What is the history of advertising on TV? Where is it going and what should digital advertisers look out for?
Almost as soon as the magic of moving pictures was in every modern household, marketers were tuning in to this breakthrough medium. A way to reach consumers using pictures and sound and even more succinct storytelling? Creative capitalists were drooling, and a new mega market was born: television advertising.
Television advertising started simply in the early 1940s, with the United States Federal Communications Commission (FCC) issuing commercial licenses to 10 US stations. Then, as TV technology evolved—with color pictures, more channels, and increased distribution—the industry quickly grew into a moneymaking behemoth.
But in its relatively short existence (compared to the longer arc of human industry), television advertising is seeing another technologically driven shift. Due to the evolving capabilities of entertainment viewing—from the onset of digital video recording (DVRs) to the endless on-demand viewing options and services—TV continues to keep marketers on their toes.
Take an exciting journey through the changing landscape in this timeline of television advertising and advancing technologies.
1941: The FCC (Federal Communications Commission) issues commercial licenses to 10 US television stations in May. On July 1, the first-ever commercial airs, a spot by the Bulova watch company that cost $9.
1951: TV ad spending reaches $128 million, up from $12.5 million in 1949: a 10X increase.
1953: Commercially broadcast color television launches.
1955: TV ad spending reaches the $1 billion threshold.
1963: TV surpasses newspapers as an information source for the first time.
1964: “The Big 3” (CBS, ABC, and NBC) demand upward of $50,000 from advertisers for a prime-time minute.
1968: Presidential campaign TV spending more than doubles, going from $10 million in 1960 to $27 million in this year.
1971: A congressional ban on radio and TV cigarette advertising takes effect, stripping the broadcast business of about $220 million in advertising.
1977: Gross TV advertising revenues rise to $7.5 billion, which, at the time, equates to 20% of all US advertising.
1984: During the third quarter of the Super Bowl, Apple introduces the Macintosh computer with a $500,000 spot, turning the NFL’s big game into a major ad event. This also marks the beginning of an era when advertising becomes newsworthy.
1986: NBC’s The Cosby Show breaks existing records for a network series by commanding $350,000 to $400,000 for 30 seconds of commercial time.
1989: Due to increased competition, the big broadcast networks reach an all-time low of 55% of the total TV audience.
1994: Internet advertising arrives. Web ad spending reaches $300 million in the mid-1990s.
1997: Netflix launches with a DVD pay-per-rental model.
1999: TiVo ships its first digital video recorder (DVR) unit, and the era of recording shows to watch later begins.
2005: YouTube launches. Google buys the site the next year for $1.65 billion.
2007: Netflix streaming launches, and AMC introduces the world to our favorite “Mad Man”: Don Draper.
2008: Hulu launches.
2011: Amazon rebrands its video-on-demand service as Amazon Instant Video and adds access to 5,000 movies and TV shows for Amazon Prime members. (They drop “Instant” in 2015.)
2017: Led by Netflix, Amazon, and Hulu, the top US subscription video services generate close to $15 billion in monthly fees alone.
2017: Spending on TV ads falls for the first time, as more Americans make the move away from cable. Viewership of even the most popular network shows continues to decline.
2018: YouTube boasts 1.9 billion logged-in monthly users, who watch more than 180 million hours of YouTube daily.
2018: Traditional TV advertising spending declines another 2%.
2018: 70% of the television sets sold across the world are “connected” TVs.
2019: Hulu boasts 25 million subscribers; Netflix is nearing 150 million.
2019: The pay-TV industry will see a 5% decline in pay TV subscribers in 2019. This same year, YouTube TV becomes available nationwide and offers an alternate type of subscription option.
2020 and beyond: TV advertising is expected to rise again in 2020 because of the presidential election, but what else will the future bring?
Get a visual history of advertising on television with this infographic.
It’s an exciting time in television. With the amount of creative dollars being spent, quality content exploding, and more people “plugged in” than ever before, there are many factors that are driving the market forward. Here are the 4 main drivers of TV advertising that are shaping its future.
On-demand streaming services continue to exert an influence on the viewing population. These entertainment providers, such as Hulu and Netflix, are taking over the television landscape, churning out content and investing in their own original programming.
It’s estimated that almost 150 million people in the US watch Netflix at least once a month, followed by Amazon Prime and Hulu (88.7 million and 55 million, respectively).
Learn more about OTT by watching our on-demand webinar.
Sales of smart TVs, or internet-connected televisions, as well as other connected devices (e.g., Roku, Amazon Fire, and gaming consoles) continue to rise. These devices include various digital capabilities and make it easier than ever for viewers to tap into their on-demand viewing options, including apps for YouTube, HBO, Hulu, etc. Currently, 69% of households have a connected TV.
Because of increased market fragmentation, cross-channel measurement is more important than ever. Measuring digital campaigns has always been a challenge for even the most advanced advertisers.
The need to understand who saw an ad and where seems so simple, but as a result of changing landscapes, varying industry benchmarks, and disparate measurement partners, it’s difficult to know which data to trust. And that’s not accounting for more complex metrics such as return-on-investment, reach, frequency, and cross-platform/channel performance.
There’s now a need for marketers to fail fast and optimize faster to find out what’s working and what’s not. In addition, it’s becoming critical to have a partner that does not rely on impressions alone to drive these decisions. Instead, partners need to verify the quality of engagement in the media to ensure budgets aren’t wasted.
Thanks to advancements in technology, marketers are now more aware of the impact of invalid traffic (IVT) on their campaigns and media spends.
As ad delivery to connected TV (CTV) and OTT TV devices continues to scale into the programmatic landscape, it’s also suffering from the same ad-fraud issues seen across all video advertising, whether direct or programmatic.
This is driving a technological push to bring stronger brand safety and viewability tools to TV advertising, which is allowing marketers to confidently plan and measure their TV campaigns. Because no matter whether the objective is brand awareness or sales lift, the first step is making sure campaigns are reaching real people.
Want more information about setting up a successful advanced TV campaign?
Kori Hill Wallace is a content specialist for Oracle Data Cloud. She loves appetizers, animals, athletics, and alliteration. (She what she did there?)