By: Joe Lamagna
The age of 24/7 connectivity has gave way to some amazing technology advances. 10 years ago who would have thought you could stream full length movies on your iPhone, while riding the bus, or connect to Netflix with your PlayStation. With Millennials constantly using mobile devices or the internet to stream content they spend much less time watching traditional television. This change in the way we consume media has not only lead to falling ratings but has forced the world around us to change as well. Huge corporations who have historically invested billions in television ads are second guessing their strategies and testing out new ones.
The first thing you need to know is that television ads are typically purchased in two ways, upfronts and in the scatter market. The upfronts, as the name suggest is buying time at the beginning of the year so you can lock up the best times, generally for a good price. The scatter market runs as the year goes on you try and buy time – this is typically bought at a premium due to the lack of supply of time slots. The scatter market, often times, offers less desirable time slots as well. The sellers will offer attractive pricing in the upfronts season so they can lock up time slots and not have to worry about time going unsold.
The television ad market is usually broken up into two groups: broadcast and cable. For the last 3 years broadcast TV endured declines in the upfronts market, cable upfronts have declined for the past two consecutive years. Advertisers have pulled back their spending in the upfronts and started investing more in digital media. With ratings declining and the popularity of DVR, On Demand, and streaming increasing, television ads are not as effective as they once were. Advertisers saw this as an opportunity to reallocate some of their marketing dollars to digital media, where they could seemingly reach more people for less money.
Unfortunately, they quickly discovered flaws with their digital media strategy. Advertisers were unable to judge the viewability of their ads, and due to things like computerized “bots,” they couldn’t decipher between real and fake web traffic. Then Ad blocker apps started popping up and the advertisers were unable to reach as many viewers as they had hoped. The bottom line is that digital media is not providing the return on investment (ROI) that it was expected to provide.
This realization was causing advertisers to run back to television and try to hop into the scatter market, where they got burned by premiums up to 20%. In 2016, upfronts are projected to grow up to 5% from last year, because advertisers are not willing to risk getting burned in the scatter market again. A spokeswoman from Proctor and Gamble, which has increased their 2016 upfronts budget by 13%, said “…we see TV and digital not as an ‘either or’ but an ‘and.’”
So although they have not abandoned TV yet, major corporations are taking note of your choice of Netflix or TV and it has forced them to change the way they invest billions of marketing dollars.
Source: http://www.wsj.com/articles/television-ad-spending-shows-signs-of-revival-1460885403
Marketing Discussions 
Personally I am a big fan of Netflix. I don’t like watching TV as much because all of the reruns they play. With Netflix I can get into a series and be able to watch exactly what I want, when I want. With this being said, I also don’t have to worry about commercials interrupting what I am watching. I like how I can watch it from start to finish without it stopping to go to a commercial break. This shows that this is definitely a scare for marketers in the advertising world as more and more people begin to favor this method of watching shows.
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I definitely agree with you, meghan. Netflix is such a huge part of young adult’s entertainment preference. Mostly because of the lack of commercial breaks and ads. it allows us as college students to watch a show with the limited amount of free time we have and not be bothered with any fluff on the side. Marketing is for sure taking a beating in this platform because of the growing popularity of commercial free tv.
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I think marketing through TV is absolutely taking a major hit. Myself as a college student, watch way more Netflix than I do in regular TV. Which looking at it from a marketing standpoint, is certainly taking away from television ads. Also, if a show is on TV that I want to watch, I can record it, watch it later, and simply fast forward through the ads. Marketers are just trying to get the most for their ROI and it is undeniably getting more challenging in the world of television and digital media. Computer bots are, live streaming, and many other challengers are giving marketers many conflicts. I agree with Proctor and Gamble that when they said “…we see TV and digital not as an ‘either or’ but an ‘and.’” Marketers need to find a way to challenge the system and gamble on digital media advertising, but also need to play it safe with television ads just in case things don’t work out. You basically have to invest in both at this point.The main concern seems to be where to allocate money and how much.
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I completely agree with Colleen Flynn. Though digital media is booming, traditional media has not lost relevance yet and not in near future. I also feel that digital media can act as complementary to Traditional media. Marketers are suggested to make their presence everywhere but not at all times. That is not strategic placement. They should see the flow of audience and target specific sites specifically.
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Should marketers try to get more ROI by investing more in digital to balance out the drop in traditional TV or should they double down on the traditional TV ads to get more ROI?
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Marketing through TV is obviously not as good as it used to be. With aspects such as Netflix and DVR coming into play, marketing on TV is only largely popular for big events such as the Superbowl. By changing the way they advertise to their target market will help them so much more. There are some generations that sit and watch commercials because that is what they’re used to, so if the older generation is your target market, commercials and tv advertisements may be more helpful than just switching to marketing on Netflix and other sources like that.
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Marketing through TV is definitely not worth the money that it used to be. With so many options to watch these days there are very few people who choose to sit through the commercials. When you are watching live TV and a commercial comes on I think most people choose that time to do something else, so when they are watching live TV they still are not sitting through the commercials. I think most people today either watch DVR shows or netflix, very few people watch live tv anymore. There are certain shows that I do prefer to watch live as I don’t want social media to spoil the results for me, but I run out of the room and do other things during the commercials.
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If you are taking that time to do other things around the house do you think it is a good idea that marketers set the volume of ads louder than the actual program so you can still here it when you get up to do other things? Should this volume change be regulated?
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Marketing on TV has drastically changed over time, as the way people watch TV has changed through the years. Now, you can DVR and fast forward the commercials. When watching a show live, I typically will get up and do something else during the commercials. If I don’t get up, I typically mute or turn down the volume until they are over.
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I like both TV and Netflix but I don’t think either of those would be a good way to market something. Netflix does not have commercials and that is why people watch it and TV does have commercials but people tend to skip through commercials when they can or step out of the room for a little bit. You can also watch television shows online where commercials are shorter or have the “skip this AD” button. With that being said marketing on TV has changed a lot and is not the best way to get peoples attention.
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Do you think if TV ads were shorter, like 10 seconds instead of the traditional 30, people would be less likely to skip them making them more effective?
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Honestly, I don’t use Netflix as much as I should. I think that it is a lot easier to keep up with shows as well as convenient. With that being said, I am definitely someone who consistently watches shows on a weekly basis. However, there has been times when I wished that I used DVR because some shows that I have become really invested in slowly died out because I missed one episode and then just continued to miss more and more episodes until I completely lost engagement in the show. Sometimes I would use On Demand but I don’t have Xfinity in my room so I can’t watch it if my parents are watching something on the TV downstairs. Another thing is the fact that a lot of shows and movies on Netflix are older. You wouldn’t be able to find a season of a show which is premiering new on TV. Netflix is essentially there to catch up on older seasons of shows. I used to use Hulu because they have newer shows but some of the ones that are on Netflix are not on Hulu so in order to have all shows you kind of need the best of both worlds which then gets pricey. Like we talked about in class, the worst thing is when you miss your show and someone posts a status on Facebook or Twitter which completely gives away what you missed! It’s the worst thing ever! Sometimes you may even feel as though it’s not worth watching because you already know what is going to happen. With that being said, I choose TV over Netflix for the most part.
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I am the same way. I like Netflix but always end up watching TV live, on demand, or on my DVR because it is not easy for me to watch Netflix on my TV. I also watch some shows week to week and don’t think Netflix could work for me because they don’t have current seasons of a lot of shows. If they did would you pay more for Netflix? Would you pay as much as you would for cable? Would you pay more than you would for cable since there are no commercials?
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I find this to be quite interesting. I assume a large majority of people who are Netflix members also watch Television. Since it is hard to measure the effectiveness of digital advertisements, I believe companies should direct their advertisement efforts towards television. Companies can allocate a small percentage of their advertising efforts on digital media. Perhaps in the future there will be a way for companies to better measure their advertisements on digital media.
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It’s easy to see why TV is beginning to decline and services like Netflix are on the rise. While watching an “hour long” show on TV, you only actually get close to 40 minutes of the actual show, and then close to 20 minutes of commercials. No one likes commercials. With Netflix you can avoid these commercials and just watch your show in peace. The only thing I watch on TV now is sports.
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Netflix is something that has become so popular, with the accessibility of having such a variety of options to chose what you want to watch at that time, as well as minimizing the commercials. As posted above, the majority of people, hate commercials. On Netflix, you can avoid these commercials and just watch your show. I do feel like the older generation still of course watch TV, as well as even the younger generation. TV already has done such huge success on advertising and marketing as we see it on our screens everyday. I believe they should continue to market TV because there still is that older generation who follow the ads, as well as tv ads for kids, that the kids can persuade their parents into buying. The marketing on Netflix is huge because of the amount of people who watch and use Netflix. You can find the target market and advertise towards them in particular.
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I first really got into Netflix three years ago during my freshman year of college. It was nice to have time to myself to just watch my favorite shows whenever I wanted. With Netflix, you don’t have to worry about what time a show will be on, commercials, or only watching one episode until the next one airs the following week. You can watch an entire season of something if you wanted to. Since Netflix is already extremely popular and only growing, TV marketers are definitely going to have to adjust their marketing plans. Nowadays, there are very few commercials that I actually see on TV, because even if I do watch shows on a regular TV, I usually record them and skip the commercials. If marketers want their ads to be seen on TV more, they should air them when a live event is going on (a sports game, award show, etc.) that way people will not skip them.
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Personally, I watch Netflix more than I watch actual TV. The only time I watch TV is when I have recorded a show on DVR. In order for marketers to reach college students, I would say that Netflix ads would be a good idea. Although, another main reason why I watch Netflix more than the regular TV is because there are so many advertisements on TV. It would get annoying if Netflix started airing advertisements in between Netflix episodes.
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I think I might be one of the odd people out here when I say that I prefer TV over Netflix. When it comes down to it, Netflix just doesn’t have many shows that are popular in our culture today. There have been many times when my friends and I want to watch a certain movie or TV show that Netflix just doesn’t offer, which is very frustrating. I know people like to binge watch series of shows and that is why they like Netflix, but I don’t like to binge watch shows. I would rather get a show once a week, that way you get the suspense and have to wait until next week to get answers, so you are able to think about theories and really get into the show. Also, sitting around for hours watching the same show I think is boring, and really not good for us. Not only is Netflix hurting commercials and TV advertising, but it is also hurting our physical activity as human beings. I would take TV any day over Netflix, as it just seems like a way better option in my opinion.
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I use Netflix occasionally, however I do prefer TV over Netflix. Netflix doesnt have all of the shows that I want to watch and I also dont really enjoy binge watching shows, I like to watch them week to week. In addition, I think Netflix is hurting TV and commercials and advertising but I know a lot of people would disagree with me
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In today’s world, I feel like Netflix and other companies in the same market (i.e. Hulu, Amazon FireStick, etc.) are becoming more and more popular because of their no-ad formats. Everybody can agree that ads are super annoying because they can be too long, irrelevant, or just plain stupid and boring. Our attention spans are also shrinking, which I believe is contributing to a decline in television and online ad marketing. Even just watching a TV show OnDemand is better than watching it in real time because the length of commercials are much smaller. Furthermore, there are programs such as TiVo, allowing people to record tv programs so that they can automatically fast forward through commercials when watching it. However, when watching TV you are pretty much forced to watch ads, where when it come to watching TV online one can usually skip 9/10 ads that pop up. For that reason alone, television ads may still be more affective than on Netflix and other online video companies.
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For me, I rarely watch commercials. If I do watch tv I will flip the channel or do something else during a commercial break to avoid watching the same ads over and over. I think sponsorships are a more valuable tool than commercials. When ESPN comes on and says they are sponsored by Budweiser I am more likely to take notice than take the time to watch a full commercial 5 minutes into a commercial break. I think companies can get away with sponsorships and streaming advertisements to reach a large audience and avoid the hefty tv ad prices.
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I’m in the minority here in preferring television over Netflix, however I rarely ever pay attention to any of the commercials. Like others have stated above, that’s the time to do other things quickly. In a typical commercial break, we will see at least 5 different advertisements, and most shows have about 5 commercial breaks per hour. With this large volume of commercials, we have become accustomed to simply blocking out whatever the commercial is saying, or just getting up and walking away. I definitely agree that an in-game sponsorship on ESPN, or convenient product placement within a show have more value. Saturday Night Live announced recently that they would be cutting down on commercials and instead catering to companies by offering in-skit product placement. I believe what SNL is doing in cutting commercial time will be the future of television advertisement.
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Do you think the amount of product placement in the actual program will get to the point where people will be turned off from watching the program because of it?
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I think that depends on the subtlety of the product placement. For example, if the program goes off course solely for advertising a product, then yes, people will be turned off.
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I am a huge fan of Netflix. With being at school, I don’t get much time to sit down and watch tv, and when I do, I never truly paying attention because I am usually doing my homework and the tv is just background noise. Netflix gives me a chance to sit down at the end of the day when everything is said and done to watch my favorite shows uninterrupted but commercials. Even when I am at home and get the chance to watch tv I have a DVR so I just fast forward through the commercials, so in a sense I can see how the way I choose Netflix and my DVR as the way that I watch television affecting marketing, but at the same time we are bombarded by marketing campaigns everywhere we go nowadays. No matter where we go there are advertisements for something, so I don’t really feel bad that when at the end of the day I just want to relax and be uninterrupted.
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This is a really interesting topic because of the “fork in the road” it presents for marketers and organizations when it comes to where/how they advertise. I am in the same boat as a lot of other people when I say I really enjoy Netflix and if I had to choose I’d most likely take it over TV so it definitely provides a tough decision for marketing. When it comes to moving to digital marketing I think marketers seemed to jump the gun with the complete shift because as you can see by the comments it’s not like there is no one watching TV anymore. It seems TV targeted marking will gradually decrease over time but I do not see it happening in the near future so it seems the next step would be for marketers to find a way to gauge their digital marketing and in the case of Netflix finding a way to advertise through them without disrupting users experience. One solution I could see being used would be something we discussed earlier in the semester where the advertisements are actually part of the service and not something like a pop up or video in the middle so they are less intrusive.
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I’m surprised that Procter and Gamble feels that they should run TV adds as well. However, that might be due to the big range of products that they have and their consumer base not watching things such as netflix. Companies with a younger target market might not want to advertise on TV because many people our age aren’t watching TV.
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Personally I do what I can to avoid watch ads on TV. I either watch something on Netflix or DVR. If all else fails I will watch on demand because at least those ads are less than watching on TV during a regularly scheduled time slot. The only time I don’t mind the ads is when watching a sporting event. I can get up and do what I have to do during the ads. Now a days consumers are so inundated by Ads that I wonder how many really pay attention to them.
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I personally watch more TV than netflix. I feel as though Netflix has some great options but not enough they need to broaden their horizons. Netflix has a lot of shows/movies no one usually has heard of and ones that have terrible ratings. When watching TV I feel like there is always something that grabs my attention.
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Cable may soon be obsolete, and it does not help how we have Smart TVs now, with the ability to connect to the internet to stream Netflix, Hulu, and other streaming programs right on the TV! However, cable may not go completely without notice; I feel the reason why cable will remain is because of sports. Those who want to advertise may want to think about the time slots during baseball or football games, now more than ever, it feels like.
Personally, we have Netflix, Hulu, and Amazon Prime – combine all three and it is still cheaper than cable. Hulu used to offer commercials (and still does when not paying for No Commercial) but now that it offers a ‘No Commercial’ (for a couple of dollars more) on most of their shows, advertisement for companies have gone down. YouTube is now offering the same program, YouTube Red.
Even though most people may find ads annoying and intrusive, it is a strategy for companies to remain relevant. It changes and confuses marketers that want to promote their products and services; What media are available? What are the difficulties or hurdles for those media? etc.
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Like many of the comments already left, I love Netflix. With the very little free time i have in grad school, i have no times to watch commercials. I want to binge watch my 2 episodes in 45 minutes before bed rather then wasting two hours. Its also cheaper than Cable. My mom nights at home, so its not even convenient for her pay for cable because shes never home for the shows she wants to watch anyways. So she utilizes the internet with Netflix, hulu, amazon prime and other platforms she can find her shows, still saving her money too.
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It is a good experience to use Netflix. It’s no commercials and you can turn it on and turn it off at anytime. This convenience has made many people subscribe Netflix. What I think Netflix needs to improve is develop their chinese market. As far as I know, Chinese market has a large potential, and Netflix should think about this.
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Television business was impacted by the net video industry. Online video provides more convinience and flexibility to audience which is the life-style for the new generation. For many people travel around the world or the foreign students, they do not even need a TV at home, you can have everything you want in the Internet, besides, netflix provides More clear pictures, mass videos with a cheapter price, how can anyone avoid this product.
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