Television Advertising - US - February 2017

1. Overview

   • What you need to know
   • Definition

2. Executive Summary

   • The issues
   • Viewers bombarded by hundreds of commercials weekly
     • Figure 1: Number of commercials viewed daily (net of linear and digital) – Mean, by gender and age, November 2016
   • Online and mobile gain traction, jeopardizing linear growth
     • Figure 2: Sales of commercials on digital platforms, 2011-16
   • DVR far more popular than TVE, cVOD
     • Figure 3: Use of ad-free methods of watching video in past week, November 2016
   • The opportunities
   • Focusing on young men
     • Figure 4: Positive response to a commercial, by gender and age, November 2016
   • Reminders and introductions both effective
     • Figure 5: Product introductions and reminders to purchase, November 2016
   • Jingles keep ringing
     • Figure 6: Attractive attributes of commercials, November 2016
   • What it means

3. The Market – What You Need to Know

   • Rise of sVOD endangers linear
   • Cord-shaving to concentrate audiences
   • 2020: Peak linear sales

4. Market Size and Forecast

   • Cyclical market shows growth in even years
   • Improved measurement a spur to sales
   • Secular decline ahead
   • X-factor: DVR vs TVE/cVOD vs sVOD
     • Figure 7: US television advertising sales and fan chart forecast, at current prices, 2011-21
     • Figure 8: US sales and forecast of market, at current prices, 2011-21

5. Market Perspective

   • Ad-free platforms competitive
   • • Figure 9: Use of ad-free methods of watching video in past week, November 2016
   • DVR successful in blocking ads
     • Figure 10: Cognizance of ads during fast-forwarding via DVR, by gender and age, November 2016

6. Market Factors

   • Cord-cutting tapers off in favor of cord-shaving
   • • Figure 11: US residential pay TV subscriptions, 2012-15
   • Improvements in hardware
     • Figure 12: Sales of 4K TV sets, 2014-2017

7. Key Viewing Platforms – What You Need to Know

   • Live viewing still king
   • Young audiences gaining devotion to Hulu, TVE
   • Significant boosts in ad-spending on desktop and mobile

8. What’s Working?

   • Use of ad-based platforms nearly universal
     • Figure 13: Use of traditional television and ad-based online content in past week, November 2016
   • Live TV most commonly used format across all ages
     • Figure 14: Use of live television in past week, by age, November 2016

9. What’s Struggling?

   • TVE not quite there yet . . .
   • . . . but usage blossoming among younger adults
     • Figure 15: Use of Hulu and Television Everywhere in past week, by age, November 2016
   • Use of Hulu, TVE, linked to more frequent purchasing
     • Figure 16: Use of Hulu and Television Everywhere in past week, by parental status, November 2016
   • • Figure 17: Use of Hulu and Television Everywhere in past week, by number of children in the household, November 2016
   • • Figure 18: Use of Hulu and Television Everywhere in past week, by household income, November 2016
   • • Figure 19: Use of Hulu and Television Everywhere in past week, by race and Hispanic origin, November 2016

10. What’s Next?

    • Online and mobile gain traction
      • Figure 20: Digital video ad sales, 2011-16
    • One in six ad dollars headed toward digital video by 2020
      • Figure 21: Digital video share of total television and digital video ad spending, 2011-21
    • Mobile video mainstreams
      • Figure 22: Frequency of viewing video on mobile devices, by type of video, December 2015

11. The Consumer – What You Need to Know

    • Excessive exposure, poor recall
    • Commercial viewing more common than avoidance
    • Commercial prompted one in three to buy in past month
    • Young men show highest levels of engagement

12. Exposure

    • Viewers inundated by 50+ commercials daily
      • Figure 23: Number of commercials viewed daily – Mean, November 2016
    • Greater exposure leads to more purchasing
      • Figure 24: Number of commercials viewed daily – Mean, by location of residence, November 2016
    • • Figure 25: Number of commercials viewed daily – Mean, by Hispanic origin, November 2016
    • • Figure 26: Number of commercials viewed daily – Mean, by parental status and number of children, November 2016

13. Behavior during Commercials

    • The audience is watching
      • Figure 27: Behavior during commercials, November 2016
    • Young men most likely to watch
      • Figure 28: Behavior during commercials, by gender and age, November 2016
    • High-income groups opt out via DVR
      • Figure 29: Behavior during commercials, by household income, November 2016
    • Blacks stay tuned
      • Figure 30: Behavior during commercials, by race and Hispanic origin, November 2016

14. Response

    • Limited recall the norm
      • Figure 31: Commercial recall, November 2016
    • Viral pass-through needs to be incentivized
      • Figure 32: Viral spread of information in commercials, November 2016
    • Reminders and introductions work
      • Figure 33: Product introductions and reminders to purchase, November 2016
    • Digital pursuit
      • Figure 34: Visits to brand websites and clicks on video overlays, November 2016
    • Majority indicate some positive response
      • Figure 35: Positive response to a commercial, by gender and age, November 2016
    • Higher-income groups less engaged
      • Figure 36: Positive response to a commercial, by household income and by parental status, November 2016

15. Purchasing

    • One in three acknowledge a purchase in past month
      • Figure 38: Date of most recent purchase because of a television commercial, November 2016
    • Dads with multiple children most likely to be influenced
    • • Figure 39: Purchasing in response to a commercial in past month – CHAID – Tree output, November 2016
    • Young men softest target
    • • Figure 40: Incidence of making a purchase in past week because of a commercial, by gender and age, November 2016
      • Figure 41: Number of commercials viewed daily – Mean, by gender and age, November 2016
    • Focusing on the mass market
      • Figure 42: Incidence of making a purchase in past week because of a commercial, by household income, November 2016
    • Urbanites, Hispanics identify and buy
      • Figure 43: Incidence of making a purchase in past week because of a commercial, by Hispanic origin, November 2016
      • Figure 44: Incidence of making a purchase in past week because of a commercial, by location of residence, November 2016

16. Negative Attitudes to Commercials

    • Only a minority don’t identify, trust, or buy
      • Figure 45: Negative attitudes to commercials, November 2016
    • Commercials have more impact on younger shoppers
      • Figure 46: Perception of influence of commercials on purchasing, by age, November 2016
    • Over $100Ks claim to be less influenced
      • Figure 47: Perception of influence of commercials on purchasing, by household income, November 2016
    • Alienation from characters more common among rural residents
      • Figure 48: Alienation from characters, by location of residence, November 2016
    • Hispanics less likely to feel alienated from characters
      • Figure 49: Alienation from characters, by Hispanic origin, November 2016

17. Positive Attributes in Commercials

    • Music makes memories
      • Figure 50: Attributes of commercials, November 2016
    • Younger ages grateful for the sales tip
      • Figure 51: Interest in hearing about sales and discounts, by age, November 2016

18. Appendix – Data Sources and Abbreviations

    • Data sources
    • Sales data
    • Fan chart forecast
    • Consumer survey data
    • CHAID analysis methodology
    • Abbreviations and terms
    • Abbreviations
    • Terms

19. Appendix – Market

    • • Figure 52: Total US sales and forecast of market, at inflation-adjusted prices, 2011-21

20. Appendix – Consumer

    • • Figure 53: Interest in recognizable actors in commercials, by age, November 2016
    • • Figure 54: Purchasing – CHAID – Table output, November 2016

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