Forrester Analyst: ‘We’ve Reached A Tipping Point’ In Advanced TV Advertising

Forrester VP and principal analyst Joanna O’Connell discusses the present and future of advanced TV advertising.

As TV watching shifts from the single screen in living rooms to cross-channel videos on devices wherever people are, advertisers are rethinking their strategies—including when and how ads are delivered, how much control audiences should have over their experiences, and more.

For example, it’s common now that the latest television programs use product placements and brand integrations to make advertising experiences more authentic and to keep up with audience expectations.

In an exclusive interview with CMO by Adobe, Forrester VP and principal analyst Joanna O’Connell discusses how consumer shifts are impacting ad buying, what the new streaming landscape will mean for cross-channel video advertising, and how the TV industry can improve its customer-centricity.

How will predicted consumer shifts in TV and video viewing drive changes in ad planning and buying for these channels?

We know that consumer behavior is changing when it comes to how, where, and when [people] consume sight, sound, [and] motion content. In fact, Forrester now calls all forms of TV and video simply “video”, regardless of the size of the screen or the method of delivery—for example, via linear broadcast, through a set-top box, in over-the-top (OTT) and connected TV (CTV) environments, or in digital and social video environments.

While our research suggests we’ve reached a tipping point in advertisers’ adoption of newer forms of advanced TV advertising—whether audience-based linear, addressable TV, OTT and CTV, etc.—the shift to a more holistic, cross-channel video approach is happening more slowly. This is for a variety of reasons: legacy organizational structures inside advertisers and their agencies, ecosystem fragmentation, measurement challenges, data questions, lack of new industry standards, and more.

What kind of shift, albeit slow, are you seeing?

In the customer conversations [we] had as part of our cross-channel video ad platforms New Wave, we saw some evidence of progress. For example, brands are talking about moving to a holistic video strategy to better connect linear and digital video efforts. They also are embracing an audience-based approach to planning their channel mix [to address the question]: “How do I reach light TV viewers in my target by blending linear and digital to maximize on-target reach?”

In addition, brands are actively looking for ways to increase the cadence of optimizing spend and mix, rather than waiting for post-campaign reporting, and they’re pursuing a more outcomes-based measurement approach [to answer questions like], “What impact did my cross-channel video have on driving foot traffic, or moving products off shelves? What was the incrementalimpact or value of these advertising efforts?”

What does new entrants into the streaming service space, like Disney+, mean for cross-channel video advertising?

It means it’s going to be messier and more complicated before it gets easier. This applies to consumers’ experiences with finding and consuming content. For example, how many subscriptions will a given consumer be willing to pay for? How tolerant will they be of ad-supported models if we don’t better manage things like frequency? [It also applies] to advertisers’ efforts to navigate a complex, crowded, fragmented landscape lacking in consistent standards and definitions. Many marketers we spoke to for the New Wave research understand this reality, but are also clear that their desire is for a simplified, more unified way to plan, buy, and optimize their cross-channel video spend.

How do agencies get up to speed more quickly on changing their planning and buying?

They need to avoid letting their own legacy organizational structures and thinking be a continued barrier to their progress. If an agency’s video investment team, for example, looks after linear TV only, there’s a problem. Their clients are increasingly savvy. They are more attuned to consumer experience, more aware that they need to manage cross-channel, more knowledgeable about the data and technology landscape, and more desirous of top-shelf strategic advice and partnership.

Agencies retain so much power in the traditional TV world, where buying clout and legacy relationships matter, [and] they have a real opportunity to lead on behalf of their clients. When it comes to negotiations with their media partners via, for example, the Upfronts process, they could push for more audience-based planning and activation capabilities, more cross-channel, screen, [and] delivery opportunities, more outcomes-based measurement solutions. But this necessitates an active blending of skills and thinking from their digitally minded folks and their traditional TV people. Neither alone can really make the most of the cross-channel video opportunity.

Will more marketers take this on in-house to gain more control?

This is certainly a material trend in digital advertising, where paid search, paid social, and increasingly, programmatic advertising are all areas marketers are taking a hard look at and asking themselves, “What is the right approach to managing this for my business?” But to be clear, there is no one model; there are, rather, 1,000 shades of gray when it comes to what in-housing can mean.

While it is absolutely the case that marketers are significantly more interested in being more involved in their media and data strategy and technology decisions, it is still relatively uncommon for them to own execution—that is, the actual buying, optimization, billing and reconciliation and other operational and back-office functions. And where brands have moved to a more in-house model for media, traditional television is one area that has remained with the agencies, for the reasons already mentioned. But this isn’t license for agencies to take a business-as-usual approach. Their clients will increasingly be asking questions about how the agency is thinking about and addressing a more audience-driven, holistic cross-channel video future.

You are passionate and vocal about customer-centricity. What can the TV industry do to improve in this area?

A few things come to mind. One, the industry should take the ad load question seriously. While there have been numerous headlines promising a reduction in ad load, evidence suggests the opposite is happening. Brands’ price sensitivity in traditional TV today, contributing to ad load increase, could hurt the industry in the long run as its impacts on consumer experience are better understood. Instead, brands should embrace a quality-over-quantity mentality with a focus on ad exposures that drive value. This could be via brand metrics tracked longitudinally to understand brand awareness and health, sales metrics, or, ideally, both. And [to drive value] across the variety of screens and video types their target consumers are using.

The TV industry can also experiment with more consumer-oriented formats. A reimagining of the traditional ad may be a hard thing to do for media companies whose bread and butter has been the non-skippable ad pod-driven 30-second spot model, but newer competitors may force them to up their game. Companies like Hulu are taking a very public stance on the future of their ad business, with a focus on more user-friendly, interactive ad formats that are made to suit the environment and mindset the user is in. Ad formats that are designed to work when consumers pause videos, or those that work better in the context of binge watching are examples.

Finally, the industry should obsess over reach and frequency. Is reach and frequency the only thing that matters? Of course not. But does it matter? Absolutely. In traditional nonaddressable TV, brands must rely on reach curves to understand reach and frequency. But in more addressable forms of video advertising, they can get much closer to an accurate understanding of these critical delivery dimensions. But when buying is done in a siloed way, an overall picture of reach and frequency gets lost. This could mean oversaturation of certain audiences and undersaturation of others, which means wasted dollars and ad opportunities, not to mention a crappy user experience for those unfortunate consumers who are overexposed.