Industry publications love predicting the decline of the living room screen. Sure network television channels suffer from declining viewership, but the living room flat panel has never been more popular with audiences and, especially, advertisers. Even despite the proliferation of a myriad of media content playing devices.
Declines for Networks
Since the arrival of television sixty years ago, the networks have controlled the living room set and enjoyed a monopoly over the advertising shown on it. However, things are changing fast.
When an advertiser buys airtime on a television network, the sole way to measure the effectiveness of the campaign is to rely on Nielsen ratings.
Nielsen ratings are based on a representative sample that is composed of just 25,000 homes (5,000 for national programming and 20,000 for local stations). Collectively they reflect the viewing habits of over 106 million U.S. households in 210 markets. Because TV ratings are based on samples, it’s possible for shows to get a 0.0 rating, despite having an audience (Example: CNBC’s talk show McEnroe). No matter how the sample is selected and how the habits are representative of the population, sample based ratings always are approximations.
Combine these statistical imperfections with the availability of more choices in the living room, and no wonder network is struggling.
Boon for Content Providers
Meanwhile bleeding edge content companies and ad agencies are utilizing the same techniques that have made web advertising a force with which to be reckoned to take over advertising on living room screens.
These content providers have leveraged the smart screen to become an advertising platform that can better target demos and deliver a more reliable set of analytics when it comes to measuring success.
For instance, there are over 27 million Xbox Live subscribers who provided a wide array of information when signing up for the service (name, age, location, etc.). By using their Xbox, and services attached to it, they are constantly providing more data regarding their interests, spending habits, etc.
The way ad placement is sold on screen is not by length of airtime, but per impression, the same way ads are sold online. In the same way that BBC Kids Television can accurately target moms aged 25-54 on Facebook, Nike can target men 25-35 interested in soccer on Xbox Live.
And they have done it! In June 2012, when the NHL Stanley Cup and the UEFA Euro 2012 were overlapping, Nike maximized the efficiency of its ad budget by directly targeting potential customers using Xbox Live. Soccer fans only saw ads relevant to them, and hockey fans weren’t bothered by soccer ads.
In March 2012, The LA Times reported that the amount of time Xbox Live subscribers spent streaming media surpassed the amount of time playing games. Furthermore, Xbox Live media streaming usage was growing 30% yearly, with users spending 84 hours per month connected to the system. This has grown very quickly and now represents more than half the 150 monthly hours the average American family spends watching television networks (according to Nielsen).
Penny Arcade reported that, according to Microsoft, a single ad placement on its console dashboard receives an average 9 million impressions on a weekday and over 15 million on a weekend. Furthermore, their advertising business has grown 142% yearly since 2010.
Lessons for the Networks
Some of the most forward thinking television companies are beginning to see that in order to compete they have to change their ways of targeting and selling advertising.
Tivo’s recent purchase of TRA, a research company that has found success in recent years with a system that matches up television viewing with consumer buying habits, is a clear indication of where things are moving: increasing ad effectiveness.
The influence of set-top boxes is helping to shape the new business model. Marketing directly to the audience and the harnessing the way in which consumers interact with their televisions is a top priority for agencies and content producers.
Contemplate the opportunity for a moment. Netflix claims that its subscribers viewed over a billion hours of content in the month of June. HBO GO, the streaming video-on-demand app, has achieved success so overwhelming that the premium network is considering offering a streaming only subscription.
Bottom line? The living room screen is new again. It presents a whole new opportunity to connect directly with individuals within the context of the content they choose at the moment they want it with an engagement or offer that’s unique to them. That’s revolutionary.
The living room screen is not only alive and well… it’s where the action is!