A Digital Revolution Might Kickstart a Resurgence of TV Advertising


It all happened so fast.

Eyeballs that had been reliably glued to the television for decades were distracted away, first by websites and later with cell phones in just a handful of years. Meanwhile, brand owners were tempted toward digital channels by the promise of audience targeting and instant response.

Digital came as a nasty shock to the TV advertising industry. By 2017, digital ad spend eclipsed it, but the TV industry is fighting back by playing to its strengths and by using digital tools to beat the upstarts at their own game.

Consider those strengths first. TV audiences are still amazing for advertisers. There’s no better place to run a brand awareness campaign. The raw reach numbers can be enormous. Viewers are often in a receptive mood, relaxed, trusting what they see and apparently still happy to watch a 30 second-spot. For brands, TV is still an easy buy with straightforward economics and the confidence their messaging will always run alongside appropriate content.

Now, leading TV media owners are embracing digital, too. Combining developments in set-top boxes and smart TVs with a holistic view of their consumers, operators and broadcasters can now target TV viewers with a new level of detail and relevance.

There’s now only one thing standing in the way: themselves. TV companies have to change the way they operate across their key value levers: relevance, reach, pricing and waste.

Relevance

Digital provides details about consumers and campaign performance that media buyers can use to refine their strategies. Broadcasters and operators need to match this, becoming data-driven. That requires big changes in the skills they have available, the talent they hire and the operating models they pursue.

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Organizations must gather relevant data about their consumers through OTT products, third-party databases and affiliate sources and be prepared to use this to define segments and deliver advertising through Dynamic Ad Insertion. Addressable technology isn’t new, but wide adoption and a sales focus is necessary for this market to deliver its potential.

Reach

Addressable TV also opens new opportunities to boost and manage reach. Some players are offering their scale advertisers new tools to book and control their campaigns. These platforms enable flexible purchase of ad slots in the right place and at the right time. The automated processes reduce costs and protect margins from being nipped by intermediary fees and back-office expenses.

Some broadcasters are growing their demand sources, tailoring products for small- and medium-sized businesses by building self-service sales channels and applying automation to drive efficiency.

Many are also wrestling with the tradeoffs between relevance and reach. Ever-tighter segmentation can generate valuable audiences that are otherwise too small to monetize effectively. So broadcasters are starting to club together, rolling up inventory to give advertisers the ability to buy niche audiences at scale. This means open platforms for cross-publisher audience targeting and data sharing, making it easier for advertisers to target customer segments that go beyond traditional age and gender audience definitions.

Pricing

Historically, TV advertising pricing has suffered from slow manual processes and lack of real-time data. Contrast this with digital, where advertisers can bid live for an opportunity. Better analytics and forecasting tools help broadcasters price more aggressively and commit to audience numbers in return for premium pricing.

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The newest generation of sales platforms enables sophisticated bundling, blending audience-based products and cross-media execution to produce a TV-digital halo effect for campaigns, drive better performance and optimize inventory yield.

Waste

According to one large broadcaster, 60 percent of the ads they scheduled were ultimately shown to a sub-optimal audience. In the analog era, wastage was a fact of life. Now, executives are discovering new forecasting techniques can dramatically lower their inventory wastage.

Broadcasters are using machine learning to improve forecast accuracy by up to 15 percent. This translates to better pricing, better inventory usage, reduced risk of displacement (accepting lower-rated business at the expense of higher-rated ones when demand is strong) and spoilage (missing the opportunity to sell all the inventory using discounts when demand is weak). Class-leading forecasting can dramatically improve monetization of inventory.

Making the change

Some broadcasters and operators have already started to play to their strengths and grab these new opportunities. Many are changing their sales, operations and delivery tools to embrace a multimedia sales process. Some are introducing cloud-based IT, decoupling from legacy technology and increasing automation to improve the speed of change and reduce costs.

But it’s the people that need to change the most. If TV truly is going to beat the digital upstarts at their own game, broadcasters and operators will need to change their organizations, their skills and processes in time to stay competitive.



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