The television ad industry is about to undergo a tremendous upheaval, far more dramatic than the slashing of ad budgets we’re seeing right now. 

As my friend Tom Morgan pointed out the other day (a notion that I’ve since heard from several other industry pros) many, if not most national advertising campaigns are on hold for the rest of this year and maybe most of next year as well.

They're being supplanted by regional spot buys.

The reason for this shift is that the pandemic and its aftershocks will hit different regions of the country at different times and states will open up and lock down on very different schedules. 

Thus advertisers will need to adjust both their messaging and their ad spend to account for the fact that while one region has just reinstituted lockdowns, another is about to open up.

It’s a theory that’s being called “The Hammer and the Dance” which says that over the next year or two we will alternate between periods of strict lockdown (the hammer) and periods where we can ease up on restrictions (the dance) and that these will happen asynchronously across the U.S..

Which, if you’re an advertiser, means that a national ad campaign is probably not going to cut it, unless you're a brand with a long sales cycle and/or you're running image ads. (And even then you'll want to take care that your ads are appropriate for regions that are under lockdown.)

We’re already seeing the start of this. The upfronts are not happening. Which is not the leas bit surprising because who would commit to buying advertising for October when we still have no idea what October will look like. 

The result is that spot buying on a regional basis is about to become the norm. 

This in and of itself is not as disastrous as it might sound.There will, of course, be winners and losers and changes in behavior, some of which are long overdue.

So who is going to benefit? Anyone who can sell addressable advertising and/or target specific locations. 

This is a pretty broad swath of the industry, but the ability to sell ads that are targeted to specific households in specific locations is going to be a huge selling point, especially when you have a TV market that overlaps state borders or when you want to reach a certain segment of the population with a very specific message. (e.g. seniors, parents) 

The FASTS (free ad-supported streaming TV services) are particularly well positioned here because advertisers can look at their linear local TV buys and supplement them by buying addressable VOD inventory on the FASTS to achieve what’s known as “incremental lift,” allowing them to reach households who did not see the linear ads and/or to heavy up in locations where they want to increase frequency. 

The “free” part of FASTS will play a major role here too—if the economy continues to crash, viewers will be looking at lower cost options, free ones in particular. Since broadband is now more or less a utility on the order of electricity or water, it’s far more likely that hard-pressed consumers will be keeping broadband and dumping cable. Which means that viewers will be turning to the FASTS even more than they are now, increasing viewership and making the inventory more valuable.

The ad-supported versions of the various Flixes (Hulu, Peacock, HBO Max, VCBS and Discovery) will similarly be in a good spot because of their ability to deliver locally targeted ads. It is also highly likely given the economy, that more people will choose the ad supported versions of these apps, which, like the FASTS, makes their inventory more valuable.

New technology standards like those being developed by Project OAR, Nielsen and others that allow for the delivery of addressable advertising on linear via overlays on smart TVs will also benefit. These systems, which are all currently in beta, are designed specifically to allow national networks (broadcast and cable) to run addressable ads on their linear (live) feeds. That means networks will be able to filter their ads by geography and so an advertiser can buy an ad during prime time that only hits those regions where the ad would be appropriate. (They can do this by running multiple versions depending on region or by only buying ads in specific regions.)

The growth of these new linear addressable standards will also lead to the more rapid development of more holistic ways of buying and selling inventory across multiple platforms, both linear and OTT, something that’s been needed for some time now, that will be greatly accelerated by current conditions.

MVPDS and vMVPDs:  MVPDs and vMVPDs also have the ability to target local audiences. They have two minutes of local inventory per hour, which is a start, and they have the ability to use set top box data to run locally targeted addressable ads on VOD and on services like Peacock, which are aligned with MVPDs like Comcast and baked into the program guide.

Local broadcasters are also in a good place because local TV news viewing is way up and will continue to be way up as governors and mayors make decisions that affect people’s lives and livelihoods. They will have more viewers (something they have not had in a while) and as noted above, are able to use the viewership data collected by ACR providers to find local viewers on CTV, thus giving their ads incremental lift. (NB: TV[R]EV will have a new Special Report next month detailing how this works, who is doing it and what the future of local will look like.)

Ad agencies are particularly well positioned to benefit from this upheaval as they become adept at helping their clients navigate the new landscape. It is going to fall on agency media planners and buyers to monitor which states are open and which are closed and to figure out how to shift ad dollars to the appropriate places in the most rapid and cost efficient ways possible and to then determine how to use the wealth of available data and technology and exchanges to execute the new strategies as seamlessly as possible...all while providing clients with accurate measurement data. Since this is all new and uncharted territory, the more adept the agency is at navigating this new environment, the more valuable they will become to their clients. 

Measurement companies of all sorts will be called on to provide data beyond mere ratings as the changes will likely mean that traditional reach and frequency stats will be step one in planning out where to put a client’s ad dollars. Companies that measure local viewership will find their data to be more valuable as brands focus in on the efficacy of their local ad spends. Similarly, ACR data companies that are able to provide in-depth measurement of viewing across all platforms, CTV in particular, will see their value grow as brands spend more on CTV and less on national TV and will need to figure out the ultimate value of all those addressable spots.

Attribution Providers will be much in demand as agencies and brands try and the effectiveness of their ads buys in this new landscape. The beauty of attribution done right (e.g., with rigor from multiple data sets) is that it can help brands figure out which outlets, day parts and program types are most effective for them, an outcome that is likely to vary from region to region. It can also help brands to understand what the current sales funnel looks like at a time when most every transaction is being done online.

Standing On Your Head

The losers will be those companies that don’t adapt, that are not agile and forward thinking enough to realize that the world is no longer as it once was and that the only way to succeed is to rapidly adapt to the here and now, to realize that you are more or less starting from scratch and that trying to adapt the old ways to fit the new world is a losing battle.

While that may seem like an incredibly obvious statement, we will be surprised at the number of companies that try and cling to the past, that refuse to accept that when the world has been turned upside down the best thing to do is to stand on your head and see things from a brand new point of view.