‘A tipping-point year’: Why 2022 was pivotal for shifting linear TV dollars

Many of the world’s leading marketers are reassessing how to generate maximum value from every advertising dollar amid high inflation, fears of a recession, and the lingering impacts of a global pandemic. And that means many advertising channels, such as TV, are at a tipping point.

Take Procter & Gamble (P&G) — the world’s largest advertiser — which now invests 50 percent of its media spend in digital, as P&G Chief Financial Officer Andrew Schulten stated on the consumer packaged goods giant’s latest earnings call. Schulten described how the focus is shifting from linear TV spend to programmatic and digital, an area he says is “a lot more targeted and a lot more precise in terms of delivering reach.”

“It really has been a tipping-point year,” says Tim Hill, head of partnerships at Interpublic-owned media agency Initiative, which works with several major brands like Lego, Nintendo, and Carlsberg. Hill says the agency is “pushing beyond” the point where 50 percent of clients’ ad spend is now dedicated toward digital video, with most concentrated in connected TV (CTV).

It’s a trend that’s unlikely to change in 2023 and beyond, experts say, as decisions are buoyed by consumer demand, the onslaught of new programming and platform options, and the need to drive return on investment as marketers face economic uncertainty. A new Insider Intelligence forecast estimates that U.S. advertisers will have spent $21.16 billion on CTV in 2022, a 23 percent increase from 2021. That amount is expected to steadily increase to $43.59 billion by 2026.

Follow the eyeballs
When the 2022 upfronts came around in May, investment officers and marketers were facing a video landscape that was — to put it mildly — in flux. More consumers were saying goodbye to their network plans as the number of CTV platforms offering ad-supported video on demand (AVOD) services were only growing (hello, Netflix and Disney+). As a result, major streaming players were beginning to see large pockets of their upfront ad commitments earmarked for streaming. Disney was a shining example, with 40 percent of its record $9 billion in commitments set to go toward ads on Hulu, ESPN+, and Disney+.

Marketers, of course, continue to follow consumer behavior. This past July, for the first time, audiences spent more time streaming CTV than they did watching cable, Nielsen reported. And with the holidays approaching, streaming is hitting new strides, as live sports streaming takes off and Netflix’s new advertising tier gains momentum.

“Our goal was to even out what we’re doing from a linear standpoint, and what we’re doing from a digital standpoint, so that we had a more equitable mix going into this year, which aligned to the audience behavior that we are seeing,” explains Adam Brumbergs, a group director who leads enterprise planning and sponsorships for one of Initiative’s largest clients.

Experts say the pandemic initially fueled a lot of the push away from linear TV toward streaming, and now that the trend is only accelerating, marketers are best positioned to grow in the space.

“The COVID crisis was a catalyst for streaming growth,” Lisa Giacosa, chief investment officer at Publicis-owned media agency Spark Foundry, tells The Current. “What that enabled us to do was to really push even further into those spaces and put a more programmatic approach to the way we’re buying TV for that big-screen experience in the living room. And what that enables us to do is to apply richer audience data, richer metrics to what’s actually happening, and where that communication is landing.”

Evolving upfront strategy
As digital video continues to take larger chunks out of TV ad budgets, the way brands and media agencies are approaching their upfront ad commitments is also evolving.

Initiative approached the 2022 upfronts with linear TV first in mind to protect the scarcity of the limited inventory but then, throughout the year, rebalanced the mix closer to where consumption is, which Hill says falls more on the digital side. The agency now looks at linear TV as a place to connect with mass audiences for “cultural heat moments” through live sports or events, whereas digital video has become used for targeted, contextual audience-based plays.

“There’s more flexibility within digital,” says Hill. “We have more opportunity to scale it up without penalty and without cost implication than we do in the upfront.”

The mix has worked. Hill says this strategy has allowed Initiative to increase reach by 13 percent over last year, and better balance frequency levels since linear TV viewers were previously being exposed to an ad up to 30 times.

Still, while some brands favor a mix, there are others that only play in digital. For instance, in the case of Roto-Rooter franchises in the suburbs of major cities, CTV stands as the best option to target homeowners with its plumbing services. “We don’t do work for renters unless we have the homeowners’ permission,” explains Ilene Hackett, marketing specialist at Roto-Rooter, who works with CTV agency Strategus. “So if there are large apartment complexes, I don’t want my ad being shown to those apartments. With CTV, you’re able to pull from ten different data sources to pretty much pinpoint reliable and accurate homeowners.”