Upcoming War between TV and Streaming Video Advertising

Streaming video on the internet has become a part of our lives, much like how television became an integral part of everyone’s life in the 1950’s and 60’s. Today there is a war emerging between television and streaming video and the battlefield is your viewing device. This war has been going on for over a decade now, but until recent years, the battle has become an all out life or death battle for your viewership. The battle for viewership has seen American Cable and Satellite providers lose hundreds of thousands of video subscribers every year because of rising subscription fees and limited ability to watch on any device at any time. All the while unique viewership of online videos has continued to grow to reach 185+ million viewers in the United States.

Television’s Battlegrounds

This fluctuation of viewership shifting away from traditional advertising landscapes has put advertisers in a hard place to discover new ways to reach the viewing audience. Traditionally speaking, television shows that are 30 minutes long have about 8 minutes of commercials. The cost of showing a commercial nationally in the United States is around the $300,000 mark to an audience that can max out to be only 115,300,000 viewers simultaneously. Now, the 115,300,000 viewers only appear once a year in a four-hour window in which nearly 1/3 of the US population is watching the Super Bowl halftime show. Which if you were trying to advertise your brand for 30 seconds, it would set you back a cool $4 million US dollars. Let’s do a little math here; if it costs $4 million USD to reach 115.3 million people, then it costs around 3.5 cents to reach each person. That is not bad of a price point, if you happen to have the money to spend on production and advertising costs.

Streaming Video’s Battlegrounds

Now let’s take a look at the streaming video on the internet. Streaming video is technically still in its infancy as its popularity only started 10 years ago. In the early years of video publishing on the Internet there were no advertisements, as it was not seen as a profitable platform. To help protect and grow digital videos life, several new advertising techniques were developed to increase revenues to help pay for the cost of server farms. First, it began with small text advertisements at the bottom of videos, which were fairly simple and viewers can close it after a certain time limit passes. Most recently, the preroll video advertisements came into existence, which also allows the audience to skip if they desired so. An interesting thing began to happen, the short advertisements that were 10-30 seconds long the audience started to watch. This is because the insignificant amount of time wasted to watch their full-length video would be around a 1/16th of the total video length, in comparison of a TV shows ads that take up 1/4th of the viewers time. The overall spending on online video advertising in 2013 was $4.14 billion in the United States, which breaks down to be around 24 cents per viewer. The amount of money that companies are throwing around for online video advertising is enormous and does not look to be decreasing anytime soon.TV’s Nuke to End the War

The challenge that TV has is to claim back its share of advertising dollars that it is losing to other mediums. The only way that cable and satellite companies can claim their value of exposure to the largest audience is by addressing what the consumer desires. From what I have heard from other noncable TV subscribers, the cost associated with forced in packages of undesired channels, the inability to have simultaneous broadcasting on any device, and a broader access to foreign content is a major deterrent. Therefore, addressing the consumers desire to make television subscription appealing again will help make advertising become more effective to reach a larger and growing audience.  By slashing prices in half and allowing for consumers to choose what programs they want to see at anytime on any device will win them back.

The former CEO of Time Warner Cable, Glenn Britt, said it best, “I think the cable industry as a whole, including our company, was in denial that we had real, viable competition. And I still hear some of my peers saying dismissive things about our competitors. And certainly, each of them has strengths and weaknesses, just as we do. However, they are around to stay, and we need to keep getting better at competing.” The video content delivery companies need to stop being in denial of competition and sacrifice record profit margins to win the consumer back. Another way that things can change is that the exposure rate to commercials during an airing of a program. Reducing the time in half or even a third of the current amount of time will encourage a revival of viewership, as it will feel like less bombardment to get the viewer to buy into a commercial. In a world we live in today, the amount of advertising locations is exploding and there is few to little retractions of what will not fit a piece of advertisement on. A progressive movement to reduce overall advertising will encourage a higher percentage of viewers to remain watching a program, as seen with streaming video having higher exposure of ads that are less than 15 seconds long.

Steaming Secret Weapon of Mass Destruction

Streaming video online has been closing the gap year after year to win over viewership. The costs associated in maintaining the servers and producing content have steadily dropped every year, which has allowed new entrants to become involved in a growingly profitable industry. The secret weapon that the streaming industry has up its sleeve is that they have the consumers on its side when it comes to profit sharing and content development. The consumer can now become the writer, director, producer, star, and editors in their own content. They can even produce their own advertisement without having to worry about extremely high overhead costs. Companies like YouTube have proven that if you foster your community of contributors they will give you everything as they believe in your service to give them what they want.

To gain a superior death grip over television, content delivery of live broadcast events, such as sports and news, will need to begin being offering up by content producers as streams. Some broadcast companies have started to provide a stream of their videos online, albeit they are not 24/7 nor always offered in HD. If an amazing service was developed to be like Hulu or Netflix that incorporated in becoming a free service but had advertisements, I could see millions of people “cutting the cable cord” in elect of having a free streaming service but be forced to watch short commercials of 15-30 seconds long every 6 minutes like how current broadcasters do it. Until such a service becomes born, people will continue to find outlets like Project Free TV to help themselves from detaching from being exposed to advertisements on videos.

Another powerful tool that streaming video has developed over the years is the ability to turn a traditional television into a ‘smart’ TV. The device hooks into a TV’s HDMI port and is a mini computer that is just as powerful as a common smart phone. Devices such as the Google’s Chromecast, Amazon’s Fire TV, Apple’s TV, Roku’s Streaming Stick or 3, or my favourite the MINIX Neo are becoming a threat how content is being delivered to the television. They literally make your TV have the ability to act like a computer and play any content from any source at anytime you desire. This dark horse of an industry is stepping into the spotlight and is going to put pressure on cable and satellite companies to change their content delivery system.

Conclusion

The driving force in this battle is a very specific generation, the Millennials / Generation Y’s. This generation is the echo of the Baby Boomers and is becoming one of the most powerful generations in history. The thing your brand needs to consider when it comes to video advertising is being able to see if your values line up with a unique generation. If you want to speak to the younger or more informed and connected older crowd, it is suggest that you try to focus on online video advertising. If you are trying to reach a more traditionalist group of viewers, offering specific promotions for television audience could be a good way to reward loyal viewers of television.

Where do you see your brand position itself in the post apocalypse war between television and streaming video advertisers?

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