Have you ever considered advertising on local TV (such as your local ABC, CBS, NBC or Fox affiliate)? In my experience, there have always been two downsides to local TV advertising: the high cost of placing the ads and the lack of targeting. Most local TV stations base their rates on broad demographic data and estimated viewership, so if you want to run an ad during prime time, you’ll be expected to pay top dollar to reach all the estimated viewers during that time slot.
Thanks to a recent vote of approval by the FCC for a technology called Next Gen TV
, the old way local TV stations sell advertising will most likely change and that could spell a big “win” for businesses with smaller advertising budgets.
Why does this matter?
Targeted advertising can be a game changer for small businesses. With a few simple clicks on nearly every social media platform (as well as on Google AdWords), we can target our audience based on location, age, gender, demographics, interests, and behaviors at a much lower cost than if we were to cast a wide net. For example, on Facebook we often run campaigns where we serve up ads to females who live in a specific areas and recently changed their status to “Engaged”. With a relatively small investment, these targeted ads have been wildly effective for us and typically help generate multiple inquiries each week from newly engaged couples inquiring about our wedding video services.
What is Next Gen TV?
Next Gen TV (or ATS 3.0 as it is referred to by the FTC) is a new Internet-Protocol (IP) based platform that will enable local broadcasters to “…better personalize their broadcasts with information and interactive features…” they believe will be relevant to you, the viewer. In order to accomplish this, media and broadcasting companies will be able to collect detailed information about consumers’ viewing habits which can then be sold to advertisers. Pretty cool (and creepy), right?!
How much will it cost?
Local TV broadcast companies have not unveiled pricing models for targeted advertising through Next Gen TV, but my hope is that it will cost less than it does currently. There is a strong case to be made that broadcasters would significantly improve their bottom line and increase ROI by developing programs that allow segmented advertising. Here’s a very rudimentary scenario I came up with showing how it may work:
- One advertiser is willing to pay $1,000 for a local commercial during The Bachelor.
- 300,000 viewers per spot
- 12 episodes x $1,000 per spot = $12,000 (total investment)
- Cost per Thousand (CPM) = $3.33
- 30 advertisers are willing to pay an average of $300 for a local commercial during The Bachelor.
- 10,000 highly targeted viewers per spot
- 12 episodes x $300 per spot = $3,600 (total investment)
- Cost per Thousand (CPM) = $30
The advertiser in the second scenario is paying a significantly higher CPM ($30 vs. $3.33), but they are spending far less money on the campaign and reaching their target audience far more effectively. Furthermore, the difference in ad revenue for the broadcaster is substantial: $12,000 from one advertiser versus $108,000 from the group in the second example. Talk about a win-win scenario, right?!
When will Next Gen TV be available?
The biggest hurdle for Next Gen TV relates to the infrastructure changes necessary to usher in the new technology. Station towers and systems will need to be updated, and it is estimated that process may take up to three years across the United States. There will also be changes coming down the pike to TVs, so viewers with devices that are not compatible with Next Gen TV will obviously not see a difference in the ads they are served.
What do you think about this new technology? Would you consider advertising on local TV if you could pay less for targeted placements? Leave a comment and share your thoughts below!
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