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Guest Blog: Local TV Isn’t Dead, But Needs Change in Status Quo

We’ve all heard the doomsday predictions about local television, that it’s dying a long, slow death at the hands of cord-cutters.

It’s my opinion that this has been overblown, but here’s what local TV is up against: The traditional broadcast model was not built with the habits of the rising generation of 92 million millennials in mind. In five to 10 years, millennials will have the majority of the purchasing power, making them the core demographic that big-spending consumer goods and retail advertisers want to reach. The TV industry is struggling to figure out how best to serve this “digital-first” market without endangering its core linear TV businesses.

So what can local TV do? Enter the Smart TV and the digital capabilities that come with an Internet-connected television. According to Generator Research, the number of households with Smart TVs in the U.S. is projected to reach 100 million in 2020 approaching complete market saturation and creating a huge asset for broadcast TV. Smart TVs represent a powerful combination of the scale and impact of TV and the addressable capabilities of digital. We refer to this merging of the best of digital with the best of TV as “Smart Broadcast,” and we believe that the Smart Broadcast capabilities facilitated by Smart TVs will enable local TV to not only survive, but thrive in the digital era. Specifically, we see four key opportunities:

Measurement: TV measurement, to this point, has been rooted upon small sample sizes, delayed reports, and ambiguous rating points. This antiquated model has left broadcasters and advertisers without a clear understanding of who is watching, when they are watching, and why they are watching. But timely reporting is vital in a world where, at the rate content is produced and consumed, programming that aired two hours ago might as well have aired two months ago. Analysis of measurement data based on small sample sizes and often geographically distant panels can skew the data and the perception of those on both the content and advertising side.

However, Internet-connected Smart TVs enable real-time viewing data with down-to-the-second accuracy like that which is available on digital platforms. We believe that this detailed and accurate knowledge of TV viewing behavior is one of the key elements that will enable local TV to thrive.

Content: With the scale, timeliness, and accuracy of data collected from Smart TVs, there’s a tremendous opportunity to understand what people really think about the content they’re exposed to – what they like, love and hate. For example, it’s possible for news directors to better understand what captivates their audience with down-to-the-second accuracy and to provide hyper-localized and personalized weather, traffic, and news stories.

A prime example of the difference data can make on content is Netflix’s House of Cards. Viewing data informed casting decisions and director hires, as well as the storytelling arc of the wildly successful original series.

Distribution: Another significant challenge facing local broadcasters are millennials’ evolving expectations of how, when, and where to consume content. They’re not going to wait around for the evening news to find out what’s happening in their community. They have Facebook, Twitter and now Snapchat to keep them apprised of relevant breaking news, and the traditional broadcast model struggles to serve their needs.

One thing we know about millennials is that they consume a lot of video content, more than any other age group, and the 92 million millennials who are watching digital video every month represent a huge opportunity for local broadcasters if they make their news available for web streaming via over-the-top devices. Local broadcasters must tackle the challenge of OTT distribution of live and VOD content to ensure relevance with the “I want it now” mentality of the rising generation.

Monetization: The traditional broadcast model is based upon selling broad audiences, but this scale also leads to inefficiency and wastage. Scale isn’t enough for modern advertisers; they want customers, not audiences.

The appeal of digital is that advertisers can avoid waste and increase effectiveness by delivering ads to the right audience at the right time. This is a huge threat for TV, but also a huge opportunity. You can sell TV ad space for higher rates if you’re able to target consumers who have a real affinity for the product being advertised. Air time for a new lipstick brand is clearly more valuable if you can show the ad to women between 18 and 29 who love makeup, while air time for a new Chevy truck is worth more if you’re able to target spots to people who are in the market for a pickup truck and have recently visited the Chevy website. This is the promise of addressable TV: one-to-one targeting at scale that advertisers pay a premium for. This is addressability is especially important for local broadcasters when you consider Forrester’s research that revealed 92 percent of retail purchases still take place in-store and the opportunity broadcasters have to utilize location-based ad targeting.

Ultimately, the adoption of digital capabilities on TV not only benefits the broadcaster and advertiser, but also the viewer. Smart Broadcast enables television to compete for viewers by providing better, more relevant content. Combine that benefit for consumers with the ability to hyper-target for advertisers at enormous scale and the narrative around TV changes significantly; it can truly thrive.

Marcus Liassides is president and CEO of Sorenson Media.