’re doing at connecting with consumers and expanding their reach. Start your research now by using the iSpot.tv website to view recent TV ads and quickly identify new trends in television advertising.
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