The Power of Advertising in the Media and Entertainment Industry

Excerpts from an interaction with  Manish Sinha, Vice President & Business Head, Media & Entertainment, To The New. He has worked with top media companies across the globe and has extensive consulting and delivery experience with top broadcasters, studios and pure-play OTT companies.

How has the rise of digital media impacted advertising in the industry?

Digital media has impacted advertising in a big way. With digital, advertising has become more targeted, more measurable and two-way communication. Traditional media has worked well for decades and cannot be discounted altogether, but it has largely worked upon a spray-and-pray approach and was always a one-way communication. With Digital media, advertisers can better target their TGs and better measure returns on their advertising spend. In India, digital media advertising is expected to overtake television advertising in 2023, with a current market share for them being 40% and 35% respectively.   

How does advertising impact media and entertainment industries in terms of revenue generation and sustainability?

The Media and Entertainment industry primarily has two sources of revenue - advertising from brands and consumer spend that includes subscriptions, rentals, tickets etc. These two account for more than 95% of industry revenue. Out of these two, advertising has a much bigger pie and has always been the mainstay of revenue generation and sustainability for the media and entertainment industry. For example, most TV broadcasters across the globe get 60-80% of their revenues through advertising.

In the new digital world as well, advertising revenues are higher than subscription revenues and appear to be more long-term and sustainable for the industry. As consumers continue to cut cords on traditional TV models and suffer from subscription fatigue in the new digital world, advertising-based AVOD (Advertising Video-on-demand) and FAST (Free Ad Supported TV) are expected to have the fastest growth.       

How does advertising influence consumer behavior and purchasing decisions in the industry?

The advertising serves three purposes - creating awareness or discovery, describing purpose or utility and influencing in favour of the brand or product. It is the only mechanism available for establishing a connection or acquaintance between consumers and brands. The first two, creating awareness and describing purpose helps the industry as it highlights or creates the need and a solution for it. The third one, influencing in favour, helps the brand. It makes consumers buy the brand.

The first two are relatively easier, the third one is where the rubber hits the road. When the need and a general solution is established, influencing consumer behavior and purchase decisions in favour of the brand is the primary objective of advertising. Good advertising is targeted, timely, relevant, contextual and succinct and gets registered in consumer minds and resurfaces when the purchase decision is to be made.        

How can advertisers measure the success of their campaigns in the industry?

The beauty of advertising on digital media is its ‘measurability’. The advertisers can plan their campaigns around very targeted, number-oriented, and outcome-driven advertising. For example, if a brand is looking to create more brand awareness, it can go for campaigns that maximize impressions for its target group and pay digital media publishers based on actual and not estimated impressions. Another brand looking for more conversions can define a campaign that maximizes conversions, irrespective of the number of impressions. The advertiser can always calculate the ROI or success based on the outcome, impression counts or the number of conversions, achieved for every dollar spent on advertising. Also, given the nature of digital media, such ROI continues to improve regularly as advertisers learn more and more about their TGs, based on consumers’ digital interactions, helping them with better targeting and more refined data-driven success criteria for their campaigns.          

With the rise of ad-blockers and cord-cutting, how are media and entertainment companies adapting their advertising strategies?

When we talk of cord-cutting, we are talking about consumers shifting from traditional TV to digital consumption. With the burgeoning digital consumer base, advertisers are significantly increasing their spend on digital media. They want to be there where the consumers are. Considering the high growth of digital media advertising and with traditional TV advertising still having a significant share, the media and entertainment companies are offering integrated digital and TV ad inventories and campaign options to advertisers. The winning theme for large players is all about providing the best of both worlds. These companies are also focusing on innovation to find out ways of maximizing value for advertisers with levers such as brand integration, gamification, native advertising and e-commerce integration.

On ad-blockers, I don’t see them as a major threat. The industry has already largely adopted server-side ad insertion (SSAI) where the ad blockers are not able to detect and block ads. The focus that media and entertainment companies and advertisers have is to make ads as less intrusive as possible for their consumers. There is more and more experimentation with brand integrations, native advertising and ways and means to strike the right balance between experience and monetization.            

How does social media advertising compare to traditional advertising in terms of effectiveness and reach?

Social media advertising is way more effective than traditional advertising in multiple ways. Social media advertising is very targeted as these platforms have multiple data points about the consumer and can make the ads really contextual for TGs and minimize wastage that is showing ads to consumers who are not part of TG. Another aspect is acceptability. When the consumer is on a social media platform, he or she is there for consuming or creating content and hence is more receptive to ads. This is not always the case with traditional advertising.

The most important difference to me though is the two-way communication that enables measurability. With social media advertising, the platforms and hence the brands can discover how the consumers are interacting with their advertisements and whether they are getting the intended results. With the current level of technology at hand, there’s so much that can be done to track, study and analyze consumer behaviour and leverage that for maximizing returns on every dollar spent on advertising.   

In what ways can media and entertainment companies tailor their advertising to different demographics? 

Digital media enables highly tailored or contextual marketing that can target different demographics in a very meaningful way. An important point to note here is that demographics in the digital media world would be two or three levels deeper than it is in the traditional advertising world. I call it the ‘digital demographics’. It has multiple dimensions and additional data points to fine tune demographics even further and both the inventories and ad campaigns shall be planned around them; location, gender, age, device, interests, journeys, persona etc. 

The media companies shall have their ad inventories segmented for these digital demographics to ensure that they get adequate fill rates while the advertiser gets maximum value on their spend. Similarly, the agencies and advertisers shall map their TGs with these digital demographics for better results. A brand that caters to the masses wouldn’t like to spend its advertising dollars on a consumer that is watching the content on a high-end phone or TV. At the same time, the media company with this inventory wouldn’t like to miss charging a premium on such an inventory.