Will 'next gen TV' help broadcasters better compete for digital ad dollars?

Dive Brief:

“Next gen TV,” more formally known as the ATSC 3.0 standard, recently got the go ahead from the Federal Communications Commission, enabling the broadcasting of high-quality content over the air using an internet protocol (IP) signal. This could enable local TV stations to provide better targeting options to advertisers and better compete for digital ad dollars against Google and Facebook, according to a report in The Wall Street Journal.
One benefit of next gen TV beyond the broadcast quality of the content is it will allow advertisers to target specific audiences by household or mobile devices making linear TV advertising more similar to digital advertising capabilities.
Targeted TV ads, also called addressable TV, to date have only been available from cable and satellite providers and not broadcast TV. The new standard brings linear TV advertising more in line with what marketers have come to expect from digital campaigns in terms of defining specific audiences rather than just buying ads based on broad demographic data about who is most likely to be watching certain shows at certain times.

Dive Insight:

The next gen TV standard clearly holds potential to make investing in TV more appealing to advertisers, but, as the Journal points out, any impact won't be immediate as local stations and TV manufacturers will need to invest in expensive system upgrades before the new standard can become a major force.

The new standard could offer benefits to every player in the linear TV business. Rino Scanzoni, CEO of GroupM’s advanced TV group, Modi Media, told the Journal addressable TV can save advertisers 30% to 40% because of efficiencies in reaching desired impressions. Next gen TV could even “stop and ultimately reverse” the current decline in broadcast TV ad revenues, Mark Aitken, vice president of advanced technology, Sinclair Broadcast Group, told the Journal.

While there is some debate around the scope of addressable TV advertising, it’s clearly on the rise. The Journal report cited a Magna Global report that addressable TV spending will rise from $450 million last year to $600 million in 2017, representing 12% of local cable spending and the number of home receiving addressable ads are expected to rise from 42 million this year to 74 million by 2021. In contrast, in July eMarketer predicted addressable TV ads would reach $1.26 billion in 2017, a 65.8% year-over-year increase, but only make up 1.7% of all TV spending.

As local TV stations and TV hardware manufacturers catch up to the ATSC 3.0 standard, addressable TV ad spending should increase even more quickly. In the mean time, digital platforms like Google and Facebook will need to the myriad concerns advertisers have around brand safety, inefficiencies and a lack of control if they want to remain competitive as addressable TV takes hold.