July 1 will mark the 75th anniversary of the first TV advertisement to ever air in the U.S., for Bulova, in 1941. The 10-second ad cost nine dollars and reached an estimated 3,000 people. Even 10 years after those first TV spots ran, radio was still the dominant advertising medium, representing more than$210 million in spending compared with just $12.3 million for TV in 1951.
Since then, television advertising has grown to a $70 billion industry, and the average thirty-second commercial costs more than $112,000 and the upfronts have become a $20 billion affair. TV advertising is the historical foundation on which hundred-year-old brands have built their empires and media companies have made their fortunes. For more than 50 years, both advertisers and broadcasters alike enjoyed the security of knowing that TV was the unquestioned champion of media, the most effective and reliable way to deliver a message to millions.
Today, TV is still champion, but it faces plenty of questions. Over the last 20 years, the introduction of broadband internet, cell phones and social media have created tremors that are shaking the walls of the house that TV built. Internet users have grown from 1% to 40% of the global population. In the U.S., 73% of the population owns a smartphone. There have been more devices built and methods for media consumption introduced in the past three years than in the 30 preceding ones.
From a marketer’s perspective, these shifts represent formidable obstacles. The infrastructure and techniques used for buying TV advertising have not kept up with changes in the way people consume media. Fifteen years ago, a marketer could call three broadcasters and reach 75% of the population. Today, they would have to call more than 50 networks simply to reach 45% of the population. Fifteen years ago, a marketer could confidently assume that 40% of their advertisements that aired would be seen by the 20% of the population that watched the most TV. Today, the heaviest TV viewers consume more than 80% of advertisements aired. The more money marketers try and throw at the problem, the more they end up bombarding that same group of heavy users and missing the other 80% of potential customers.
Amid all of this talk of disruption and change, it’s easy to forget that that from a viewer’s perspective, this is the golden age—more content is available on more screens than ever. To viewers, video is video regardless of whether someone is watching on a TV or a tablet. And viewers are watching everywhere.
Just as new technology introduced these challenges, so too can new technology solve them. For the first time ever, marketers can use software to combine the benefits of digital advertising—individualized messaging, automated delivery, real-time feedback—with the scale and effectiveness of TV. Instead of relying on archaic measures like age and gender as a proxy for what a person may like, marketers can use actual information like what a person bought or where a person has travelled to inform when, where and what ad that person eventually sees. Instead of picking up the phone and calling 50 different TV networks, marketers can log onto their laptops, click a few buttons and achieve the same result in a matter of minutes, not months or weeks.
It works. Because software not only streamlines the incredibly manual process of planning and buying advertising, but also amplifies its effectiveness through the application of data, next year, for the first time ever, digital ad spend is set to surpass television. The buying of TV ads through software is expected to grow from $2.5 billion to $10 billion in three years. In only five years, advertising bought through software has passed the 10% mark of the overall $200 billion spent on advertising in America.
And as technology steamrolls forward, the perspective will shift from one of obstacle to one of opportunity. Virtual reality, the Internet of Things, the on-demand economy—these aren’t just new hurdles to overcome. They’re new sources of that same data that advertisers covet. They’re new places to interact and engage, vehicles for illumination and education. Software is the central nervous system that will connect all these disparate points into a cohesive sensory experience that the viewer can understand—all without realizing what’s going on.
Seventy-five years from now, TV won’t be called TV. It will just be “video.” New technology will be just as convenient for consumers as it is challenging for marketers and media companies. But as long as software remains the connective tissue between the three, that same technology will continue to propel advertising forward for many more happy birthdays.
Brett Wilson is CEO & co-founder at TubeMogul
(Photo via FamZoo Staff's Flickr. Image taken on May 25, 2016 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)
