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Impact of Alternate Delivery Systems on Addressable Television

June 4, 2018/in Blog /by Tahesha

One definition of chaos is “complete disorder and confusion.” The origin of the word is pretty interesting: It comes from the Greek for “cha” (open) and “os” (mouth) – in other words, someone’s facial expression when witnessing complete disorder and confusion. There are a lot of open mouths in agency planning departments these days as television viewership, once so boringly predictable, seems to have gone totally off the rails. If you’re a planner you’re dealing with decreased overall viewership, shifts from broadcast networks to cable, shifts from ad-supported television to commercial-free television, and shifts from traditional MVPDs (cable, satellite, telcos) to Internet-based delivery systems or Over The Top (OTT).

Commercial television has been important to so many consumer-facing businesses that its rapid destabilization has caused great concern in the marketing community. The flight of television dollars to other, more predictable media has been impressive – though not if you’re in the business of selling television advertising time. Some advertisers have moved as much as three quarters of their television dollars to online advertising, product promotions, sponsorships and other so-called “below the line” techniques that are seen as more stable and accountable than commercial television. One thing that has remained stable is the number of network television advertisers – that figure hasn’t deviated much hovering at about one thousand.

The picture is clearer if we divide the “eyeball flight” into two types: First, commercial-free subscription services such as Netflix, Amazon, and Hulu. It seems like every week brings a new blockbuster du jour, another “must see” series on Netflix, HBO, Amazon or others. For now these eyeballs are lost to advertisers (there are rumors that Netflix will soon come out with a commercialized version). The second type is made up of those who choose to watch television from traditional sources but on alternate devices. Technology allows viewers to watch television whenever and wherever they want – literally TV Everywhere. Here, the picture for advertisers is brighter.

Developing technology will soon allow advertisers to find their target audiences in whatever time/space combination that viewers choose. Some level of targeting is possible even for anonymous viewers. Targeting authenticated or registered viewers across multiple devises (think iPads, smart TVs, smart phones) is even more powerful.

The media planner of the (near) future will have access to a dashboard consisting of every possible way of reaching their target audience. That planner will be able to find that viewer regardless of what content they’re watching and what technology platform they’re watching it on. This cross-platform planning dashboard will be able to aggregate audience delivery, cap frequency across delivery platforms and provide real-time audience delivery figures. As technology evolves further, real-time attribution systems will drive continuous campaign optimization with little to no user intervention. Advertising campaigns will reach their theoretical best in a much shorter time than today. And with the normalization of data across distributors, networks, and OTT providers, the campaigns can be planned and launched in minutes instead of weeks.

Yes, this sounds like pie in the sky. But there’s nothing standing in the way of it becoming reality. All it will take is some engineering attention and the recognition on the part of programmers and distributors that this benefits everyone – especially advertisers who are, after all, the ones with the money.

Written by Michael Kubin, EVP Media

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Fragmented Viewership and Addressable Television

May 9, 2018/in Blog /by Tahesha

The media press appears obsessed with what’s happening to the television audience: Lower viewership levels and greater fragmentation. Viewership of commercially-supported television is certainly dropping. The impact of commercial-free programming from Netflix, Amazon and others is substantial, undeniable, and not reversible. We’re never returning to the good old days of three networks, 70+ prime time Houesholds Uisng Television (HUT) levels and 90+ 3-network shares. Life was so simple then – but we have to deal with this new reality and a future of even lower viewership and greater fragmentation.

Commercial television has seen the effects of several changes over the years. As the most impactful media available, it has driven the marketing success of a wide variety of consumer-facing products such as cars, consumer packaged goods, credit cards and insurance policies. Television’s power lay in its messaging (“sight, sound, motion and emotion”) as well as the vast audience it was able to reach. That lasted until cable networks came along, atomizing viewership (“57 channels and nothin’ on”). The wide range of choices fragmented audiences making it very difficult, and very expensive, to accumulate unduplicated reach. Then the Internet arrived with its ability to target specific audiences and measure the impact of the campaign through the availability of direct purchaser data. Attribution (one of those magic media words that appear out of nowhere and quickly become ubiquitous) made it possible for marketers to use their media dollars with precision and effectiveness. Ad dollars began to pour out of television.

Facing these market realities, a senior network sales executive recently told me his business is under pressure because “viewing levels are dropping by 8% a year, I have a fixed number of advertisers and I’m being asked to increase ad revenues.”

That’s all true, but despite what so many Chicken Littles believe, the sky isn’t falling.

Addressable television advertising focuses on what is most important – a one to one relationship with each member of a large audience. Program-based audience ratings are not as important as unduplicated reach. Today the only thing that really matters is being able to figure out exactly who is in the advertiser’s target audience – think of direct mail. If you’re selling dog food, you want to reach dog owners. If there’s a dog living in 123 Elm Street, Peoria – you want to reach his owner. And if there’s a cat living in 124 Elm Street – you have no interest in reaching that household. Simple concept, challenging execution. But that’s exactly what addressable television advertising is able to do and with unparalleled success.

It’s taken addressable television advertising in the US about 15 years to develop into a tool sophisticated enough to attract hundreds of national advertisers spending billions in ad dollars. Its rapid growth indicates it will continue to conquer a growing share of television ad dollars. Where in the past, television’s strength lay in cheap audiences, today addressable television’s strength is in both effective targeting as well as a re-aggregation of reach. It is now less important to select which program the viewer is watching; the important thing is that he/she is watching at all. When the viewer is watching, addressable technology is able to send the right message to that viewer, put a frequency cap on it so the advertiser doesn’t suffer huge variations in message delivery rates or drive viewer burn out, and ultimately, use attribution techniques to figure out which campaigns and audience segments worked best. That leads to a game change, coupling the ipact of TV with the kind of optimization that has been at the heart of success for online advertisers.

Media seems to transform itself roughly every couple of decades: Radio was big from the 30s to the 50s, broadcast television went from the 50s until the early 80s, cable television from the 80s through the early 2000s, and we’re now at the end of the second decade of the Internet era. If history is any indicator, this new technology – addressable television advertising – will rapidly grow and absorb advertiser interest, transforming television from one-to-many into one-to-one.
Stay tuned.

Written by Michael Kubin, EVP Media

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Advanced TV Ad Targeting: Separating the Wheat From the Chaff

April 11, 2018/in Blog /by Loria
Using rich first- and third-party data to target audiences on TV as in digital
You probably read the trades and know that you can now use rich first- and third-party data to target audiences on TV just like you can in digital.

This is just one of many improvements available via Advanced TV. It sounds straightforward, but dig into the topic and you’ll quickly find yourself asking questions. For example, what’s the difference between addressable TV and programmatic TV? Does digital-esque targeting work on “traditional” TV, or just addressable? What does “data-optimized TV” mean?

Aside from the early adopters, many marketers can’t define exactly what Advanced TV is.

The first thing to know is that Advanced TV isn’t just one thing. It’s a broad term that encompasses an array of products and services. Let’s examine three of those services: programmatic TV, addressable TV, and data-optimized TV. Each has its purpose. One might be better for your brand’s goals than the others. Together, we’ll explore how the services work and identify some questions to ask when considering which service might be right for you.

Programmatic TV
What is it? Programmatic TV attempts to deliver the efficiency of inventory organization and selection that ad technology creates in the digital world, and bring it to TV ad buying. Many marketers associate programmatic with automation—think real-time bidding on available inventory—but since ad buying on TV still requires a predominantly manual workflow, programmatic solutions are mostly used for planning. For this reason, programmatic TV has a ways to go before it will be confused with programmatic digital ad buying and selling. Once you’ve chosen a provider, you can upload customer data, create a target audience, and rank the available inventory based on which units are the best fit for your brand’s marketing strategy.

Key questions to ask a prospective programmatic TV provider:
· What’s required to integrate a programmatic solution into my media workflow? Do I need to format the data in a certain way? And how do I get the data into and out of your platform?

· Where does the automation end and the manual work begin? Once I have my plan, how does it get executed?

· What inventory sources are accessed through your platform? Are they local, national cable, broadcast, rotators, or at the program level?

· How can I use my CRM data for targeting?

Addressable TV
What is it? Addressable TV enables brands to deliver ads directly to specific households. The format enables delivery of different ads to different households within the same show. It’s ideal for reducing waste, but compared to the 110 million households reached by linear TV, its universe is relatively limited in scale. That’s because it’s comprised of about 40 million households via addressable-enabled set top boxes (STBs), and another 10 million households through video-on-demand and TV everywhere apps. To execute a campaign, marketers first create their desired target audience. That audience is then matched to the households in the addressable universe, and the ads are delivered only to those specific households. But beware—delivering enough GRPs to a smaller, addressable audience segment often results in high, often wasteful frequency for heavy viewers.

Key questions to ask a prospective provider:
· How much of my target market is contained inside the addressable universe?

· Within that group, how can I maximize my target reach while avoiding wasted frequency for the heaviest TV viewing households?

· What can you do to help me scale across different MVPDs?

· How will you help me measure the business impact of exposure to my campaign?

Data-Optimized TV
What is it? Unlike its addressable and programmatic counterparts, data-optimized TV allows marketers to use their first party or third party data sets to create strategic audience targets, breaking their reliance on blunt age and gender targets. Then, they can build media plans that maximize efficient target reach, GRPs, or CPMs and activate those campaigns across all of linear TV – well over 100 million households in all. The real value of data-optimized TV is that it can empower marketers to understand the true value of the media they purchase. By matching what people watch with what they buy, marketers can see which audience segments are most responsive, which networks and dayparts are most effective for reaching them, and which parts of a campaign aren’t working well enough. In turn, marketers can then refine their targets, build more efficient media plans, and continually optimize each subsequent campaign for improved performance.

Key questions to ask a prospective provider:
· Can I use my CRM data for targeting? And what 3rd party data sets do you activate?

· How do you select inventory? Is it index-based or do you use other data to determine the most efficient plan?

· How can I see which audience segments are responding to my advertising?

· What kind of attribution models can be applied to my campaign?

Television advertising is undergoing a renaissance. Advanced TV’s three flavors – data-optimized, programmatic and addressable – give brands, agencies and broadcasters new and more powerful tools to plan, buy, sell, and measure campaigns. Selecting the right tool for the job depends on many factors, and there’s no one solution that’s right for all situations. Before you begin, take time to assess your needs, learn about your options, and most importantly, ask questions. Do all this correctly, and you’ll emerge not only with new skills, but quite likely better campaign results, too.

Written by Michael Kubin, EVP Media

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Addressable Anxiety? Time to Jump In

March 13, 2018/in Blog /by Loria

“Crossing the chasm” and what is it going to take for advertisers, programmers and distributors to adopt and accelerate addressable? What is holding it back? What are the myths out there?

Two billion dollars. Or actually, more than two billion dollars. That’s about how much money advertisers will place on addressable television in 2018, from a standing start just a few years ago. Sounds great, right? I mean, if you started a business that was doing a couple of billion dollars you’d be thrilled. I sure would be. But compare two billion to the roughly seventy billion that advertisers spend on American television and suddenly it doesn’t seem like much – not even three percent.

And yet over two hundred advertisers have tested addressable television, and their tests have proven successful enough that over ninety percent of them have dedicated a portion of their media buys to addressability. One rarely sees a success rate more than ninety percent anywhere, much less in advertising.

Which raises the obvious question: How can a technology that is demonstrably so effective have such a low share of television spend? What’s holding it back?

Based on many conversations with media people as well as marketers, I can point to four main reasons:

1. Distributor Reach

While addressable television was planned from the outset to be a universal improvement to “conventional” television advertising, the rate of adoption by distributors (i.e., cable, telco, satellite) has varied. And while there are many advertisers who have successfully tested addressable campaigns covering less than a full national footprint, there are others who have used that as an excuse to hold back. In our opinion that’s a very big missed opportunity to establish solid learning about addressable practices, learning which will become increasingly valuable as the footprint expands to universality. But all we can do is lead a horse to water.

2. National Network Addressability

As with universal distribution, it has been the long-term vision to extend addressability to all forms of television: The distributor inventory (i.e., the “local two minutes”) as well as networks (broadcast and cable) and local television. But so far addressability is limited to distributor-controlled inventory; some advertisers are waiting on the sidelines until the others are lit up.

3. Clear Attribution Analyses

Television advertising historically has been an effective but blunt instrument. ROI analyses, such as they are, fall into the hand-waving category: “We spent X on television and our market share increased by Y.” Addressable television brings with it a much more precise way of determining who saw the spot and how they responded. But as with all new forms of analysis, this one brings skepticism on the part of advertisers and media buyers; it’ll take a while for them to see just how reliable this form of attribution analysis really is.

4. Advertiser Timidity

Advertising has historically been a business made up of a few daring explorers and a whole bunch of timid followers. And those followers really don’t act until they believe the path has been cleared of all danger. Even though there’s a great deal of evidence showing that addressable campaigns work very well for most advertisers, many are still too shy or too uncertain to dip their toe in the water. Which, of course, is their loss – they get to watch as their competitors figure out how to use this powerful weapon.

As you might expect us to say: Jump in, the water’s fine.

 

Written by Michael Kubin, EVP Media

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GroupM global chair: ‘Australian media budgets have gone too far digital’

February 26, 2018/in Blog /by Loria

(ADNEWS) – Australian marketers have “gone too far” in shifting media budgets into digital channels and it’s addressable advertising that will allow television to compete for ad dollars in the lower parts of the marketing funnel.

That’s the verdict of GroupM’s global chairman Irwin Gotlieb, who delivered his views on media planning, targeting and addressable TV advertising at the Future of TV conference last week.

Chief among his concerns is that he believes marketers have become too concerned by “picking the low hanging fruit” rather than “watering the roots of the tree”, and this is having a negative impact on the pulling power of brands, illustrated by apathy towards brands from millennials.

“Australia has an issue in that allocation against digital has gone further than it should. We know that the per capita expense of digital media in Australia is probably the highest in the world,” Gotlieb says.

“When you look at the percentage spent on television it is one of the lowest in the world when you consider markets that have fully developed television industries.

“The decline of television’s share of ad expenditure in this market has been more severe than most. It probably warrants a good careful look and a thorough understanding, not just in terms of ad expenditure, but in terms of the percentage of impressions delivered from digital media compared to TV.”

mcn_event-gotliebv2.jpg

GroupM global chair Irwin Gotlieb and Videonet editor in chief John Moulding talk TV. 
 
A revaluation needed

Gotlieb points out that in the US there is a minor rebalancing occurring, which has also occurred in the UK and other leading media markets.

“A correction of some sort is probably in order [in Australia], certainly an evaluation is in order and TV addressability is one very, very effective path to getting better value for client’s money,” he adds.

Gotlieb, leader of the world’s largest media investment group, says it is time for the media and marketing industry to rethink its gravitation towards digital media and targeting.

“I think we have too much focus on targeting. When a client puts a gun to our head and says we need to generate savings, the easiest way to deliver those savings is to develop a more refined and narrower market,” he says.

“But you sow the seeds of your own destruction. One of the reasons we have this issue with millennials and branding is that we moved too heavily into digital in a too targeted a fashion and have forgotten some of the fundamentals of marketing.”

‘A standing ice cube’

The GroupM chief believes that television has become “a bit of a standing ice cube” considering its business potential.

“Managing decline is not a position that television should be in,” Gotlieb says. “Part of the problem is there is an affinity in marketing circles to exploit targeting opportunities and it is a way to save money.

“Television has been put into this little box called ‘top of the funnel awareness’ and has never been able to exploit the money that is directed at every other level of the marketing funnel.”

Gotlieb says that there are no longer reasons why TV should be excluded from lower parts of the marketing funnel because there is the data and technology to support granular targeting of TV inventory based on factors like consideration, preference and where in the purchase cycle a consumer is.

“Technology for addressability has been around for a number of years and, quite frankly it is not being exploited. So shame on all of us,” he says.

Although addressable TV can only be delivered to households rather than individuals, Gotlieb says targeting can become more granular on a “probabilistical” basis when you consider the type of content being watched, for example a children’s cartoon versus live sports versus a dating reality TV format.

“What wouldn’t you do with this capability? Television has always been our most effective means of communication,” he adds.

“It has a reliable supply chain, there are few known integrity issues, very few, if any, brand safety issues and we have known and accepted viewability standards that we trade on. What’s been missing is the targeting opportunity.”

He also stated that GroupM is ready and able to invest client money in addressable TV advertising when it rolls out in Australia.

“I didn’t just come down all this way for kicks,” he says. “In markets where we do have addressability going, the constraint is inventory for now and we spend more time explaining to clients why they can’t invest more.”

Rebalancing budgets

Gotlieb points out that today between 70% to 80% of marketing budgets go towards trade support, such as in-store promotions and sampling. He believes this contradicts the reality that television and other forms of above the line media offer better bang for a marketer’s buck.

“There are a lot components such as sampling that is not very efficient and couponing is cost poor,” Gotlieb explains. “If you talk about a $40 CPM (for TV), do the maths – you are 4 cents per impression. A coupon costs you 50 cents to a buck – and that’s a prime time TV spot.

“Television as a medium is engaging, compelling, safe but importantly it is relatively efficient and certainly when compared to areas where clients allocate 70-80% of their budgets.”

Although Gotlieb believes addressable advertising can help TV reach further down the marketing funnel, he warns CMOs that if they ignore top of the funnel investment, they do so “at their own peril.”

He explains: “If you focus too heavily on targeting, what you are doing is you’re identifying the lowest hanging fruit and you are allocating all of your resources to plucking that low hanging fruit. But lest you forget to water the tree, there is no next generation of fruit. One can not over-emphasise the importance of top of the funnel marketing.”

Although addressable advertising should help TV play further down the funnel, marketers who turn the hose away from top of the funnel marketing and focus purely on cutting cost will lose out in the end.

By Arvind Hickman

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Data-driven Addressable Advertising – The Next Frontier

February 14, 2018/in Blog /by Loria

Read the trade press. Go to a conference. Chat with your colleagues.  Everybody is talking about data.  If you believe the hype, data is going to revolutionize TV advertising.  We hear about how a complex target can be defined well beyond the Neilsen cohorts that have driven TV advertising for decades.  Examples of some new target audiences include auto intenders with more than two children; dog owners who buy premium brands; and even consumer package goods customers who buy competing brands. Clearly this is a far cry from buying solely on age and gender.  But is this the ultimate vision or can more be done to unleash the power of data?

First, let’s define the various types of data as it relates to TV advertising.

Viewership Data

Most discussions surrounding data focus on the characteristics of the viewer.  Data is collected by service providers showing which set-top boxes (STBs) are tuned to which programs at any given time. When the characteristics of the household in which the STBs are located are matched with the viewership data, it is possible to gather ratings specific to the advertiser’s chosen audience.  Target/viewership data is just the starting point.

Impression Data

The next type of data is more campaign specific.  In order to measure the effect of the campaign, we need to know who saw the ad, how many times they saw it, and for how long.  This is impression data. The data must be anonymized to protect viewer privacy, but the data can be used to determine reach and frequency.

Conversion Data

The last type of data provides an indication of viewer action after seeing the ad. In the vernacular, this is known as attribution or conversion data.  Actions do not have to be purchases.  Any Key Performance Indicator (KPI) can be used.  Visits to websites, calls to a toll-free number, credit card applications, requests for information, are all examples of KPIs that can be used. Pairing impressions with conversions can show the effectiveness of the ads.  Again, this must be done in a privacy-centric manner, but if done that way the data is extremely powerful.

There are many ways to use the various forms of data.  ROI analysis, A/B testing, and even the use of cross tabulations are just the beginning. Data will open up the world of automatic campaign optimization and even impression-based programmatic buying. The next frontier of TV advertising is just beginning.

Written by Howard Fiderer, SVP Strategic Corporate Development and Product Line Management

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eCPMs: You only get one chance to make an effective impression

January 8, 2018/in Blog /by david

Oh, the good old days when television was simple to plan and buy! All you had to do was:

  1. Pick a Nielsen age and gender cohort – Adults 18-49, Men 25-54, Women 18-34,
  2. Negotiate your cost per thousand (CPM) by daypart,
  3. Refer to the plan’s daypart mix,
  4. Allocate dollars by daypart,
  5. Calculate whether that will achieve your reach and frequency goals, then…

Wait a minute! That’s not simple at all!

Not to mention the fact that age and gender cohorts can’t tell you about, for example, dog ownership if you’re Purina® or auto intenders if you’re BMW. So, while your television media buys can be efficient on a CPM basis, you know your campaign is reaching lots of people who have no need or interest in the product you’re advertising.

Enter addressable television, which behaves like direct mail. If you’re a direct mail advertiser you buy a mailing list because it contains the names and addresses of the people who are most likely to buy whatever it is you’re selling.

Same goes for addressable television, except the age and gender CPM calculations are no longer relevant. Since addressable television enables you to only reach the people in your target audience, the metric changes as well. We move from the tired old age and gender CPM to the shiny, new eCPM.

eCPM – the effective CPM that tells you how much you’re paying to reach your precise target audience.

This is best illustrated by way of an example. Assume you’re buying television for Purina Dog Food, a brand only interested in reaching dog owners. (For the moment, we will ignore people who may someday own a dog; we’ll discuss them a little later.) And let’s make a few assumptions to illustrate how the eCPM calculation works:

  • Purina has been using a target demographic of Women 18-49 (W18-49) on linear television, since their research indicates that’s mostly who buys dog food.
  • They’ve been paying $10 per thousand (CPM) to reach W18-49 on television, using whatever additional research is available to them in picking out the best programs for reaching dog owners.
  • And finally, ten percent of W18-49 own dogs.

Given these assumptions, Purina’s current effective CPM (that is, the cost per thousand they’re paying to reach dog owners on linear television) is $10/10% = $100.

In our hypothetical example, Purina is paying $100 to reach a thousand W18-49 who own a dog. It’s important you get comfortable with this number, because the way you calculate the cost of media is about to change.

Now let’s assume Purina is interested in running an addressable television campaign, so they acquire a list of people who own dogs, regardless of age or gender. Of course, if Purina wants to further refine their audience, they’re free to do that – but let’s not overcomplicate things.

So how much should Purina be willing to pay to reach a thousand dog owners? Keeping in mind that until now they were paying $100 to reach a thousand dog owners, shouldn’t they be willing to pay that same number for addressable television, where they’re assured of reaching only dog owners?

The answer to that question is “No.”

Here’s why: In the linear television example, Purina knows that only ten percent of the audience their campaign is reaching own a dog. In other words, ninety percent of the audience doesn’t own a dog BUT (and it’s an important “but,” to which I referred earlier) those people MAY someday own a dog so the Purina message has some brand-building value. By contrast the addressable campaign, which ONLY reaches dog owners, has no value in building the Purina brand name among current non-dog owners.

Purina would not want to pay the same $100 eCPM for an addressable campaign that it’s paying for its linear campaign, since it doesn’t enjoy the (admittedly marginal) additional benefit of building its brand among non-dog owners.

Therefore (if, as Keynes said, it has to price itself rationally), the addressable television marketplace must charge advertisers a lower eCPM than what they’re paying for their linear campaigns. And the current addressable marketplace seems to be priced at about two-thirds of the linear eCPM, though that number varies by advertiser category.

So…welcome to the new world of TRULY simple television media buying. All you need is one number – your eCPM – and that will tell you exactly how many potential buyers of your product your media budget will reach. It’s as simple as that.

Written by Michael Kubin, EVP Media

 

 

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Programmatic vs. Addressable for Dummies

June 17, 2015/in Blog /by david

Television advertising has had a long history of targeting based on age and gender. While other media types moved on to more sophisticated segmentations, TV advertising was trapped in this old model due to the lack of detailed audience statistics and targeting capabilities. Even if the audience were known, it was impossible to target the desired audience without producing significant wasted reach. That is why many age and gender-based campaigns combined Nielsen cohorts to provide a larger “target” audience. This practice may have reduced wasted reach on paper but reduced effectiveness since the true audience was merely a subset of what was targeted. New processes and technologies have emerged allowing for greater targeting and measurement, the two predominant being programmatic and addressable.

Programmatic Advertising

In the context of TV advertising, there are many definitions of programmatic ranging from a simple technical integration of the buying and selling platforms all the way to an auction-based system. The industry seems to be settling on a simple but meaningful definition:

Programmatic Advertising:  The use of STB data to inform the purchase process. 

In today’s world, programmatic vendors use STB data to forecast avails with the highest concentration of the desired audience and then purchase those spots.  The process is made possible because of the vast amounts of viewership data available and the richness of the data set.  Instead of reviewing ratings by Nielsen cohort (age/gender), advertisers can analyze viewership data by a wider set of attributes. For example, a minivan manufacturer may define its target audience as auto intenders with a minimum income of $75,000 and at least one child in the home. Previously the advertiser may have used an age and gender proxy of women 25-34 and settled for a fairly low percentage of its true target audience.

The primary benefit of programmatic advertising is the reduction of wasted reach. By increasing the percentage of the true audience from just 8% to 15%, an advertiser sees a near doubling in the efficiency of the campaign–a dramatic increase in efficiency for a small increase in cost. An additional benefit of programmatic is the ability to be more precise with segment definitions, narrowing the target audience to those most likely to respond to specific advertisements. This narrowing must be balanced against the possibility of reducing the potential viewers too much, so that each spot does not significantly contribute to campaign objectives. The more spots required to reach the target audience, the more likely it is to show the ads to the same audience members over and over. Audience fragmentation virtually guarantees there is no way to ensure the unduplicated reach that is desired, and increases the potential for viewer burnout.

The benefit of programmatic advertising for the advertiser is clear: Reducing waste by even a few percentage points allows for gains in ROI – as long as the advantage is not cancelled by a commensurate increase in media cost. Given the costs of using a third-party programmatic buying platform, only a marginal increase in rates charged by MVPDs is allowable. In fact, INVIDI has learned through its advisory board that advertiser willingness to pay for programmatic inventory only increases by 5% – 10%. Most of the advantages are disproportionately experienced by the advertisers and, of course, programmatic vendor agencies.

Addressable Advertising

Programmatic advertising increases the odds of reaching true target viewers by using actual data and not merely a proxy. But no matter how good the data, there will be wasted reach and the more narrow the segmentation, the more wasted reach will be created. What is needed is the ability to send ads ONLY to those viewers within the target audience.

Enter addressable advertising.

Technology has advanced to the point where ads can be delivered on an individual STB basis. Advertisers can now buy audiences instead of programs. Unlike programmatic advertising, there is no need to preselect avails. There is no need to forecast who will be watching. There is no need to experience the wasted reach associated with spot buying. The system determines audience composition in real time and then chooses the most appropriate ads. Each individual advertiser reaches only those households that qualify.

As with programmatic advertising, the system must provide the required reach and protect against viewer burnout. This is a core strength of addressable advertising, which uses frequency caps to ensure a smooth distribution of impressions across the subscriber base. Addressable advertising systems go further, allowing advertisers to set a minimum time between viewings (separation) regardless of the programs being watched. These capabilities eliminate the worry associated with the small, well-targeted campaigns mentioned above. There is no issue with wasted reach or viewer burnout. Advertisers are not forced to expand their segments due to the constraints associated with spot buying.

Moneywise, everyone’s a winner:.

  • Advertisers pay less for each targeted impression on an effective CPM (eCPM) basis since virtually all wasted reach is eliminated. This discount varies based on the availability of the target audience but the market seems to be pricing eCPMs at around a third less than current linear CPMs.
  • MVPDs win since the revenue per avail increases greatly. Unlike programmatic advertising, addressable advertising allows for multiple ads to be delivered in the same avail. There is no need for any one advertiser to purchase the complete avail since the unused viewers of one campaign can see ads from other campaigns. Each individual advertiser gets only those households they want to reach. The MVPD monetizes the remaining viewers by selling them to other advertisers.
  • Viewers win because they get to see TV spots more relevant to them.In other words, fewer diaper ads if there are no babies at home.

Depending on the implementation, the number of ad alternatives can range from just a few to hundreds. Most terrestrial TV delivery systems providing addressable advertising have chosen to enable all their STBs and use the cable plant to deliver ad alternatives. The number of options is typically limited to between four and ten per break. Satellite providers use the DVR as a storage mechanism and preload relevant ads. This allows them to have a much larger pool of ads from which to choose; the more ads that can be sold into a given avail, the greater the potential to sell all available impressions.

Transitioning from Programmatic to Addressable

One of the largest drivers behind programmatic advertising is the slowness of the MVPDs to deploy addressable advertising. While there are already more than 30 million homes delivering addressable, the remaining 75 million pay TV homes are not. For these latter homes, programmatic advertising is the best they can do.  Advertisers want to maximize reach and will continue to use programmatic until they see significant mass behind addressable. Vendors such as Adap.tv, clypd, and Videology all have programmatic offerings, and rightly so. But the tide is turning.

Addressable advertising is rapidly gaining momentum. MVPDs representing more than 70 million homes have embraced addressable advertising and are expected to deploy systems within the next two years.  Advertisers have begun to experience the benefits of addressable advertising with more than 90% continuing or expanding their addressable campaign expenditures. This is putting pressure on the rest of the MVPDs to do the same. It is also pushing programmatic advertising platforms to expand into addressable advertising. Several have already announced addressable efforts and others have plans yet to be announced.

In short, both programmatic and addressable advertising have a place in the market. Programmatic will continue to be the best way to squeeze additional results out of legacy, avail-based systems while addressable advertising represents the newest and best way to use television.

Written by Michael Kubin

https://www.invidi.com/wp-content/uploads/2017/12/shark.jpg 400 698 david https://www.invidi.com/wp-content/uploads/2017/11/logo-sticky.png david2015-06-17 15:56:442018-01-26 13:14:12Programmatic vs. Addressable for Dummies

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