Broadcasters take on online advertising giants

As online advertising giants Facebook, Google and Snapchat provide more ways to serve, target and measure ads – and apps offer ever-more advertising opportunities – broadcast companies are increasingly looking to take a slice of the huge revenue on offer.

All sorts of ads are taking a growing share of what was once a simple equation that involved only broadcast and print media:

• Search-based ads (Google)
• Product listing ads (Google)
• Contextual ads (on Facebook, Amazon and a billion websites)
• Targeted Pins (Pinterest)
• Goal-based bidding ads (Snapchat)
• Geo-targeted local ads (Google)
• Banner retargeting (using cookies that follow us around the web)
• Incentive-based and skippable video ads
• In-app ads
• In-ride/in-hand recommendations (Uber + Foursquare)
• Hyperlocal targeting

Google and Facebook’s ad revenue

Google’s AdWords programme has provided the foundation of the search giant’s revenue since 2000.

It places clickable links at the top and bottom of Google’s results pages and charges advertisers an amount per click based on the search term their ads appear alongside.

Google’s US ad revenue grew 20 per cent year-on-year from 2015 to 2016, and now tops $35 billion in America alone.

Facebook’s US ad revenue – creeping towards $15 billion – increased by a huge 62 per cent during the same period.

And it appears traditional broadcasters have reached the point at which they want a bigger slice of the pie.

One of the key differences between ad-spend today versus pre-internet times is often the size and financial clout of the advertisers themselves.

A few years ago, big money was spent on advertising with broadcast media, national newspapers and famous magazines primarily by large organisations. Individuals and small businesses hoovered up newspaper classifieds.

Then Craigslist and the big online players we’re all so familiar with today enabled an infinite number of SMEs and individuals to reach even the smallest demographic – in just the same way the huge corporations do, albeit not in the same numbers.

And what about those huge corporations?

As their advertising budgets migrate online, is it now time for the broadcasters to attract smaller businesses that would otherwise spend their budgets with Facebook and Google?

A recent report on thedrum.com suggests it is:

Several of the UK’s largest broadcasters are in partnerships – or attempting to forge them – with ad measurability companies.

ITV’s quote in the headline of thedrum.com’s report – ‘We want to take Google and Facebook’s ad revenue’ – is indicative of the growing feeling in the industry.

Simon Dalglish, deputy managing director of ITV’s commercial division, is attempting to convince smaller businesses to change the way they think about TV advertising.

Clients need to wake up and see what’s happening as they’re being bamboozled,” he said, implying that marketers need to be “more testing of their partnerships with Google and Facebook.

Dalglish is aware as anyone that advertising inefficiencies are increasingly exposed by data, which is why he’s keen to use it, and looking to partner with companies who can help the company uncover who is watching what in real-time.

Channel 4 and Sky: already on the case

Channel 4, with similar ambitions and partnering with Yospace and Adobe’s Tubemogul, is already making progress, and wants to work with Moat, described in 2011 by TechCrunch as a “search engine for display ads” and working with Twitter, Facebook, Snapchat, Vice and AOL, among other equally notable names.

Sky’s AdSmart technology is also an influence in this space, enabling businesses of all shapes and sizes to serve different ads to different Sky households watching the same programme.

But, ad measurability has its drawbacks…

1. People don’t always like what they see
2. Nor do people always like data on themselves or their behaviour being collected
3. Ad-blocking growth continues

Also, it’s worth remembering that advertising is inherently interruptive, rather than permission-based.

And no amount of tailoring and targeting is going to make entire audiences want to engage.

Despite this, we’ve certainly come a long way, and it might be a good time to remember the famous quote of John Wanamaker, who opened the first department store in Philadelphia in the late 1800s and is believed to be the inventor of the price tag and the seasonal sale:

“Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.”

The online half of advertising is different. Is mainstream TV about to follow suit?