Here Are 4 Surprising Reasons Why Advertisers

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“Must See TV” was a long time ago

TV ratings continue to slide. People are ditching cable and bingeing on shows like “Master of None” on Netflix without seeing a single ad.

So why are advertisers still pouring money into TV advertising? Even if this year’s TV upfront selling season is expected to be soft, as Variety reports, advertisers are still likely to commit billions to the likes of CBS and ABC.

There are lots of reason why marketers remain so committed to TV, even as media habits change radically. For starters, people still watch lots of commercial television, just maybe not the way they did in the heyday of “Friends” and “Seinfeld.” Even people between the age of 18 and 24 still log over two hours a day watching old fashioned TV, says Nielsen.

TV ads offer sight, sound and motion on big screens. There’s also zero chance that your ad will end up next to an ISIS video. And let’s face it, there’s plenty of inertia in the ad business, where companies buy TV ads because that’s what they’ve always done.

Still, it all feels illogical in this streaming era. Here are four perhaps surprising reasons why marketers have such a hard time pulling money from TV:

Grandfathered pricing

Some marketers, like say Bayer aspirin, have been advertising on TV literally since the 1960s. That means they’ve probably been absorbing modest ad price increases every year, according to Eric Bader, managing director at the ad tech advisory firm Volando, who has logged stints at several top media buying agencies. And these ad rates are contingent upon them spending at a certain level.

“TV is eroding in every dimension, but there is a spoken or unspoken threat that if a Bayer takes money out, that cost basis goes away,” said Bader. And coming back to TV after leaving for a period of time could result in that brand having to pay rates that are two and three time higher, according to estimates from Pivotal Research analyst Brian Wieser.

Gustavo Devito/Flickr

The models says TV works

Gustavo Devito/Flickr

The models says TV works

Many marketers have long relied on using what are know as “marketing-mix modeling.” Research companies such as Millward Brown provide brands with sophisticated research and statistical analysis designed to help them figure out where best to spend their marketing budgets to achieve whatever it is they want to achieve.

Guess what? These models often tell marketers that despite all the shiny new digital options out there, TV works. Again, the Bayers of the world may have decades of research data showing them how effective and efficient TV is. Digital media is still catching up here.

CMOs like to see their ads

As much as marketers say they want to try more sophisticated ad tactics, such as using better data and tech to deliver precisely targeted ads, they also really like to know that their expensive new commercial is running during the second ad break of “Law & Order SVU” on Wednesday night so they can tell their boss to tune in.

Agencies make good money making TV ads and buying TV ad space

Because ad agencies need to make every dime they can, there can be an “internal bias towards TV,” said Bader.

Source: Business Insider SG