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Direct-Response Advertising Thriving on Connected TV, Says SteelHouse CEO

Written by Tim Edmundson

Traditional TV Ad Spend Is Down 33%, But Connected TV Is Thriving

This past week would have marked the Upfronts, one of the major events in TV advertising. Or at least, it would have been if COVID-19 hadn’t disrupted it completely. 

Under normal conditions this would be a time for networks to showcase their top-tier episodic programming and sports content. But this year has been anything but normal, and the COVID-19 crisis has put a stop to new TV production and live sports entirely. Reports that traditional TV ad spend is down 33% isn’t surprising at this point in the crisis. Brand advertising, which is a mainstay on traditional TV, has taken a massive hit.

Connected TV Ad Spend Is Up

But that drop in ad spend isn’t the case with performance marketing and Connected TV, says SteelHouse CEO Mark Douglas on his most recent appearance on Fox Business.

“Spending on [Connected TV] is increasing very rapidly, especially among the advertisers that traditionally would spend with Google and Facebook,” said Douglas. And that’s mainly due to the fact that direct-response advertisers have realized Connected TV’s performance marketing potential.

“Google and Facebook reported earnings and I think a lot of people were surprised that they did a lot better than expected,” he said. “And the reason for that is they get a lot of revenue from direct-response advertisers, basically ecommerce companies, and that’s now happening on television.”

Shifting Budgets Could Lead to Permanent Change

The next year should prove interesting for Connected TV. Viewership has doubled since the beginning of the crisis. Advertisers, meanwhile, are both looking to follow their audience and drive measurable results with their campaigns.

As money for brand advertising shifts to direct-response and Connected TV, one must ask if this new trend will grow. There’s a good chance advertisers who dedicate more ad budget to Connected TV now will stick with the channel due to its direct-response nature and measurement features. Time will tell for sure, but it’s looking like the beginning of a new performance-driven era in TV advertising.