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Advanced advertising needs to walk before it can run

16 February 2012 

TV and advertising executives expect little change to traditional TV advertising in the next 3-5 years;

  • Traditional TV advertising will remain key for brand advertisers;
  • There is a strong appetite for more data on viewers and viewer behaviour;
  • 93% say that new forms of advanced TV advertising will not cannibalise traditional brand building campaigns.

New Deloitte analysis1 of the TV advertising market finds that advanced TV advertising2 – such as targeted and interactive advertising – is unlikely to make a significant impact in Europe in the next five years. This reinforces previous Deloitte research indicating that traditional television advertising continues to dominate the advertising industry3. In the US, advanced TV advertising is still in an experimental phase and faces a number of major challenges before it will achieve mainstream acceptance.

Advanced advertising for advertisers

TV advertising spend is firmly focused on brand building via linear TV – television watched through the broadcast schedule - and its unique ability to reach a mass audience. However, 60% of the senior TV and advertising executives questioned by Deloitte were clear that data on television viewers is valuable currency, which enables more targeted forms of advertising.

Jolyon Barker, global lead for Technology, Media and Telecommunications (TMT) at Deloitte, says: “TV continues to be the most effective media to reach the mass market. The ability to place TV ads next to programmes that attract specific groups of television viewers already provides a form of targeting that the advertising sector is familiar with. Linking the objectives of an advertising campaign to the characteristics of groups of viewers has proved extremely complex and time consuming. Executives who have experimented with such campaigns in the US have found that the current approach to targeted advertising is impractical to run mass market targeted advertising campaigns that reach millions, or even hundreds of thousands of viewers.

There is, for example, a desire amongst cable and satellite operators in the US to use subscriber data to improve the effectiveness of TV advertising campaigns and to be able to analyse their return on investment. This is however constrained by the limited proportion of the TV advertising inventory that is available for cable and satellite operators to sell to advertisers. This barrier is more apparent in Europe where advertising inventory is fully controlled by broadcasters.

Barker continued: “Deloitte predicts that connected televisions with faster IP delivery can create more opportunities for targeted advertising based on viewer and behavioural data in the longer term. Broadcasters and cable/satellite operators need to begin to build data capture, data analytics and measurement capabilities now, to mitigate the risk of disruption by technologically advanced players.”

Content and data: opportunities and challenges for broadcasters

With some UK broadcasters having already introduced targeted advertising through their online Video-on-Demand services, one challenge will be to establish its effectiveness in relation to traditional TV advertising. Deloitte’s survey has indicated that online advertising is seen as complementary and not a threat to traditional linear TV advertising. However, there is a lack of a common industry measurement to assess the combined success of online and TV ad campaigns, in the US and European markets.

Jolyon Barker concludes: “Getting smarter about what ads are delivered to whom and when is an appealing idea and adds a new string to the bow of marketers and planners. However, advertisers are not willing to invest until they see proven results, underpinned by metrics they can trust. In addition, winning consumer and regulatory acceptance on the use of personal data is another significant challenge. We expect a slow evolution of the industry towards cross platform standardised measurement, that is where consumption of television programmes across TVs, tablets, computers, smartphones and other devices, is all measured. We also expect a modest progression towards mainstream use of targeted advertising.”

Ends

Notes to editors

  1. The report was commissioned by RTL Group. Deloitte conducted over 50 interviews with senior personnel in across the connected TV and advanced advertising industry. The interviewees were from advertisers and agencies to broadcasters, distributors and technology companies in the UK and US.
  2. Advanced advertising is defined here as new advertising technologies that enable greater targeting or interactivity and new sales platforms that allow a greater degree of automation. This includes targeted and interactive advertising.
  3. Deloitte/ GfK research in June 2011 shows TV is the type of advertising that has the greatest impact on 58% of people. An online survey of 4,000 respondents, undertaken by GfK based on a question set written by Deloitte and GfK based on inputs from industry executives.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

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Laura Parsons
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Deloitte LLP
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