Financial Times - Time runs out for the 30-second television ad

Financial Times - Time runs out for the 30-second television ad

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June 28, 2017. John Gapper.

A narrative format crafted for viewing breaks does not work online.

One of the winners last week at the Cannes Lions, the advertising industry’s annual festival of self-congratulation, was an advertisement for a new Gillette razor designed for carers to shave the elderly. The ad by the agency Grey New York is a delicately filmed and moving narrative; it is also three minutes long.

There you have the advertising industry’s existential problem. Who will spare three minutes to watch an online video ad in these days of vanishingly short attention spans? Who even allows a 30-second ad to play without clicking as soon as possible on the box invitingly marked “Skip Ad”?

The 30-second ad pays for a lot of the rented yachts and expensive parties at Cannes, and burnishes the industry’s claim to being as creative as Hollywood, if in shorter bursts. “The enterprise of television has created hundreds of billions of dollars in value,” enthuses Jeffrey Katzenberg, former chief executive of DreamWorks Animation.

But the traditional ad is in trouble. By the end of this year, Google will stop allowing them to run on YouTube unless they can be skipped and is instead pushing a new six-second format, known as a “bumper”. The narrative format crafted for breaks between television shows does not translate online.

This is part of a wider crisis in online advertising, despite the celebrations in Cannes. The discovery in March that ads were running alongside hate speech videos on YouTube led to companies such as AT&T and L’Oréal removing ads from YouTube and sites sold through Google’s advertising network.

Automated distribution of online display ads through exchanges and networks was supposed to bring untold efficiencies. Instead of broadcasting their ads to mass audiences, marketers would reach precise niches according to demographics and online behaviour. The reality is a mess: ill-suited ads appearing on low-quality sites, and irritated viewers skipping past them.

This race to the bottom serves no one well. Online advertising rates have fallen, leaving publishers and broadcasters poorer; advertisers cannot reach a new audience reliably. Vice Media, the digital group that focuses on millennials, is valued at $5.7bn, showing the worth of any brand that delivers advertising to the online generation.

The difficulty for advertisers such as Procter & Gamble and Unilever is clear in the numbers. Internet advertising overtook television advertising last year but most online spending went to search marketing. Advertisers rely on television for display: they spent only $9bn on US online video display ads compared with $71bn on US television ads, according to PwC, the accounting firm.

This Gillette ad piced up six Lions at Cannes, the industry’s annual festival of self-congratulation

“What the viewer wants and what the advertiser deems as ‘quality’ are often not the same thing,” Group M, WPP’s media-buying group, noted recently. It estimates that the big advertisers that pay for 90 per cent of television ads contribute only 30 to 40 per cent of online ad spending. They prefer the 30-second ad and the break it occupies.

Hence the mild panic in Cannes. Michael Kassan, chief executive of the consultancy MediaLink, talked of “the chaos at the intersection of marketing, technology and advertising giving [everyone] sleepless nights”. Sheryl Sandberg, chief operating officer of Facebook, appealed for “thumb-stopping” material to make an impatient mobile audience pause and watch.

Enter Mr Katzenberg, who sold DreamWorks Animation to NBCUniversal for $3.8bn in 2016, and toured Cannes last week with his new pitch. As a veteran of Hollywood films and big-budget television, he views the scrappy production values and low advertising rates of many digital videos with dismay verging on disdain.

He instead wants to create “new TV”, a five to 10-minute format for online dramas and entertainment to which studios would devote similar budgets to television shows. By spending $100,000 per minute, rather than the $1,000 that is considered expensive online, they could hire star writers and actors for mini-shows that could “make viewers say, ‘wow, I love this’.”

Mr Katzenberg draws inspiration from the author Dan Brown, whose masterstroke was to chop The Da Vinci Code into bite-sized chapters that could be easily digested by a mass audience. For good measure, he throws in the example of Charles Dickens, who serialised his novels in magazines.

Producers and writers enthuse about his idea, he insists — unsurprising, given that everyone prefers big budgets to small ones. The industry wants to retain what Mr Kassan calls “north of Sunset [Boulevard] money” — enough for a house in Beverly Hills.

But a great deal rests on something that has not yet been devised — a sturdy successor to the 30-second ad. Gillette’s razor commercial is almost long enough to qualify as “new TV” by itself, and it would be hard to fit an advertising break into a seven-minute show without losing irritated viewers.

What will save advertising from chaos? In Cannes last week, it was easy to meet people asking the question and very difficult to find anyone with a convincing answer. The 30-second ad was a perfect invention for its time; the creatives must create another.

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