Opinion

Why addressable TV poses a bigger threat to TV networks than any video streaming service

Screen Shot 2015-06-23 at 10.48.05 amThe 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

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