The Shifting Landscape of TV Advertising—Content (and the Consumer) Are King

With an estimated 40% of all media expenditures going towards television advertising (tallying some $56.4 billion according to various reports), there’s no denying TV is still an important part of the industry. Every year during the upfronts, brands are still lining up to sink hundreds of millions on TV commercials while lining the pockets of media buying agencies and those whom produce the expensive 30-second spots. Those of you with arguably more engaging and measureable ways to reach consumers are still on the outside looking in to this lucrative part of our industry.

This is all about to change in a big way.

While consumers will always love watching video content on large panel high-definition displays, this method of content distribution is in a state of flux. In short, TV content will soon be solely distributed via streaming digital channels and the way we currently access content from providers like Hulu and iTunes will soon be how we receive all of our television content. Supporting data is hard to argue with:

• Broadband penetration in U.S. homes is growing rapidly as it continues to become more affordable
• Television manufacturers are building Internet connectivity into nearly every flat panel TV being sold
• High-definition video data compression is enabling live Internet video streaming that rivals digital cable
• Advertisers are demanding more interaction, targeting, and measurability from their spending; something linear TV simply cannot accomplish
• Content developers are striking deals left and right to stream their traditional television content directly to the consumer

What could this mean in the near future?

• Television networks will struggle to exist unless they reinvent themselves soon (just like Blockbuster currently struggles to survive). Right now, TV networks largely play the role of distributor and curator. Both roles can be done much more cheaply and effectively by anyone with Internet access. I would much rather have content curated by a person who shares my interests than a TV network that doesn’t know who I am. I have countless friends whom have already cancelled their cable service and rely exclusively on the digital distribution model. Yes, they are downtown hipsters with 10,000 Twitter followers, but they are a genetic marker in the DNA of our industry.

• In the same way there was a race to bring computers to the masses with the advent of the PC and graphical user interface in the 1980s, there is now a race to create a seamless television operating system for the living room. This will easily tap you into both archived and live content on demand. The usual suspects here are obviously Apple, Microsoft, Google and TiVo but don’t ignore Hulu and Netflix in this race. The actual TV and PC manufacturers will also play a huge role in building the OS right into their devices (think Panasonic, LG, Samsung, Vizio, Dell and HP).

• If you have great content, there’s nothing to worry about. You will have more opportunities than ever to reach people without relying on networks to pick up your content. You will also have greater control of the monetization of your content, allowing advertisers to know exactly whom they are reaching and measure accordingly.

Where is this $56.4 billion in linear television advertising dollars going to go? Nowhere right away, but we are closer to a massive shift than you think. With more advertising dollars going into the pockets of content creators further down the proverbial “long tail”, the next generation “television networks” will really see the major benefit of this windfall. Here are the best bets:

• Facebook: With the eyeballs and the ability to make TV viewing social, Facebook has a great shot at being the TV network of the future. If they can create the OS, they have the ability to be the most valuable company of our generation.

• Apple: While AppleTV was executed poorly and a bit ahead of its time, you can never count them out for a strong second act in this arena.

• Google: YouTube aside, they have made it clear that with the launch of Google TV they will make a concerted play for the flat panel in everyone’s living room.

• Content portals: MSN & Yahoo come to mind with their massive reach and role as content curators. They are dabbling in online video right now, but if they can build an OS with device manufacturers they can hit it big. Yahoo currently has a rather uninspired app-driven OS built into the latest line of Samsung LED displays.

• Video Game Console Manufacturers: Xbox and PS3 have made no secret that they intend to leverage their real estate in the entertainment center to stream real time digital content in partnership with players like ESPN and Netflix. As gaming continues to become more mainstream these players will be at the heart of this convergence.

• Word Of Mouth Marketers: Any agency that has access to influentials may be able to leverage their audiences to create and stream “micro stations” of content to micro-communities over the television. How interesting would a Perez Hilton- or Jon Stewart-curated TV station be? You are already seeing this in satellite radio with Bob Dylan and Jamie Foxx.

• You: That’s right. A sizeable chunk of this payload might end up in the pockets of consumers who can curate content to distribute to their own networks of friends. There are many folks whom I would choose to handpick my content over a cable or TV network … so be sure to tune into @MattyB123 TV channel sometime soon.

Those of us not working for the major conglomerate ad agencies that make and sell fancy TV spots or the mammoth TV networks that sell them will finally have our shot at a larger stage. What are you doing to get ready for your shot at $56.4 Billion?

Matt Britton is CEO of Mr. Youth. Microsoft, HP, Dell, Apple, LG, Samsung, Sony, and Google are all either past or current clients of Mr Youth LLC.