Do people still watch TV?
If you looked at any stats related to cord-cutting, the popularity of streaming, or the rise of OTT advertising, you’d think the answer was a resounding “no.”
The waves of video consumption are shifting and flowing heavily in favor of online sources. The entrance of NBC and other traditional media giants into the streaming wars proves that this isn’t just a fad.
Conventional wisdom would be that advertisers would shift their budgets from TV to digital.
Not so fast.
More than 5.5b people still watch TV, giving brands 5.5b reasons to keep TV ads alive. And that they did in Q1, collectively investing more than $14.8b in TV, with most of those dollars going to commercials of the 16-30-second variety.
This article explains why advertisers are gravitating to shorter TV ads, which ones are going against the grain, and what the future holds for TV advertising.
Hint: The future may surprise you.
Short Attention Spans Mean Shorter Ads
Commercials are a hot topic among consumers and advertisers alike.
Advertisers have historically cherished their reach, especially during marquee events like the Super Bowl, the Olympics, and elections.
On the other hand, the average consumer expresses the opposite sentiment, with two-thirds of respondents to a survey saying they don’t actively watch TV ads.
Combine that with declining attention spans, and it shouldn’t be a surprise that advertisers aren’t fussing with long commercials; ads over 60 seconds accounted for just 4% of spending in Q1.
According to our data, advertisers spent over $12.2b on TV ads of less than 30 seconds in Q1 2023, representing 82% of the total TV advertising investment.
Of those ad dollars, $5b went to ads less than 15 seconds, while around $7b went toward those between 16 and 30 seconds.
The gravitation toward shorter ads aligns with the attention spans of the digital consumer, but there are also data to support the allocation.
While advertisers have historically defaulted to 30-second commercials, McKinsey found that the performance gains from longer ads (beyond 15 seconds) aren’t worth the extra dollars. The research also found that advertisers could potentially save up to 9% by shifting spend away from longer ads—a move that’ll be extra appealing in 2023 as advertisers look for efficiencies in their budgets.
Shorter commercials are universally loved
When it works, it works.
That’s what most advertisers said in Q1 about commercials that cut at the 30-second mark.
In Q1, nearly 60% of the TV ad investment from media & entertainment advertisers went to ads between 16 and 30 seconds ($1.1b), while about a third went to 15-second commercials ($619mm). During Q1 2022, the mix was similar, with 61% of spending dedicated to 16-to 30-second ads and 31% to ads of less than 15 seconds.
Meanwhile, the investment in 16- to 30-second TV ads from both finance and technology advertisers hovered around 66-67% ($1.1b and $766mm for finance and technology advertisers, respectively). At the same time, finance advertisers invested $432mm in 15-second ads, while technology advertisers spent $260mm.
For example, advertisers for The Progressive Corporation invested 83% of their budget on 16- to 30-second commercials, many of which landed on CBS, NBC, and Fox networks.
The message is clear: Short ads are in.
Even advertisers with deep pockets who can stomach the lofty price tag that often comes with longer ads aren’t getting carried away. In Q1, advertisers for Procter and Gamble spent 100% of their TV ad investment on ads of less than 30 seconds.
Pharma Advertisers Like What They Like
There’s always that one person in your family who goes against the grain. That’s pharma advertisers when it comes to TV advertising.
While advertisers almost universally opted for shorter commercials in Q1, pharma and medical advertisers did the opposite, investing over half of their TV budget on ads between 46-60 seconds, up from 44% in Q1 2022.
AbbVie, for example, spent 86% of its budget on 46- to 60-second ads, with the remaining 14% going to commercials of less than 45 seconds.
Some pharma and medical advertisers took it further by investing millions ($217mm) in TV ads longer than a minute.
The sizable investment in TV comes despite pharma’s slow-but-steady embrace of digital advertising as the industry continues its shift to digital healthcare.
In 2022, advertisers for 572 pharma brands spent just under $1.5b on video ads, with 74 investing only in the format, including Millennium Pharmaceuticals, Merck & Co, Pfizer, Gilead Sciences, and Pfizer.
While pharma advertisers’ embrace of TV is far from surprising given the thin regulatory lines on which they sit, their investment in the traditional format may not look so outlandish in a few years.
It’s 2023, and TV ads are making a comeback.
The Comeback Few Saw Coming
TV ad spending was down by 2% YoY in Q1 2023, but it’s poised for a comeback few saw coming.
Despite the adoption of digital and online video from a consumer and advertising standpoint, brands will have more reason than ever to keep TV ads moving forward.
In fact, many advertisers are returning to traditional ad formats to break through digital ad loads, capitalize on consumers’ trust in traditional formats, and prepare for a world without third-party cookies.
TV advertising may have faded out of focus for a few years, but it’s battling to regain the spotlight. As it does, advertisers across medical & pharmaceutical, media & entertainment, finance, retail, and technology, who combined to spend 54% of the TV ad investment in Q1, will continue to invest.
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