The big debate: is TV advertising still worth the cost?

There has been a marked decline in broadcast television viewership in the UK, forcing marketing teams to reassess the value of TV ad campaigns. Do they justify the considerable outlay any more? Two experts have their say

Advertising on broadcast television is expensive. A 30-second nationwide slot during peak hours on ITV, for instance, can cost almost £30,000. Peak-time ads on Channel 4 are priced between £9,000 and £21,000. And, although advertising outside peak times or on channels with smaller viewerships is far more affordable – a 30-second ‘breakfast’ slot on C4 can cost as little as £500 – brands seeking a wide audience can easily spend several hundred thousand pounds on a month-long TV ad campaign.

Marketers have traditionally justified such heavy expenditure with promises of reaching a large and diverse pool of consumers. But, given the rise of streaming services and the decline of traditional TV viewership in the UK, marketing chiefs are starting to scrutinise the retu on their investments in broadcast TV ad campaigns.

Experts agree that the landscape is changing and that marketing teams must take advantage of the new opportunities offered by video on demand (VOD). But is advertising on traditional broadcast TV still worthwhile? Some believe that marketers would be better off focusing on VOD and streaming, while others think that broadcast TV, when used creatively, can remain a valuable part of an omnichannel marketing strategy.

Broadcast TV ads are still valuable, but marketers must be creative about their use

Kim Costello 
Chief marketing officer, Pendragon 

There is absolutely a place for advertising on TV and it should form part of many brands’ advertising and marketing mix. But that’s the key: television forms part of a mix; it is simply one channel, not the sole channel.

Before you decide if TV is essential in your marketing mix, you must have a clear baseline understanding as to where your sales are or would have been without media investment.  You then need to clearly understand the synergies as they are today and how they will change with the addition of targeted TV. Given that television advertising is one of the more expensive above-the-line channels, it should be used in a calculated way. The correct reporting must be in place to understand the ROMI and support the goals of the entire business. As marketers, we need to not only be able to justify every pound spent, but to also show the impact of the ROMI on the wider business.

Once you’ve hit the customer with the TV campaign, you can serve them follow-up ads on other platforms

There remains a very clear correlation between TV advertising and uplift – there’s no question about the direct impact targeted television advertising has – and this is especially true during live events, such as football matches, live news broadcasts and reality TV show finals. The key is to target broadcasts that people simply don’t want to watch on replay. It’s well documented and talked about within the industry that brands who have the healthy budgets to advertise during the Super Bowl or the Euros finals, as examples, especially benefit from these significant uplifts.

Naturally, advertising during these events is very expensive and not possible for every business, so for brands that are priced out of advertising during these high-ticket live events, VOD is an excellent option. Ideally, a mix of VOD and live streaming allows you to target audiences more strategically and affordably, which we at Pendragon have seen excellent results from.

VOD and live streaming services allow you to be particularly refined with audience segments and location, while research has found that many customers tend to dual screen while they’re watching TV. This is where an omni-channel advertising campaign can really work for a brand. Once you’ve hit the customer with the TV campaign, you can then serve them follow-up ads on the other platforms they’re engaging with on their second screen – whether it’s a smartphone, tablet or laptop. With this strategy, customers are far more likely to follow the course of action you’re trying to get them to take versus advertising on TV alone.

A rebrand and launch that I worked on recently was that of CarStore, which was supported by a television campaign. That campaign delivered a 57% month-on-month uplift in online enquiries and during the first month we exceeded our target share of voice in every above-the-line channel we activated.

The thing to note is that omni-channel campaigns are less effective on their own than when coupled with targeted television. As soon as you switch television off, campaigns simply don’t perform as well. Today, TV plays an essential role in the marketing channel mix, it is just not the ‘TV’ of old.

TV viewing preferences are evolving and advertisers must adapt their strategies

Sam Wilson 
Managing director of CTV, EMEA, Magnite 

When Ofcom revealed last year that UK broadcast TV’s weekly audience reach had declined by a record 4% year-on-year, alarm bells were ringing for some advertisers. This doesn’t mean people aren’t watching TV altogether, but they are shifting their viewing preferences outside of traditional broadcast. For this reason, advertising on traditional broadcast TV is no longer worth the high costs. Advertisers need to evolve beyond traditional linear and broadcast TV and find audiences where they’re watching.

However, TV more broadly is not a dead market for advertisers. Research suggests that, instead of broadcast TV, a majority of UK audiences are using streaming TV. Economic headwinds have pushed consumers towards FASTs (free ad-supported TV) as they embrace the value exchange of watching ads to access high-quality TV content for free. 

More audiences are also tuning in via smart TVs and this gives advertisers the opportunity to explore new ad formats like home screen tiles.

Advertisers need to evolve beyond traditional linear and broadcast TV and find audiences where they’re watching

The digital nature of streaming TV also makes it an incredibly powerful tool to deliver more relevant ads and greater advertising efficiency. Audiences are actively engaged with streaming, choosing the content they want to watch. Understanding viewer behaviour helps programmers and advertisers and create stronger connections with viewers through contextualised and more personalised experiences. 

Streaming TV combined with programmatic execution of advertising campaigns also introduces the benefit of providing greater control and flexibility for advertisers. Streaming buyers can have a campaign up and running within minutes or adjust budgets in-flight to take advantage of spontaneous spikes in viewership or align with specific content. 

What we mean by ‘advertising on TV’ has changed. Traditional linear formats can’t match the convenience that viewers desire and can’t provide advertisers with as many options or promises of return. TV advertising isn’t endangered, and it certainly isn’t going extinct – but it is evolving. By offering more choice with a data-led approach to streaming, advertisers and buyers have much to gain from TV as it undergoes its latest evolution.