TV Advertising’s Next Act

I spend a lot of time thinking about the state of marketing and advertising. What’s changing (less than you probably think), what’s staying the same (more than you probably think), and where the past and the future are converging in interesting ways.

One specific area that’s fascinated me, both as a consumer and a marketer, is the world of television advertising. Which I believe is morphing and evolving in ways that put this space on the precipice of a new resurgence. Here are three reasons why.

TV inventory is - once again - becoming abundant.

For the last several years, everyone in the marketing industry has been lamenting (or celebrating, depending on your perspective) the absolute collapse of the linear TV space.

The broad generalization that "no one watches TV anymore" led quickly to the rather obvious "then, therefore" conclusion that TV advertising, as we've all known it, would finally be laid to rest.

The internet had won. As Facebook and Google had successfully hoovered up all of the ad dollars from traditional media, now so too, Netflix and the other big streaming platforms had slowly bled the big networks dry - leaving them with only live sports, local news, and 300 or so spin-offs of CSI and the Bachelor.

However, there was a rather obvious next step that seemingly few people seemed to see coming.

Which is really the most basic power law of modern media; wherever there are eyeballs, there will eventually be advertising.

I mean, did we really think that these streaming services would be satisfied with subscription revenue alone? Of course not!

This is why you're now seeing every major streaming platform (save for Netflix so far) double-dipping and dropping ads into their programming, whether it's a paid subscription service or not.

For Hulu, this is nothing new (Look at their ad revenue, by the way. Holy shit.).

That's a lot of ad cash

But, of course, it's not just Hulu. Recently, this "ads + subscription" approach has shown up on the most OG premium tv space there is, HBO.

Cool cool cool

That's right; good old-fashioned ads are creeping into HBO, and you're STILL going to be paying a subscription fee. What are you going to do? Cancel? You won't, and they know it.

Amazon, maybe less shockingly, has also begun upping the ad volume in their Prime Video service. I recently watched a movie on Amazon Prime Video, only to have it abruptly and clumsily interrupted by an ad about fifteen minutes in.

I was taken aback for about 6 seconds until I thought, "Well, of course." and just dealt with it. Again, where was I going to go?

And then there's Disney Plus, whose CEO very confidently said (regarding ads), "We've got no such plans now to do that. We're happy with the models that we've got right now", and then a few months later, seemed to soften that stance saying "all this is malleable. Again, it's soft clay right now. And we are very pleased with what we are seeing with addressable advertising on Hulu."

Let me just spoil this one for you. Disney+ will have ads.

In the end, while this may be a real bummer for those of us couch potatoes who have gotten used to relatively ad-free TV viewing experiences, it does create something the advertising industry has been lacking for some time now - which is fresh inventory, and lots of it.

Collectively, these platforms can (and will) deliver metric tons of eyeballs for advertisers in the coming years. So if you're in the TV ad business (or want to be), it would seem that ad inventory may only be getting more abundant and quickly.

Self-serve, addressable, targetable TV advertising is a reality.

Beyond the sheer increase in available inventory, it's the type of inventory springing forth from these platforms that present maybe the most exciting opportunity for advertisers.

Because what the Hulus and Disney Plusses - and even the Netflixes should they want to get in the game - all have, is the data and plumbing to finally deliver addressable, targetable tv advertising at a truly massive scale.

This sort of thing has been promised for years, and has existed in small pockets here and there, but now it's arrived and is ready to scale. Today, any marketer with a credit card and a 30-second spot can be up and running on living room tv sets, targeting a pretty precise audience and managing their campaign just like they would with a Facebook or Google ad in under ten minutes.

A peek at Hulu's self-service ad console.

The significance of this bit can't be overstated. I genuinely think that this seemingly small thing (self-serve, targeted TV ads at scale) will be looked at a few years from now, as one of those significant tectonic shifts in marketing that only comes along every so often.

Because these self-serve platforms just absolutely obliterate a massive barrier to entry that most brands outside of the Fortune 100 have had to overcome...forever?

Which is that buying TV has always been massively confusing and complicated for any marketer who isn't inside a giant brand or media agency.

For as long as I can remember, anything beyond hyper-local TV advertising, even for pretty experienced marketers, was a big scary black box. It involved fancy media agencies, upfronts, massive spend commitments, and all sorts of other red tape, expense, and risk that just felt daunting - even if some of this built-in complexity was actually good and necessary.

And that was just the first part! Once you navigated the media labyrinth, there was the cost and difficulty of production—more on that in a moment.

But now, click click click, and you're on TV for real.

Put simply; these platforms are just making it crazy easy for more advertisers to get started with TV and to buy more ads more efficiently. And that's a big deal.

So in the coming months and years, I'd expect to see an absolute flood of cash-rich DTC startups, many of whom have begun to see sharply diminishing returns on their Facebook ad spend, start plowing their marketing dollars into OTT TV advertising.

It's already begun of course, but it's only going to get bigger as more small and mid-sized brands realize that they can get the best of both worlds. The attention and brand-building juice that comes from running proper TV campaigns, along with the relative targeting and control that they're used to with their digital campaigns.

Production continues to get cheaper and easier.

Now assuming you've got your media plan all sorted, and to the above, are ready to slap down a credit card to buy some ads, there's the little issue of...ya know, having an ad to run.

Traditionally, this would mean engaging a proper creative agency, which would do what proper creative agencies do. They'd make you a proper ad, with all of the bells, whistles, production pomp, and circumstance that go along with making such a thing.

There'd be fancy hotels, craft services, many producers and creative directors, and other people whose roles or titles weren't all that clear. There would be location scouting, concept testing, animatics, preproduction meetings, focus groups, loads of equipment, lots of standing around, and many takes and re-shoots. And at the end of it all, you might spend anywhere between $50,000 and $1,000,000 or more to make an ad, depending on the complexity of what you've chosen to do.

But, like with so many creative or technological things these days, it all keeps getting cheaper and faster and evolving in ways that seemed wholly unimaginable just a few years ago.

For starters, the latest iPhones are comically good at doing things only the most expensive professional camera equipment could achieve just a short time ago. It's getting to be a cliche, but it's true - most of the world's population now has a device in their pocket capable of shooting cinema-quality footage with the tap-tap-tap of a few buttons.

Set up a DIY lighting kit, invest in some basic sound equipment, maybe some add-ons for the phone, and if you're doing a product-centric ad spot, you could probably cut a rough version of a minimum-viable-tv-ready commercial for very very little in the way of actual production cost.

Not to mention the dearth of cheap (and sometimes free) additional imagery, b-roll footage, and software that's now widely available and easy to use for almost any schmuck off the street - not just professional creatives.

And lastly, these platforms understand that creation is an obvious barrier to scaling up the advertiser pool. So thusly, more and more of them will start adding in creative services - software or partner driven - as a value ad thrown in with your media buy. Makes sense.

Now, are there scenarios in which big, fancy, "traditional" production approaches still make sense? Of course. Nothing in marketing is ever one-size-fits-all.

And this is also to say nothing of the Creative (with a capital "C") aspects of making a great TV ad. Pointing your iPhone at a product and grabbing some 4k footage is one thing. Making something creatively interesting, worthwhile, or effective is another entirely.

But the creativity bit aside, I'm merely pointing out that defaulting to a production-heavy approach is quickly becoming the exception, not the norm. And that for a great majority of the world that TV advertising is now being opened up to, it's very possible to make a totally passable and effective ad on the cheap.

See y'all on TV.

All in all, from a marketer's point of view, I feel like this is exciting stuff.

As long as it’s not overly hyper-targeted and doesn’t follow the path of digital direct response too closely, the introduction of TV advertising to a whole new world of marketers who’ve only known the likes of Facebook and Google Adwords, feels like a good thing.

This narrow-minded, hardcore growth-hacking, performance marketing orthodoxy that has dominated the last decade of marketing can’t die soon enough in my view. So if these shifts help deflate that fantasyland and open more of the world to more marketers, then I'm all for it.

And as I’ve always believed, you can’t really build a proper brand using digital direct response alone—something the inimitable Bob Hoffman has articulated here, better than I could ever do myself.

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UPDATE: June 2023

As predicted, Disney+ launched an ad-supported version because of course they did.

And so did Netflix, because also, of course.

Hulu's ad revenue continued to climb, topping $3bb in 2022.

And since I wrote this originally in 2021, generative AI has burst onto the scene, and I can promise that in a few short years (maybe less?) this will supercharge all of the above in all manner of wild ways.