The investment by national advertisers in local TV in the U.S. has always been called national spot TV. For the first few years of television, the dollars in national spot TV had been lower than the dollars in local spot TV (local TV spend by local advertisers). However, by 1953, national spot TV dollars had pulled ahead of local spot TV dollars and stayed ahead until 1988 when local spot TV pulled ahead (data courtesy of Bob Coen). Since then, local spot has continued to grow, whereas once digital came in, national spot TV began to contract.
However, in this column during the past few months I have repeatedly noted that national spot TV share of spend has been on the rise.
In my May 12 column, prompted by my friend Tim Spengler, I reported on the growth of adspend by insurance companies and noted a +26.2% rise in their investment in national spot TV in Q1 2021 year over year (YOY) according to the authoritative Standard Media Index (SMI).
In my June 3 post I noted that CPG advertisers upped their national spot TV investments +42.8% in Q1 2021 YOY. (Source: SMI)
And in my May 20 article I observed the +292.3% lift in online retailer investments in national spot TV. (Source: SMI)
Speaking with my RMT partner and CEO Bill McKenna as well as friends in the business, I discovered, as I'd suspected, that a goodly part of this expansion has been with nonlinear inventory, such as ads delivered via OTT streaming apps supported by CTV and AVOD platforms.
McKenna summarizes the situation thusly: "For national advertisers, including large retailers, OTT is seen as an opportunity to efficiently improve audience targeting, reducing wasted linear frequency and increasing conversions nationally and in local markets. Augmenting national linear campaigns with OTT provides brands with new regional and local targeting capabilities.
"While OTT viewing has been progressively baked into the Nielsen national measurements for many years, local Nielsen DMA panel-based measurement services have excluded Broadband Only Households (i.e., cord cutters and other homes with no cable/satellite or local antenna reception on any HH TV set) from the DMA TV universe definition. According to published reports, in October 2021 Nielsen is ending this practice when BBO homes with 5+ minutes of local TV channel OTT viewing are to be added to local DMA Nielsen panels. The immediate effect of this methodology change is an expansion of the DMA TV universe definition, increasing the HUT/PUT base for ratings calculations and adding OTT impressions. Concurrent with the adoption of BBO homes in local DMAs, the Nielsen local currency metric is expected to change from ratings to impressions.
"Multiple published studies confirm that today, local market OTT viewing of ad supported programming occurs on TV network programs and selected affiliate news apps supported by custom media apps available on multiple platforms including AVODs and eMVPDs, including CTV. This insight portends an October 2021 reduction in local market ad inventories as expressed in target audience ratings and, to a lesser extent, target impressions when Nielsen adds BBO HHs to its panel-based local DMA measurement services.
"Local broadcasters, especially independents, need to understand the impact of these methodology changes, adjust their pricing policies to meet the reduced local ad inventory, convert guarantees to impressions (CPM avails) and increase their OTT program distribution within each station's DMA."
As ATSC 3.0 continues its rollout, the value of spot inventory will potentially double, mainly as a result of making it all addressable commercials, capable of taking back response as easily as with digital, and made accountable by the equivalent of "set top box type" data which can be matched to sales data, and brand effects measured by the interactivity functions which enable surveys.
It will be important to ensure that national spot is buyable programmatically, and the sooner that happens, the faster the comeback the national spot TV medium will make. Reset Digital and RMT are already making linear TV buys programmatic.
The biggest opportunity is for the U.S. national spot TV industry to band together to finance a major educational campaign aimed at marketers, agencies and other media companies to re-teach them the importance of geographic targeting.
The key point is that any brand's ROAS varies by geographic market.(ROAS = Return On Ad Spend)
The reason that this is the case is that all brands (and all innovations) roll out following an S-curve, and different geographic markets are at different points in that S curve at different times. It makes no sense to throw ad dollars into topped-out markets. The best place to put ad dollars are in markets in which your brand is in its fast-growth phase. RMT offers the predictive equation I developed with the ANA many years ago, now called HY-OPS for hyperlocal opportunities. The model maps the geographies predicted to have the highest ROAS.
If you are a TV station owner or ad sales executive, you need to find out which brands are in their fast growth stage in your market. The education campaign recommended above needs to budget to license as much purchase data in as many product categories as possible, to be used not only in trade and consumer advertising primarily aimed at national advertisers and their agencies, but also by the ad sales forces of all stations participating in the education campaign.
You will also want to license adtech/martech which makes it easy to help marketers and their agencies decide how to optimally allocate their ad spend by national and local media, and to do that planning programmatically whereby activation may swiftly follow, the whole process programmatic.
One such platform already available is OptiBrain. All the major digital media offer the ad buyer a portal through which to optimize and make the buy, then track it and improve it in flight; so why not TV? TV networks that own TV stations are in a very good position to lead the charge in optimizing national/local buys for the buy side as an added value service. And so are TV station groups and independent TV stations.
P.S. In Erwin Ephron's book Media Planning, his first chapter, "The Man Who Invented ADIs" (that was me), contains the line "The ADI helped create the $11 billion national spot television medium." The whole point of the ADI (and Nielsen's subsequent DMA version) was to be able to analyze and optimize the sales effects of any TV campaign. However, it has rarely been used for that, so perhaps now is the time.
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