Media – Takeaways on Advertising from the Rally in the Alley -- RBC Capital Markets

TV is Evolving, but Not Dying (for now)

A major media planning agency said that it doesn't see the ad market simply as TV vs. digital, as both are required in a major marketing campaign. TV remains the go-to medium for "demand creation", IE awareness and impact. Digital remains the place for "demand capture", IE carrying the impression through to points of sale. But, media planners and sophisticated advertisers increasingly don't think either works well independently and the ROIs are interconnected. Hence, we think TV ad sales are perhaps more defensive to ratings declines than we previously believed, for now. This is being exacerbated by well-known measurement issues, but overall, we walked away feeling that advertisers are currently comfortable with TV budget allocations and pricing. That said, if improvements in mobile/digital advertising make it a substitute medium for demand creation, then this could change over the longer term.

The OTT Opportunity

While the overall TV ad market seems fine, the opportunity for ad buyers and planners appears to be OTT viewing where targeting is better. These impressions are still nascent from a volume perspective as far as we can tell, but they offer an exchange of the reach premium for the targeting premium. Media buyers were thus none too bullish on reach as a long-term driver of CPMs, but that said, the shift in inventory isn't happening overnight. There were real questions as to Nielsen's value to the ecosystem in this future world.

The Advantage of Digital: Advertise, Measure, Iterate, Repeat

While big brands are likely to continue to put a premium on the impact of long-form TV, nichier brands like Etsy commented that they prefer the data-driven aspect of a digital-only marketing strategy. They're looking for a fast-evolving strategy of digital advertising, followed by measurement and analysis, which results in new iterations and a repeated process. The velocity of this iterative brand advertising strategy is not considered to exist on TV. It will be interesting if the OTT transition, and associated better targeting, shapes this trend.

Ad Agencies: Maintaining the Data Edge

MDCA's Assembly acknowledged that transparency remains an industry issue that's not going away. As for the threat of disintermediation, they believe the value of media-focused ad agencies is a direct function of the data generated from media buying. In other words, it's tough to compete in advertising analytics if you're not also engaged in buying and measuring discussions with Nielsen, comScore, Facebook, Google, etc., not to mention other marketers. This data "high ground" remains the most important moat in Assembly's view. In their opinion, 30% of the value in a media buy is the resultant data and analysis.

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