The Decline of Television and its Effects on Local Advertising

May 26, 2009

In an article on AdAge.com, Akamai CEO Paul Sagan points out that we’re witnessing the tipping point for web video vs. television. (Not surprisingly, he details this out in a web video that accompanies the article.)

In advertising, television’s superiority was that it reached the most people. Despite their diminishing reach, they continue to raise advertising rates. As a result, things start looking bad for local businesses. It will be more expensive for them to reach fewer people.

Enter the rise of online video. Hulu.com, for instance. Right now, Hulu’s ad breaks each consist of one very short spot. In addition, like Tivo and DVR, Hulu’s platform allows program pausing. These factors combine to give the viewer a superior experience over traditional TV.

The problem for local advertisers is that all the ads are a part of large national campaigns from big blue-chip companies. Which brings us to the big solve.

Technology has a funny way of creating new opportunity where it has wrecked the old. Local television advertising does not have to be an exception to this. Hulu, like all web video platforms, offers increasingly flexible and accurate ways of targeting consumers. More than simply targeting a demographic, web video can, through IP information and GPS in laptop and hand-held devices, make it possible for advertisers to literally know a person’s location.

If online video sites really want to show mastery of reaching specific markets, local advertising will be in its best interest. Right now, if you watch an entire program, you often get redundant commercials in the ad breaks. As a viewer, this is boring and annoying. Instead, fill some of those spots with local ads, offering a valuable layer of variety. In break A sites like Hulu could charge a larger rate to bigger companies. In break B, they could reserve one spot at smaller rates to local companies to make up the difference.

Local advertisers will also be able to show their clients much higher levels of analysis in tracking the impact of the online campaigns - something that is harder to gauge from traditional television spots.

But, it won’t be enough for local advertisers to just stay on top of web video marketing capabilities and technology. They will need great ideas for content and creative presentations that are engaging for the end viewer.

In that, some things never change.

By Mike

Filed Under Advertising, Technology, Marketing, The Process

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