Why addressable TV poses a bigger threat to TV networks than any video streaming service
The future of television has become a ongoing issue for our industry but Paul Wilkinson argues that the medium’s future revenue lies in buyers being able to buy on demographic and behavioural information.
Disruption in the TV sector raises a multitude of questions such as how will the split between linear TV, SVOD and Catch Up etc play out in the next five years? How will we trade TV? What will be our currency when the TARP goes by the wayside? Will we even call it TV?
But one point stands out to me more than any other: “The future of TV advertising is ‘addressable’.” This is something I’ve heard more and more about in recent months, and as a media buyer, I love the concept.
The ability to segment TV audiences and serve different ads within a common program or navigation screen is obviously a game-changing innovation for our industry. Segmentation can occur at geographic, demographic, behavioural, and in some cases, even individual household levels, granting TV buyers the kind of flexibility (and accountability) previously limited to digital channels.
At first glance, it’s ticking all the right boxes – tightly targeted TV ads, no more wastage; brilliant!
But wait – surely if addressable TV advertising becomes the norm, this will present the networks with their biggest challenge thus far? I mean, forever and a day, TV networks have been able to hang their hats confidently on the fact that nothing else, absolutely no other media channel can deliver the sheer scale of TV.
And it’s true. Still today, no other media in Australia allows me to reach over two million people in 30 seconds.
And clients love it, let’s be honest. While the way we plan, buy, and measure performance of TV has definitely evolved in the last decade beyond a blatant reach play, we all know that reach percentages hold a huge amount of weight in the evaluation of any TV buy.
Addressable advertising, however, bears its roots in digital, which is not solely about reach – at leastnot in the same way it’s defined in TV speak. It’s about pinpointing your target market based on multiple variables and reaching out to them directly.
So, by definition, surely the advent of addressable TV advertising poses a much bigger threat to TV networks than any video streaming service?
More than ever, it places TV networks in line with digital networks, opening up their competitive field to a myriad of experienced and determined players, versus the handful they have faced in the past.
While it’s arguable that they are already in competition for the same ad dollars, and have been for some time, TV networks have been somewhat sheltered from the rise of digital – maintaining their
50 percent share of monies over the past seven years – because their USP of mass reach has been unrivalled.
Instead, as we all know, digital revenues have so far grown mostly at the expense of print. As technology advances however, and our TV sets become more connected to the online world, consumer choice (and with it, fragmentation) increases, and the gap between digital and TV closes in.
For the TV networks, it means playing by a different set of rules than they’ve been accustomed to – the biggest shift, I would suggest, being around accountability.
Not forgetting that our traditional TV networks still have a lot to learn in the digital space, they also have a vast amount of infrastructure that needs to be created, and entirely new skill sets that need to be developed. ‘Addressable’ is, after all, driven predominantly by the ability to access and harness the power of data.
Digital networks, on the other hand, have already been offering addressable advertising for years.
They have the data capabilities and the experience, but most importantly, their products are already a part of the digital infrastructure and they know how to sell them.
Speaking from my own agency experience at Carat, and indeed Dentsu Aegis as a whole, we are continually seeking to invest ahead of the curve, with increasing emphasis being placed on all- encompassing ‘video strategies’, rather than looking to operate within a channel-specific model.
Our investment into programmatic video via Amnet, local partnerships with MCN, as well as global agreements with YouTube and Facebook, are all evidence to this.
So, does this mean that TV revenue is destined to face the same fate as that of print?
Most likely, no – not to the same extent, at least. At this stage, TV is simply too influential a part of the media mix to simply disappear. Besides, the first rumblings of evolution – or rather adaptation – by TV networks are already being heard in the marketplace.
The recent partnership announcement between MCN and Network Ten is the perfect example. It enables Network Ten to harness the data and targeting capabilities in which MCN has long-been invested, whilst increasing MCN’s footprint across the broadcast landscape.
This arrangement can surely be nothing but advantageous for both parties.
Seven and Nine must now also show that they are looking to the future – a future in which targeted rather than blanket reach plays a much more important role. If they don’t, they certainly risk falling behind.
Addressable TV advertising, while still in its infancy, is coming hard and fast, and looks set change the media landscape forever.
Paul Wilkinson is the head of investment for Carat Melbourne
Paul, Could you explain to me why the few shows that manage to get big audiences – often “reality” shows, encourage viewers to tweet etc during the ad breaks (meaning they are not paying attention to the big screen) . Surely that is a slap in the face for advertisers and another nail in the coffin for the traditional “ad break”?
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Perhaps it’s because people tweet to get noticed and voice their thoughts – which in turn are broadcast via the TV screen, part of the incentive is to see your tweet on the screen as part of the presentation
there is always the option to run the twitter feed across the advertising breaks so that the ‘interaction’ is maintained, even during ad breaks – maintaining a visual connection for advertisers ?
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Hi Geoff – I’d suggest the idea behind this is to keep audiences engaged with the show in question as opposed to channel hopping. I take your point that it may seem as a slap in the face to advertisers, but ultimately, it’s about building viewer loyalty with the content, extending the presence of the show beyond the living room screen and encouraging conversation across social media – which in turn builds momentum for more people to watch.
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Thanks Paul, but I disagree respectfully – I know my younger nephews refuse to watch ad breaks, and I must admit I zap through them, or on the rare occasions when I’m watching live, I head for the kitchen or the computer when I know the ad break is on!
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RE: driving social interactivity, I always thought part of it was to attract new (particularly light) viewers to event TV programming through the commentary on social networks eg: people wondering ‘what am I missing’ while they see the social buzz happening?
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Good article Paul.
One small thing. You say “Still today, no other media in Australia allows me to reach over two million people in 30 seconds.”
In fact the TV medium can reach more like six million people in the five metros and a further three million in the regionals in 30 seconds. If you only include the commercial FTAs we’re talking around 7 million in 30 seconds.
A top program will get you two million in 30 seconds. And for us oldies – if you road-block you’ll easily get one-third of Australia’s population with a few insertions.
Not bad for a dead medium I would say.
And Geoff, I take it that you and the kids sit glued to all the on-line ads.
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No John, I avoid on-line ads – couldn’t tell you the last one I looked at !!!! LOL
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Geoff, I’m pretty much the same. The only ones I see are the ones that I am basically ‘forced’ to see (such as ones that pop up in the middle of text I am reading).
The irony is that as CTRs drop to miniscule levels, ad-blocker usage rises, more and more people (claim) to simply ignore online ads, and frustration grows with intrusive ads … that increases the ‘value’ of a TV ad.
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So then there’s the flip side of the coin.
1) TV gives broadcast scale, which is vitally important to drive sales by converting light users in many categories QSR, FMCG and the like… Ehrenberg Bass model.
2) In the instances where using TV for more niche/ bullseye targeting is applicable; a broader view of basic marketing principles is needed. i.e. the fastest way to ‘cross the chasm’ of influencers/ early adopters and early majority (gladwell’s tipping point) is a two-pronged strategy…. a targeted campaign to influencers; while also creating a critical mass of predisposition with early majority….. effectively it’s about using both targeted addressable media AND broadcast media in unison.
3) Lastly I think you miss the bigger picture of how FTAs operate; if there’s good money (and shareholder returns) to be made in adding addressable advertising to the mix they will be there. The two you mention both happen to be partnered with global ‘digital networks’ so it’s not a stretch to think this play is just a “table stakes” one so long as the cost benefit analysis stacks up.
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