Moving Ad Dollars From TV to Digital Not a Solution to a Growing Problem

Simulmedia CEO Dave Morgan points out issues for advertisers planning to shift budget over to digital video

By Lindsay Rubino -- Broadcasting & Cable, 3/18/2013 4:10:27 PM

The growing use of mobile devices to view video has been a sticking point with advertisers, but planning to stay in the game by shifting dollars over to digital video will not work, according to Dave Morgan, CEO and founder of Simulmedia, in an article on Ad Age.

The hype gives marketers hope that their plans to shift 10% to 20% of their budget out of TV and into digital will prove beneficial, but all research says that 97% of all video viewing in the U.S. still occurs on TV, the report said.

When it comes to Web video, scale, content quality, ad load, usage concentration and price are all major challenges to advertisers, the article said. Only 2% to 3% of all video viewed in the U.S. occurs on the Web, and over one-half is on Google's YouTube, but over 80% of that content is not the type advertisers look for, according to the report. The ad loads are also only 10% to 20% of conventional TV, which makes it more difficult to measure its media weight, the story said.  A small portions of the Web video audience also comprises most of cumulative Web video watching - 20% of all Americans watch 80% or more of all Web video viewed -with 20% of those viewers being heavy TV watchers, the story said.

According to the article, The price of ads on Web video is high relative to television, especially on "quality" content, so media companies like NBCUniversal can sell its Web video separately at higher prices.

Aside from traditional Web viewing over PCs, smartphone and tablet viewing also poses the same challenges. Smartphones and tablets, however, also virtually no means of audience measurement, and also has extremely high pricing relative to TV, the report stated.

Audiences are also moving over to so-called "dark networks," where networks and network day-parts do not have Nielsen ratings, the article noted. Viewing research, when combined with Nielsen data, shows that this inventory represents more than 15% of today's U.S. television viewing, and possibly more than 20% in some regions, the story said. Because it isn't measured by Nielsen, advertisers couldn't buy it-but companies like Rentrak, Kantar and TiVo now offer services to deliver impression level and GRP equivalent measurements, according to the story.

Although shifting the 10% to 20% of the video budget over to digital seems like a good idea given the hype, but the challenges that multiplatform video delivery poses make it more of a problem than a solution, the report said.