Options Explode for Slicing Up Advertising Pie

Fundamental Advertising Hasn't Changed

In 1964, Canadian Marshall McLuhan wrote a book titled “The Medium is the Message.” The hypothesis centers on the fact that where the message is delivered – and not the message – is most critical. 60 years later, that hypothesis is more essential than ever. Consumers bewildered by the cornucopia of television viewing options should thank their lucky stars. The smorgasbord for advertisers is even more vast, and divvying up slices of the advertising pie requires research, creativity and discipline.

The dilemma for advertisers is especially top of mind as Super Bowl LVII gets set to kick off on February 11 in Las Vegas. CBS, the network televising the game, is seeking $6.5 million for a 30-second spot. The inventory was 95 percent sold out two weeks prior to the game between the Kansas City Chiefs and San Francisco 49ers. The questions advertisers and their agencies must wrestle with is how and where to place their assets to reach their audience. While that has always been difficult to assess, the fragmented television landscape makes an agency’s input even more valuable now.

Media Planners & Buyers Are Essential

Nearly a half century ago, big brand advertisers had essentially three network options – ABC, CBS and NBC. Today? Those options have expanded significantly, and viewers now have more options than ever. For advertisers, it’s like trying to solve the Rubik’s Cube with their advertising budgets. While the options have become more fragmented, viewership has soared. OTT viewership has soared from 2.6 million in 2019 to 3.5 million in 2023. The number is expected to climb to 4.3 million by 2028. Televised sports continue to attract the large crowds that advertisers crave. No more evidence is needed than the NFL playoff game between Kansas City and Buffalo on January 21. The game, which aired on CBS and Paramount +, was the first to have more than 50 million viewers. The game was the most-viewed program across all networks since last year’s Super Bowl.

Platforms, Pricing, & The Downsides

OTT platforms – which includes Netflix, Amazon and Hulu – have led to the demise of channel surfing. They have also helped advertisers by enabling precise targeting through geographic, demographic and psychographic segmentation. Securing better data analytics such as completion rates and engagement. Along with interactive capabilities, viewers can engage directly with content, click through to websites, or take other desired actions enhancing user engagement and driving conversions. That level of detail is an advantage over traditional media, where advertisers were simply buying time in the show.

The downside, however, is advertisers now have to be more selective in where they place their advertising. The market has become diluted with a range of options that makes agency expertise even more valuable. The range of choices confuses viewers – especially boomers who were long-time cable subscribers – and makes it even harder for advertisers to discern the best packages, platforms and even the content they should be using.

The problem might be getting worse before it gets better. Regional sports networks, which have long been a cash cow for some sports franchises, are now facing competition for advertising revenue from streaming services. Amazon started televising NFL games in 2022, and in December, NBC placed a playoff game between the Chiefs and Miami Dolphins on its streaming service, Peacock. Viewers who did not already have Peacock needed to pony up to watch the game, which drew 23 million viewers and was the most-streamed game ever.

Fox Corp., Warner Bros. Discovery and Disney are set to launch a new streaming joint venture that will make all of their sports programming available under a single broadband roof, a move that will put content from ESPN, TNT and Fox Sports on a new standalone app and, in the process, likely shake up the world of TV sports.

The Chiefs are a big draw, as is Taylor Swift, whose boyfriend Travis Kelce plays for KC. The diva could – or could not have – impacted viewership numbers by her presence. The Golden Globes, another event in which Swift also surfaced, climbed 50 percent from their 2023 ratings.

The overarching message for advertisers is to rely on the expertise of their agency, especially as television fragmentation continues to evolve. Quite likely, there will be consolidation or even more streaming platforms that will continue to make selection more critical. Advertising is expensive, and it’s essential that businesses know which media is best to make sure their message hits their audience.