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Addressable Television from the Media Buyer's Point of View: What Is Hype Against Reality?

Television buying has entered the field of digital marketing for a long time. Advertisers can target tens of millions of US households using third-party and first-party data rather than buying in large demographic runs. Television purchases also become programmatic, the results take months to arrive, and campaigns can be optimized on the fly. This is the promise of a data-driven TV targeting.

Sounds good – especially in the ears of a digital marketer – but what part of conversation about advanced TV, generic term (perhaps invented by IPG's Cadreon) for the purchase of TV on the addressable linear TV, sur-top (OTT), programmatic TV and more is based on reality, and how much is, still, hype? (For an overview of some of the terminologies and capabilities discussed here, check out our FAQ: Addressable TV and the Convergence of Buying Digital Video and TV Ads.)

We talked to media buyers, strategists and others in the space to find out what it really is on the side of buying advanced television these days, not just what is promised.

"Everyone in this ecosystem – platforms and supply partners – boast of having things that they do not have," said Erica Schmidt, EVP , executive director of Cadreon, IPG Mediabrand's advertising unit. Ms. Schmidt, who has a background in digital marketing and research, says that part of her job is to understand what is the reality.

Data-based sensitivities have taken root

"We wanted to use the principles of data and automation and apply them on TV to find networks, schedules and days above the decreasing return that a linear TV plan will have and find "points and points," says Schmidt of Cadreon's entry on television. "All that can be provided programmatically, we believe it should be. It is there that television came into play – take the principles of automation and data on television. "

A big change is happening: brands are thinking much more strategically about customer data.

"We are finding more and more that customers are taking the data seriously and have been ordering in their 'data house', including CRM and other signals. programmatic digital that are now in place, "said Schmidt. "This gives them an opportunity to link this data throughout the planning process."

As the data enters the field of television buying, it takes sensibilities already present among digital practitioners and strategists. One could assume that digital marketers are well positioned to inform the trajectory of advanced television in their organizations through the convergence of computer-based audience targeting with television.

How does the digital buy the advanced television?

In terms of data performance, addressable television is quite similar. "You use data sources to identify and triangulate audiences," says Tobias Wolf, executive director of Mindshare GroupM, who made his addressable television debut 10 years ago in his previous role on the American Express account. "The delivery is slightly different, but the planning is essentially the same as the digital in identifying audience segments and delivering personalized messages to them." You can broadcast five targeted ads [in addressable] for one. in traditional television. "

There are also similarities in terms of liability. "You can get direct matches with the household (anonymous) and provide ROI or ROAS, which has proven to be very effective," says Wolf. "Especially for [GroupM client] Volvo in terms of ROAS, if I'm on the market for a sedan and you're on the market for an SUV, I'll see a Volvo ad for an S60 and you'll see an ad for an XC90. the programs we are looking at, not what Volvo thinks we are watching. "

However, in terms of the purchase and activation process, the level of targeting and automation depends on the type of delivery.

A linear addressable purchase via an MVPD [multichannel video programming distributors, including cable operators and direct broadcast satelite] is currently the most common method targeting households with some sort of audience segment, says Anthony Laurenzo, SVP of Non-Linear Strategy and Investment at Dentsu Aegis Network (DAN). Laurenzo provides feedback through the agency's in-house teams on TV and video planning opportunities.

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The purchase of OTT on platforms like Sling, PlayStation Vue or Roku is a little more complicated, says Laurenzo. These purchases can leverage subscriber data and target households via connected TVs. Roku, for example, has announced a licensing agreement this month to include its streaming services on Philips branded smart TVs in the United States. But according to Schmidt, "OTT looks more like digital video and has more flexibility in terms of optimizations on the fly."

"With MVPDs, says Schmidt," we can enable and send insert orders in an automated way, but in reality, they are manually active. And for national broadcast spots, automation is not at all possible. "

Addressability to households on providers like Dish Network, Cablevision and Comcast is more in the programming mind with the ability to do some optimizations in flight. For example, says Schmidt, they make a purchase targeting an area targeting auto buyers in the market and that they are able to quickly see sales reconciliation rates they can make adjustments. But only by going to addressable providers, and that always involves going back and forth.

Addressable is a complement to traditional television, for the moment

For brands that already have a traditional television strategy, the addressable is considered an addition, with a goal of extending the reach and effectiveness of a linear television plan traditional.

"Finally, there is a point of diminishing returns with broad demographic targets," says Schmidt. "To be more efficient, we need to identify high-value audiences and use datasets to identify them, including digital video, OTTs, addressable linear, and so on. It is a holistic planning process using traditional television planning and audience planning. supported by data. "

IPG created an internal data stack, called AMP, designed to be a single platform for planning, purchasing, measuring, and managing all ad campaigns "if your targeted audiences are watching ads from set-top boxes or smartphones and complement traditional television, "says Schmidt.

Yet traditional TV measurement sources play a role. "You can debate the reliability of the Nielsen and Rentrak data," says Schmidt, "but it's still the common currency, so let's start with that and then overlay additional data based on the customer's target . This may include data from the first part of the client as well as data from an OTT platform like Samba [TV] and IPG partnerships to augment Nielsen and Rentrak. "

DAN uses internal tools to identify the right mix of media to reach the right audiences. "In some cases, it could be a large linear purchase.In others, it could be a combined purchase with Dish and 2 million + SlingTV households. additional, for example, "he says.

"You do not try to reach everyone if you do good targeting."

How big is the opportunity and what about the scale?

EMarketer estimates that US addressable linear TV advertising spending will reach $ 1.26 billion in 2017, up 66% from the year before. Yet this is only a fraction, 1.7% in fact, of the total television advertising expenditure. By 2019, this percentage is expected to rise to 4% of US television advertising spend.

There are 75-85 million addressable households in linear cable and video-on-demand services. OTT has grown rapidly over the past year to 51 million homes, according to comScore. (There is some overlap with households that have both a decoder and a streaming device).

Yet, most people I have spoken to see the scale as being next to the point.

"The scale is not a problem now," Wolf says. "At the beginning, 10 years ago, we started with Cablevision with 2.6 million homes."

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"You do not try to reach everyone if you do a good targeting," he adds.

Schmidt echoes this feeling. "The scale should be less of a concern when you have precision, and it will be much more responsible than if you hit your GRPs [gross rating points, a metric TV buyers use to determine how many people within a target demographic might have seen their ads]."

With addressable linear television in about half of US homes, the addition of this OTT technology and digital video can "provide greater reach than traditional linear only," Schmidt adds. .

"You can use addressable to find the incremental range, increase the frequency against a high-value audience, target negatively to exclude certain households (eg, loyal competing buyers), use multicultural targeting of households – and this is the only way to do this. is probably half of the cases of use, "says Laurenzo.

In terms of volume, however, the reality is that it's still quite limited.

On the one hand, rather than open the data targeting to their network programming affiliates during the 14 minutes of TV advertising time available per hour, television operators do not make it available only on their own local advertising time. minutes per hour.

Dave Morgan, CEO of Simulmedia, who runs a SaaS platform for linear data-based advertising targeting, says that the actual scale of addresses should be contextualized.

"Although the linear is disputed, it is still huge and will not go away anytime soon." Seven or eight years ago, people said that today you would see all or all of the fully addressable television. "But that has not happened yet.

To illustrate his point, Morgan states, "An episode of Judge Judy will offer more advertising time than all videos on YouTube all day. A 30 minute show will offer 12 to 15 minutes of announcements. This scale does not correspond linearly. "(I have not checked the facts, but note that most of YouTube's ads are playable, and according to a recent VAB study, music accounts for over 30% of YouTube time.)

However, the fragmentation of viewing time on a large number of channels is a challenge for media buyers, says Morgan, because "standard measurement methods that inform advertisers where to buy are no longer very effective. Vast quantities [of watch time] occurs on shows rated 0.5. You have to buy a lot more spots … and the error rate of the Nielsen panels is 0.5 point, so it's also likely that everything goes wrong, which is why people buy large lots of medium GRP. "

"Basically, the change must come from the sales side."

Win-win-win potential makes things happen

The opportunity, of course, is "if you could get very specific data on thousands of commercials, it would look more like digital with the ability to use buying or buying behaviors. CRM data or other digital behaviors.If you have the data for targeting and the software to analyze all the spots to ensure maximum reach and penetration, instead of a 3 million purchase of dollars for a month for 100 spots on 10 networks, a computer system might suggest you buy three thousand spots on 85 networks, "says Morgan." That's where we start to see this innovation from optimized advertising show for the data. The reason this starts to happen faster is that there is a win-win-win realization. "

This equation works like this: Buyers can use data to optimize their ads and get better results at a lower cost. And they can follow the exhibitions to see the impact on the return on investment. Media sellers benefit because they are not credited for wasted frequency, and they can optimize their sales at a higher price based on the data rather than the time of day when the ads are shown. Consumers are winning because they are less likely to get redundant and irrelevant advertisements – which also means that they will be more likely to stay tuned.

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Morgan says that at least 1 to 2% of TV commercials are handled this way. "But there are a lot of incentives that will force it … Basically, the change has to come from the sales side and they will have to invest in systems to do it."

Morgan points out Brian Lesser of AT & T and David Clark of Comcast as proof that the salesman is going in that direction. "Some will aggressively invest in this area and they will grow faster," predicts Morgan.

"Owners of old television channels like NBC are starting to change the game and incorporate addresses into their offers.The way big media owners will start to change and their ability to target ads will be a tendency to monitor, "explains Laurenzo.

NBC Universal has launched an API to allow brands like Target to programmatically purchase ads using first-hand data as part of NBC programming.

Another example is Open AP, a joint initiative by FOX, Turner and Viacom to support the audience targeting launched in October. Advertisers can create audience segments and share them between sellers on the platform.

A Convergence of Languages ​​and Skill Sets

"Television is becoming more and more responsible as digital," says Laurenzo. "This will not replace linear TV in the short term, but we will take advantage of the data we can discover more quickly if a campaign is effective. Equally important, you can use this knowledge in your media plan and reintegrate it into linear TV. for example, buys information about networks that drive performance locally and nationally. "

For advertisers, Wolf says, "If you want a competitive advantage for leading audiences, you can do it in large-scale addressable TV."

Wolf speculates that we will start seeing digital and addressable TV buying teams come together more in the future.

Laurenzo agrees, "I can see the skills come together." If you think of something as addressable, you think of television in the same way as digital with targeting and things like capping. The foundation of data across everything fundamentally changes the business and puts everyone on the same ground.There will always be TV and digital specialists, and these roles are really important, but they will share a set of skills in the field of data. "

Cross-stream targeting that synchronizes addressable linear advertising with digital video campaigns, so you're looking for unique reach and frequency between channels, is also a trend we'll see grow in the short term, says Laurenzo.

This article was originally published on our sister site, MarTech Today.

About the author

As a Third Door Media paid media reporter, Ginny Marvin writes on paid online marketing topics, including paid search, paid social, posting and retargeting for Search Engine Land and Land Marketing. With over 15 years of marketing experience, Ginny has held internal management and agency positions. She provides marketing research and demand generation consulting for e-commerce companies and can be found on Twitter under the pseudonym @ginnymarvin.