LOS ANGELES – It may not happen overnight, but the evolving nature of TV consumption methods is bringing a “tipping point” in the way that TV ads are bought and sold.
That is according to a veteran media agency executive who has been observing the long arc of supply and demand toward a profound shift.
In my interview with former GroupM global chairman Irwin Gotlieb talks about how connected TV is re-shaping the TV upfront ad sales season.
We start our conversation with his personal take on the responsibility of the media industry on the impact of the media on society.
Media’s pincer move
Gotlieb sees two big dynamics.
1. Shift from linear to non-linear content
“In a linear world, you can use programming strategies – things like lead-ins, lead outs, hammocks, tent poles, that kind of stuff. You can use the built-in promotion schedules… In a nonlinear world, it’s much more challenging to create awareness. If you can’t create awareness, your audiences are going to, by default, be smaller.”
2. Growth of subscription content
“In a world where subscriber support is growing (relative to) advertiser support, what you have is a situation where you have supply diminution and that is inflationary on CPMs. There’s almost no way to offset that, and that’s a huge challenge.”
The future of the future
Irwin’s tenure at GroupM parent WPP began in September 1999 when he joined the company as Chairman and CEO of Mindshare Worldwide. He launched Mindshare North America by consolidating the media resources of JWT and Ogilvy,
His ad industry career, however dates back to 1970. In 2007, he was named one of the media industry’s top 25 most influential leaders by TV Week and inducted into Broadcasting & Cable Magazine’s Hall of Fame.
Now Gotlieb says the big media shifts are creating a big moment in the evolution of TV advertising.
He says the upfronts are a “futures market” and, with TV ad supply decreasing but demand continuing to be high, “there is in fact a tipping point”.
“I’m not suggesting in any way that upfronts are going to go away,” Gotlieb points out. “I don’t think they ever will. Futures markets will always exist in some form in the media world. Will they exist in their present form? I’m not certain.”
Dollars to dimes?
Of course, all TV and video companies are heavily invested in transitioning to the digital, non-linear world of which Gotlieb is talking.
But he thinks a clean conversion that protects all revenue won’t be possible – because it won’t be possible to protect all ad inventory and all views.
“The commercial loads that are going to be acceptable in AVOD in the nonlinear world are going to be one third of what they had been in the linear world,” he says.
“There is only one potential solution to that – refined targeting and addressability … something to be blunt that hasn’t developed at the pace that it should have.
“Today, I think the media sell side has to deal with the reality that they have lower commercial loads and audiences are drifting inexorably in that direction.
“The buy-side is either going to be faced with skyrocketing cost per thousands or improved targeting and addressability solves the problem for both (sides).”