• by John R. Osborn , Op-Ed Contributor, October 9, 2012

This is the second of two articles addressing why the dramatic emergence of RTB/Ad Exchange buying and selling will significantly influence a broadly accepted, T/V business model. Part 1 is a primer describing the basics of this process.

Dramatic growth in “Big Data” is driving a revolutionary advance in buying and selling advertising media that has several names: RTB (Real Time Bidding/Buying), Media Exchanges, Ad Exchanges, Media Trading. The time-consuming, far-in-advance, guaranteed direct deals for uncertain upfront and scatter TV inventory (media-centric ad buying) is now making way for a more audience-centric process.

I spoke with Keith Eadie of leading T/V DSP (demand-side platform) TubeMogul and explored some of the opportunities presented by this rapid shift in the way T/V is purchased.  Here’s what I’ve learned from him and others, supporting why I believe this development will influence the birth of a new business model for T/V:

Advertiser Opportunities

Unprecedented target-ability: T/V buyers can now purchase audiences based on addressable data beyond demographics: viewing behavior, geography, platforms, operating systems, type of ad (pre-rolls [including mid- or post-roll], auto-play, interstitials etc.), proprietary and third-party data.

Guaranteed engagement: Because all premium video starts with a consumer action (“click-to-view”) where the viewer accepts pre-rolls or mid-rolls as the way to get content, advertisers will be able to measure and evaluate engagement and let go of “opportunity-to-expose” CPMs. 

Reasonable ad-loads: Over-the-top (OTT) T/V, even from traditional networks (e.g., Hulu), has not forced unreasonable amounts of ad-loads on viewers.  This will reduce consumer ad avoidance and add value to marketer messages.

Interactivity: Features that allow advertisers to efficiently track and purchase viewer behaviors such as surveys, polls, RFIs (requests-for-information), dealer listings, social media connections and other “drill down” actions are a big plus.

Constant, real-time adjustments: Traders/buyers can make real-time modifications to buys using sophisticated yet easy to navigate “dashboards”. Local or national buyers with strong relationships to media sellers are no longer the only way to get effective deals done.

Contextual placement: This real-time video buying puts brand marketers in control of context -- the sites where ads will run. Any time during a campaign, marketers can tweak the exact sites where their ads are appearing based on where campaigns are achieving goals.

Favorable costs-per-thousand based on engagement: Advertiser value will increase as constant, real-time feedback and adjustments get the message in front of the right audiences in the right context at the right time. 

Heavy lifting becomes lighter: As with any industry that has used automation to increase productivity, more and better buying can be done with lower staffing costs.

Digital GRPs: Many players are focused on development of a common buying currency, (sometimes called “digital GRPs”) to help accelerate the use of RTB and video ad exchanges.

Content Creator/Producer Opportunities

Monetization scale: The aggregations of audiences allow producers to get to a massive global audience across many platforms quickly, and monetize their investments.

Developing differently priced product lines: Content producers and publishers can segment (e.g., direct vs. RTB vs. remnant) inventory to gain optimal pricing through real-time bidding, particularly for high-value impressions. 

Bidding and optimized pricing: Online search has benefited from pricing based on a bidding approach for years. For the first time, central exchanges can present a total publisher’s video inventory to a massive buying sector in real time.

Content Distributor Opportunity

Competition drives growth/success/innovation: Traditional distributors (cable/satellite) now face competition from OTT (over-the-top) platforms and providers who most benefit from RTB. Like land-line telcos or dial-up internet providers in the 1990s, these cable and satellite companies will either grow or die. Whether they are comfortable with that or not, the survivors will be stronger for it.

Consumer Opportunities

Lower monthly T/V content costs: Consumers rely more and more on search to find and organize their own programming schedules from fragmented sources (USA Today has announced it will include web options in its T/V programming guide). Younger viewers, reared on an internet-fed world already, seem willing to avoid monthly subscription fees of cable/satellite and will no longer need “one-stop bundled shopping” from a single media distribution source. This increased competition should lower out-of-pocket costs. 

Better experience: A video-on-demand world with many programming sources, interactivity and small ad-loads is better for consumers. Also beneficial: lower OTT consumer costs.

Summary

Whether the marketer’s purchase funnel strategy is focused on the top (branding), middle (developing consideration) or bottom (promoting action), these advances in buying and OTT are softening the silo walls between the various traditional responsibilities for media placement – a good thing.  I am most excited for the engagement opportunities that “click-to-view” pre- and mid-rolls offer along with interactive, “drill down” offerings that serve consumers as well as advertisers.  When viewers willingly provide pre-roll/mid-roll attention in exchange for the  content they want, the process starts to look like the quid Pro Quo model I have always believed will be the best chance for all ad-supported T/V to grow and prosper.

Note: For a deeper dive on this subject, my primary source of learning comes courtesy of Prohaska Consulting’s training program, “How to Be a Digital Media Trader.”