Ad Industry Eyes Shift From Ratings to Impressions
TV advertising is on the brink of a fundamental shift. Again.
Despite empty promises in the past of interactivity and addressable advertising, there is now a measureable change underway in how TV ads are targeted, sold, and delivered. At a Light Reading breakfast on Targeting Ads in the Multiscreen World hosted by cable/video practice leader Alan Breznick at The Cable Show last week, executives from Canoe Ventures LLC , Clearleap , Imagine Communications , Viamedia, and Scripps Networks shared statistics and stories illustrating just how far TV advertising has come... and how far it still has to go.
According to director of new media distribution at Scripps Alexander Beach, Internet advertising dollars surpassed broadcast advertising for the first time in 2013. At the same time, however, the TV industry is making tremendous strides in monetizing video on demand content. There were more than 2 billion ads inserted into free VoD content in 2013, according to Canoe Ventures head of product, sales, and marketing Chris Pizzuro, and the number for 2014 is already up to 1.7 billion ads in just the first four months. Pizzuro said advertisers are "jumping in" and that there are, on average, 179 VoD dynamic ad insertion (DAI) campaigns executed every week. (See Cable's Search for Advanced Advertising Treasure.)
Perhaps more importantly, multiscreen video services are creating crossover between the Internet and standard TV advertising. Executives at the breakfast panel agreed that the multiscreen trend is driving major changes. It's not just about where a viewer ultimately sees a commercial. It's also about how that view is measured. Multiscreen video means IP delivery, and that means considering a shift from TV's traditional ratings-based advertising model, to the Internet's impressions-based approach.
To take a step back, several executives on the multiscreen advertising panel offered perspective on how pay-TV operators have looked at monetizing new multiscreen services. Imagine CTO Steve Reynolds noted that operators have studied the question of whether they can charge extra for multiscreen delivery, but added that "advertising really is the obvious way to try to monetize that."
Pizzuro chimed in by pointing out that advertising is also what programmers know. Some programmers have tried to launch direct-to-consumer businesses with the hope of increasing revenue, but generally it hasn't worked out. A shift to impressions-based measurement for monetization may be dramatic, but it's still within a paradigm that content owners understand.
Unfortunately, familiarity doesn't mean there aren't still major challenges in moving to an impressions-based model. One big one is that operators still have to serve both a linear TV master, where program ratings prevail, and a digital master, where impressions are the preferred currency. And while providers want to sell inventory across multiple platforms, the data available from these different channels varies significantly.
Clearleap director of product management J.R. Cottingham explained that it's hard to do an apples-to-apples comparison of viewing data across platforms. Online datasets are richer than the datasets available from set-tops, for example, and operators not only have to collect data from everywhere, but clean it and make it actionable. The middle part is "monstrous," said Contingham. "How do you pare it down to that which is truly actionable?"
Still, the consensus of the panel was that the evolution to a new kind of data-driven advertising is already happening. Reynolds cited an unnamed customer of British operator BSkyB who has made the transition to thinking about impressions-based ad buying, and Viamedia president and CEO Mark Lieberman referenced Proctor and Gamble as having been vocal about seriously studying the same shift. According to Lieberman, Proctor and Gamble saw an 8% increase in sales across product lines when it reallocated advertising dollars based on a combination of set-top viewing data and other available datasets. That's powerful evidence of the value of direct viewing data over traditional TV ratings.
Reynolds argued that impressions-based advertising makes ad inventory more efficient, even if the transition period is a vulnerable time. Lieberman added that the impressions model gives programmers and advertisers a greater sense of accountability, which "I think is where the opportunity lies."
Technologically speaking, said Beach from Scripps, the industry is ready to change, but getting linear and digital sales teams to come together and converge on a common currency will still be difficult. Beach described the industry's progress on a spectrum of slither, crawl, walk, and run. "We're just slowly walking now."
— Mari Silbey, special to Light Reading