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The “Competition” of DVR and Netflix

When you talk about advertising, people tend to think first of TV ads. Iconic campaigns and long-running spokespeople typically make a stronger impression than a static print ad or a forgettable radio ad. But as these stats from Adweek illustrate, TV advertising might not be as effective as it used to be.

  • Broadcast TV ratings are down 50% over the last 12 years
  • 5 million people have canceled cable subscriptions since 2010
  • The cost per impression of TV ads rose 5% in 2013

So fewer people than ever are watching TV, and advertisers are paying more to reach them. It is way too early to declare this the end of television spots as the behemoth of advertising, but clearly they are not dominant in the way they once were. Any businesses that is invested in effective advertising needs to take this simmering trend seriously.

Why is TV Advertising Less Effective than it Used to Be?

Industry experts have spent a lot of time puzzling over this question, and it’s impossible to point a finger at any one cause. But it is possible to look at the current media landscape to draw a few conclusions.

  • Tweet thisTV advertising has real competition – Broadcast and cable TV now compete with streaming services like Netflix, and surfing the internet has replaced watching TV for many.
  • TV advertising is easy to skip – Digital video recorders make it easier than ever to simply skip through commercials.
  • TV advertising is expensive – The cost of TV airtime has always been expensive, and research from the Harvard Business School suggests since the mid 90s the true cost of TV advertising has been rising much faster than inflation.
  • TV advertising is hard to produce – Viewers expect reasonable production values, making them less tolerant of local, small-budget TV ads.
  • TV Advertising is outdated – Many advertisers have scaled back or entirely abandoned their television campaigns in favor of new, lower-cost, and more-effective digital strategies.

Will Online Advertising Replace TV Advertising?

As we said before, TV advertising still has a lot of life left in it. But online advertising is catching up fast. According to eMarketer, $100 billion worldwide was spent on digital advertising in 2012, representing 20% of all advertising spending. An estimated one in four advertising dollars will be spent online by 2016. So clearly at least a portion of the money that used to be spent on TV advertising is making its way online. Here’s why:

  • Online advertising is cost effective – The ROI of online advertising is both higher and easier to track
  • Online advertising reaches all of us – We now spend a lot more time – throughout the day and in lots of different settings – online than we do sitting in front of the TV.
  • Online advertising is dynamic – Advertisers have lots more options to engage, pitch, educate, and inspire customers online than they do on TV.
  • Online advertising is accessible – Anyone can advertise effectively online even if they have a small marketing budget.
  • Online advertising is comprehensive – No other advertising strategy is as flexible, homogeneous, and complimentary as online advertising. Multiple mediums, outlets, and messages can be incorporated into one overarching strategy that makes the most compelling-possible appeal to customers.

Direct Your Energy – And Money – Where it Counts – Online

An online marketing campaign is not a guaranteed home run. But compared to TV advertising, it does offer lots of benefits at a fraction of the cost. Before you put your plan into motion, consult with the digital-marketing strategists at Studio C5, and make sure you are set up for success.

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