‘People don’t hate ads’ – how media companies are creating relevance for marketers
While many ‘traditional’ media companies struggle to maintain profits, others are embracing the digital disruption and emerging technologies to shape a new future for themselves. Here Mumbrella looks at what this means for TV businesses and the way they sell and distribute their content
They may not have known it at the time, but October 27, 1994, is when media businesses were first confronted with the digital world. That’s the date when the first online banner ad went live. It was for AT&T on a website called Hotwired, the digital version of Wired magazine, and, fittingly enough, explored how emerging technologies would transform our world.
The banner ad in question didn’t even feature AT&T’s logo, yet was clicked on by 44% of visitors – a figure largely explained by its novelty value – and was prophetic in its message. “Have you ever clicked your mouse right HERE?” it asked, pointing to the words “You will”. The campaign gazed into the future and predicted that technology would shape everything we do and, in some cases, eliminate the need for human involvement.
Whether programmatic advertising – advertising bought without human interaction – was on AT&T’s radar back then is debatable. But for media companies today, digital advertising has become part of the everyday and ripped up business models across the media landscape. It has forced boardrooms to fundamentally rethink strategy and reassess the very future of their organisations.
Clive Dickens, Seven’s West Media’s chief digital officer, has spoken of the “critical importance” of owning and creating as much content as possible. It’s the only way the network can guarantee programs both appear on streaming platforms, and that they can make money from them. Today those screens include SVOD (monthly subscription platforms such as Netflix), TVOD (pay-as-you-go offerings such as Google Play) and AVOD (ad-funded streaming services such as YouTube or Seven’s Plus7 platform).
“If you don’t own the rights to a show on every screen, you’re then trying to force people to watch content on only the platforms you have permission to use,” Dickens explains. “If you are limiting your distribution to one preferred distribution partner because that is the one where you have made the most money, you are in a world of pain. And if you are relying on people reading the internet rather than watching it, you are also going to be in a world of pain because increasingly consumers want to watch, rather than read, the internet.”
The way he sees it, the abbreviation TV shouldn’t stand for television but “total video” because streaming is now as important in the mix of viewing habits as traditional broadcast. And this change in viewing habits has spawned the growth of an ad tech industry eager to guide media businesses through this transition.
One such company is SpotX, which provides ad serving solutions for media owners and advertisers. In simple terms, the company lets its users monetise their ad inventory on any screen or device, and has a particular focus on online video. They not only allow you to upload your adverts, but also to manage pricing and access to maximise revenue.
Randy Cooke, SpotX’s VP of programmatic TV, says the transformation has not been an easy one for media firms who, as Dickens suggests, must tackle the fragmented nature of how customers read and watch modern content in 2017.
“Engagement with content has become very specific to the consumer,” Cooke tells Mumbrella. “There’s increasing need for the media owner to have visibility into the intersection of content and consumer. This is an entirely new business model from the way TV advertising has transacted for the last 50 years. We’re helping media owners not only monetise audiences, but serve ads into any distribution environment [SVOD, TVOD, AVOD etc] establishing enterprise value across a media owner’s portfolio.”
While that traditional linear TV ad market remains a significant part of the mix, Cooke thinks its size – currently US$70bn in America – will wane as advertisers look for more sophisticated means of reaching their target audience. Amid rising expectations from marketers, pressure increases commensurately among media agencies and media owners to demonstrate results.
“At SpotX we have taken a longer view of what programmatic means to TV,” continues Cooke. “That is, someone in Australia streaming a live rugby match on their iPad represents a unique opportunity for an advertiser to engage with them based directly on the fact that they are streaming this rugby match in this postal code in Sydney. It’s a completely different offering.
“In the traditional TV content market, the speed of data does not require the market to act in real time. Even if ratings come in overnight, you don’t know anything more about a spot that is coming up in 30 seconds than you did yesterday. But when the content is streamed through a connected TV or a multimedia device like a Roku box, the content or audience owner can call us for an ad the instant someone initiates a content stream. That is absolutely in real time, even in linear streaming environments.
“The market intelligence and the infrastructure needed to support a marketplace that operates at such speed, and the level of ad decisioning required at this scale, are the core competencies SpotX sees on the horizon.”
Technology, Cooke adds, is evolving to a point where marketing campaigns can be executed anywhere and are only limited by our own imaginations. “The flexibility media owners need is in the ability to establish dynamic marketplaces that revolve around specific advertiser objectives,” he says. “This is where we’ll see large chunks of TV spend in a couple of years.”
Marketers are no longer buying demographics based on what they believe people are watching, but discovering precisely where an audience is at any given moment irrespective of the content they are viewing or where they are viewing it. For example, US streaming service Sling collaborated with SpotX to enable advertisers to target viewers on a one-to-one basis with live TV.
Sling’s director of advanced TV and digital, Adam Lowy, says this “addressable advertising” is the future. “We can determine, say, whether you are in the market for a mortgage, or if you have two kids and the lease on your car is almost up,” he says.
“We have been able to send motor cycle insurance ads only to people who have a motor cycle or are in the market for a motor cycle. It’s a waste to send it people who don’t have one. You are buying the audience, not the context.”
Or as Seven’s Dickens puts it more succinctly: “People don’t hate advertising. People just hate advertising that is not relevant to them or poorly executed.”
Changing skills
The shift towards digital has required a different sales approach from media businesses and with it the need to recruit experts in new areas, like social, native and video advertising to name but three. Gone are the days when all you needed was good sales patter.
According to Sling TV’s Lowy, only a fraction of a conversation with an advertiser is spent discussing the product or price. “You have to make it easy for an advertiser to buy. SpotX helped with that because you could confuse an advertiser in a second,” he says. “Between 80% and 90% of a sales call is technical and operational, explaining how it works, what needs to happen. The last 10% concerns the product and price.
“I am very keen with my sales team to teach them what underpins digital, to train them more about operations and dynamic ad insertion and how it works and why. We are not just going in and selling Sling the product.”
When it comes to Seven, Dickens thinks sales teams and producers need to specialise in a range of formats offered to advertisers and their media agency partners. “It takes new skills to integrate different clients’ objectives on a multi-platform brief. It’s a different sales execution and a different sales process,” he says.
“Even inside digital, there are many ways to get a result from someone, whether it’s digital video, long-form, short-form, programmatic, native advertising, search or classified. This idea of a binary thing between a TV spot and a digital sell doesn’t exist.”
Dickens highlighted the production team at Seven’s YouTube arm Platform7 as an example of the new talent required by media organisations: “The videos are brand-funded, don’t have adverts and are produced by millennials. Brand funded advertising requires seamless integration in as authentic way as possible and that is now part of the sales skills.”
Ross Dawson, chief executive and chief futurist at Sydney creative agency Rh7thm, warned that Australian media firms have been too slow to transform their business models.
“We have seen a conservatism across Australian industry, essentially at board level, where the attitude is, ‘We are making money now and we’ll stick with that,’” explains Dawson. “The transition has not been as dynamic or front footed as it could have been. It requires sacrificing some current profitability for future gains and that in itself requires foresight, a vision of where the organisation is going and courage.”
As we see more moments-based programmatic trading, the question arises as to whether that heralds the end of media agency volume, or upfront, deals. “I don’t see it as an over-reliance [on volume commitments],” Dickens says. “It is more about making sure our trading partners can plan their clients’ marketing objectives. It all starts with that.”
The Seven executive added however that the market is changing as programmatic, direct selling and executions like in-show integration generate “an increasingly material part of our revenue”.
With such rapidly developing technology, it is impossible to predict with any certainty how the market will evolve. What is certain, however, is that media businesses committed to this transformation will find the journey challenging, but, if they can invest in the infrastructure, ultimately profitable, too.
…..Or as Seven’s Dickens puts it more succinctly: “People don’t hate advertising. People just hate advertising that is not relevant to them or poorly executed.”
Well put sir, but that is half the picture, Frequency ( as in promo breaks per hour) and repetition ( how many times we see a TV commercial in a given programme) has a lot to do if we watch a programme through to its conclusion. .
User ID not verified.
With virtually no marketing to promote the use of ad blockers, 615 million devices worldwide now have them installed. Some browsers come with ad blockers already installed, and it won’t be long before they all do. Websites already plead with visitors to whitelist their address.
If people don’t hate ads, this behaviour seems unaccountable.
User ID not verified.