The New Advertising-Industrial Complex

Advertising is big business. But while media buyers were complaining about whether they were buying demos, impressions, views, or households, they weren’t watching their rear flank. Theoretically, the inability to consolidate statistics and reach scale is a very large impediment to buy for brands. Because of this, the available creative in digital seems limited.

I had an eye-opening experience visiting a friend who watches cable TV. Clearly, I am missing something by only seeing digital advertising. I see a few car companies, a couple of laundry companies, a vodka company, some local political ads, and messages from folks who think I need to lose weight to take care of my diabetes. Watching cable offers a wider shopping opportunity I had no idea I was missing. Digital, I need you to get more inventory, because the love affair is waning.

I’m taking solace in the revenge of the TV set. Here’s the situation: Digital, you have been treated like a second-class citizen for too long. On the one hand, you offer direct deals that showcase decent “creative,” even if the same ad is being shown on broadcast. I appreciate the on-location car shoot, the actors modeling with the vodka bottle, and the perfect audio and video of the tribal leader somewhere in the wilderness talking about how California needs to vote Yes on Prop 27. On the other hand, you’ve lost me on the low-end programmatic dross I’m shown. I’m normal, if not low-end weight for a woman of my age; what hints did you pick up that I’d be needing insulin soon? Your targeting is off, unless you know something I don’t.

The consumer electronics side of the business has positioned itself to become the new cable companies. Think LG+, Samsung, etc. Each and every one of the manufacturers is now the go-to location for the streaming public, which just wants something FAST.

Because the viewer is turning these systems on, the TV companies have all become ad sellers. TV manufacturers have become the “new owners of the Last Mile,” says Brian Rifkin, co-founder and SVP of strategic partnerships at JW Player. “I don’t think it happened strategically in most of these TV manufacturers. It was more like, ‘Look at what Pluto, Roku, Xumo, and Tubi are doing. We could do that too.’ ”

Samsung Channels launched, and the others soon followed. The formula was to replicate what cable was doing and build services directly into their TVs. Then, by default, viewers would go directly to the manufacturer’s TV streaming service, bypassing companies like Comcast.

A few things are driving this: TVs are cheap, cable is expensive, and viewership numbers have surged. “Every time a new Samsung TV is purchased,” Rifkin says, “the user is going to watch all these Samsung TV channels, and that’s going to create this much inventory. It’s a great acquisition [for Samsung], because they own the platform and the inventory.

“You’re going to see many of these TV platforms, at the point where you were with apps,” Rifkin continues. “I think it’s going to be verticalized, and you’re going to start to see hundreds of FAST channels, whether it’s hobbies or some sport or some specific kind of cooking. A lot more content is going to come online in the next few years. The TV manufacturers and the operating systems that power those TV manufacturers are going to have a lot of control. It seems to be the safe spot for a buyer who controls a lot of TV dollars to place their money.”

I, for one, can’t wait. Strategically, streaming delivery needs more advertisers. Advertising is a necessary part of the media business model, but by not being nimble enough to attract more advertising and somehow sell digital the same way cable and broadcast are sold, digital services are shooting themselves in the foot. TV manufacturers are becoming the new cable companies and selling the inventory delivered on their devices.

This sounds like the construction of another walled garden. Will this trend really push the advertising industry forward or just create more problems for an already complicated advertising-industrial complex?

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