TV advertising is in the midst of a total transformation, driven by the prevalence of online streaming services that have led to a shift in consumer behavior and a new era of content consumption. Importantly, these streaming services are delivered by internet-connected TVs (CTVs), which provide for the first time the ability for TV content and advertising to be measured in a closed-loop system that enables the measurement of business outcomes that are associated with ad exposure, just like digital advertising. And as if this wasn't enough change for the TV industry, enter artificial intelligence (AI), which will accelerate the pace and scope of the TV industry’s transformation.
For many decades, the TV industry has been relatively stable, with around $70 billion in revenue driven mostly by 500 or so major national advertisers making large ad buys based on “reach and frequency” and designed to drive awareness against target consumer demographics. The recent shift towards streaming services like Hulu, Roku and Peacock, coupled with the rise of connected TVs, has made TV just as measurable as online search and social advertising. New self-serve TV platforms have democratized access to TV, enabling millions of search and social performance advertisers to move into TV as a growth-driving medium. This shift is underway and will have a radical impact on the TV ecosystem.
AI will change the game yet again. With the help of AI, advertisers will be able to create TV-ready video ads by simply providing text inputs. AI algorithms will enable marketers to refine the ad and create multiple versions of the same ad with element-level differences, from major changes like an actor’s gender, color scheme or messaging, to more subtle alterations like frame rate, aspect ratio, types of clothing worn, volume, etc. Advertisers will be able to test multiple versions of ads on TV-buying platforms that provide feedback on exposure-to-outcome, to determine which combinations of creative elements drive the best performance (where performance equals outcomes like sales or return on advertising spend, or ROAS).
Moreover, TV buying and optimization platforms will use AI to optimize ads for outcomes, leveraging all versions of ad creatives in combination with an endless set of non-creative variables (such as context, audience profiles, daypart, frequency, etc.) to drive optimal results.
Ultimately, creative development platforms will merge with TV buying and optimization platforms, enabling marketers to create TV ads with one-click simplicity, and then leverage AI systems to optimize creative and media buying using an endless set of variables. This optimization approach, executed at the nexus of creative and real-time/programmatic TV buying, will transform TV from a reach and awareness medium into a powerful outcome-based medium, leveraging the unique TV attributes — sight, sound, emotion via large-screen, uncluttered delivery — to drive ads with higher impact and better ROI than any other advertising medium.
AI is already accelerating the transformation of TV. Within the next few years, TV will be accessible by millions of advertisers via democratized TV buying consoles that will be able to create ads, then deploy and optimize them using AI. The consequence will be a new TV advertising landscape that proves its value in a wholly measurable way.
Broadcasting & Cable Newsletter
The smarter way to stay on top of broadcasting and cable industry. Sign up below.
Jason Fairchild is founder and co-CEO of tvScientific.