Commentary

Smart Tech Will Boost TV Ad Effectiveness And Yield, Not Undermine It

by Dave Morgan , Featured Contributor, November 5, 2009

The television industry is in the midst of a technology-driven transformation. Digital set-top boxes, digital video recorders, high-definition flat-panel screens, Internet-tethered set-top boxes for on-demand streaming of programs, and interactive features available through remote controls are all changing television as we have known it. Further, a number of companies (mine included) are building businesses to help industry constituents -- from television operators to networks and programmers to agencies and advertisers to, most importantly, viewers -- get more value out of the television platform.

As I'm sure you know, many television operators and networks are wondering aloud whether they might lose some of their power in this new tech-transformed world. Will "smart" technologies undermine TV's "magic"? Will data-driven marketing undermine TV ad pricing? Will media owners lose as media buyers become smarter? I believe that the answer to those questions is no. Here are my reasons why:

Tech will drive better results from TV ads. TV ads work. We all know that already. The more folks look at "back-end" data from the TV world, the more that fact is reinforced. TV ads that are "optimized" to improve their relevance to viewers work even better. Delivering better results can only help media owners when it comes to maximizing pricing and inventory yield. A lot of TV inventory is underpriced relative to the results it can deliver, and most of that value is either harvested by direct-response shops, or is just plain wasted. That can change.

The emotional power of TV is unmatched. TV is not going to lose its "magic" anytime soon. No other medium or communication platform has a comparable capacity to excite, entertain, infuriate, inflame or sadden like television. High-definition is only making that fact more so. Smarter TV ads won't lose that magic; done correctly, they will enhance it.

Better information will create more control. More and better performance information is coming into the TV world every day. Whether it is measurement data from TNS or TRA Global or TiVo or Nielsen, marketers, agencies, buyers and direct response shops are getting much smarter about TV viewers and the effectiveness of the media that they buy. Here, information is clearly power. The smarter TV operators and networks become, the more they will control their own destinies -- and their deals, pricing and yield. Ignorance here won't be bliss. It will be death.

"Last Man Standing" is delivering big reach, engagement & recency. TV is the Last Man Standing of the big media. Newspapers, radio and magazines have all suffered severe declines in their audiences over the past few years. There just aren't any viable alternatives anymore when it comes to delivering really big reach, a high level of audience engagement and the ability to "cume" that big audience really fast. Technology and data will help TV media owners maximize their ability to deliver this extraordinary, scarce and valuable media product.

Supply v. demand stability. Finally, TV media owners have an enormous advantage over Web media owners when it comes to supply versus demand. The pricing of Web ads has fallen dramatically over the past few years, but not because data-driven targeting, networks and automation have "commoditized" the inventory. No. Cost-per-impression prices have fallen because the "supply" of impressions has risen dramatically, almost tripling over the past four years.

TV does not have that problem. While TV viewing in the U.S. is growing slightly, the supply of audience impressions has remained quite stable relative to marketer demand. Thus, smarter advertising will only increase demand as the linkage to pricing and results become clearer to marketers -- and as media owners make more effective use of their spot inventory.

There is no question that TV's data-driven future is a big unknown to many and scary to most media owners. I don't think that it will be so bad, though (quite selfishly, of course). What do you think?

commentary, tv

2 comments about "Smart Tech Will Boost TV Ad Effectiveness And Yield, Not Undermine It".

Check to receive email when comments are posted.

John Jainschigg from World2Worlds, Inc., November 6, 2009 at 12:45 a.m.
I would love to believe you're right. But what about the following?
First, we're told that folks are spending WAY less time watching TV than before, and that 'online' in various forms has taken up that slack. In a closed system, reduced consumption equals increased supply.
Second, doing data-driven and interactive advertising on TV turns the TV into an internet terminal; and changes the relationship between viewer and medium. The value, here (or some of it) comes from this being 'a non-anonymized version of the internet.' But doesn't it also bring with it the virtual certainty of a more clicky, transient, impulse- or goal-driven navigation paradigm? More solo (rather than family) TV-watching, because TV is now an interactive experience that can't be shared the way a passive viewing experience can? More screen-sharing between video/ads/commentary (hence conflicts among advertising placements in the video and in the text-body surrounding it)? Multiple windows (and conflicts of attention, and failures of metrics to accurately represent the user's state?) And eventually, doesn't it engender a blurring between what the TV-box can do and what the PC-box does?
Certainly, there's a "partially-evolved" state possible where you keep brutal control of broadcast and cable networks, leverage the fact that huge money is required to enter the game to limit competition, and add interactive features judiciously. And I think that - if that line can be held - it could be very profitable. But I can't see holding that line for very long (if at all) - especially not in a world where TV is distributed by cable operators and network service providers earning substantial revenue from internet access, IP telephony and similar services. It just makes too much sense not to build a common infrastructure, where all services are data services, delivered over fiber to the premise; and where everything presents as "the internet," whether it comes to the TV box or the PC-box. And at that point, the jig is up -- all the same commodifying forces come into play to empower the buyer and disempower the seller.
Reply

Nelson Yuen from Stereotypical Mid Sized Services Corp., November 6, 2009 at 11:17 a.m.

I don't disagree with what you're saying John, I just think that there is a counter balance pitting the effectiveness of the ad using marketing ingellignce VS the OVERALL consumption of TV as a whole.

Keep in mind, TV is the MEDIUM and not the PRODUCT.

Also, keep in mind, that there is a social paradigm shift of how people consume content as a whole. Your description of a "data-driven interface" and how it will "change the relationship between viewer and medium" is mute. That can, will, or HAS happened to every medium and is beyond a marketers control.

Content is content. People spend less time watching TV than before but they do not consume DIFFERENT content. I'd argue a generational gap that says people aged 18 - 40 KEEP the TV on when they are interacting with social media platforms or blogging. ETC ETC. (I'm making a bold assumption that you're around 50 or so judging from the diction and stance on the subject matter.)

Leveraging technology while cohesively tying marketing intelligence to television is kind of implied. I mean, isn't a tertiary goal of marketing to UNDERSTAND their audience? I mean we take surveys and conduct studies on television audiences all the time?

Your point about melding TV and PC together and blurring the lines between the two is kind of logical isn't it? They both put out content that audiences consume.

BTW. The whole "windows and attention conflicts" is a USABILITY issue and NOT important in terms of marketing. It really isn't relevant.

Your "passive vs active" viewing experience is also kind of irrelevant. All "viewing" experiences and marketing experiences are to some degree both active and passive. And even if there was a distinction, I'd market to the active viewer over the passive viewer any day of the week. How much would it cost me to market to engage in disruptive marketing techniques that attack a LONG buying cycle over a LONG period of time, VS interacting with a consumer that can clearly tell me what they want, how they want it, and when I should commit marketing budgets to convince them of a purchase.

I totally agree with your last paragraph. But is your tone one of optimism or pessimism where you paint a picture that empowers buyers over sellers?