• by Erik Sass  @eriksass1, May 3, 2011

The television business needs more data on viewership, as well as the infrastructure to support targeted ad delivery and eventually addressable video advertising -- all of which are still in development, according to a panel discussion of "Advertising Strategy, Expenditure, and Analysis" at Digital Hollywood on Tuesday afternoon.

The panelists agreed that cable TV advertising is on the verge of a revolution -- or at least a wide-ranging evolution, thanks to the expansion of digital distribution and the concurrent increase in measurability through feedback mechanisms. Jim Turner, SVP, product management for Canoe Ventures, noted that "TV has typically been brand advertising, but one of the things we're doing is turning brand advertising into direct marketing," adding: "it's amazing how quantitative television buying has become."

Likewise, Bill Stratton of the SAS Institute's media and entertainment group emphasized that the key element will be "the infusion of data," including "not just set-top-box data, but Internet data, mobile" -- all of which is already affecting "how media buyers look at their audiences, as well as how sellers who are trying to retain audiences" approach both programming and advertising.

This represents a sea change, according to Stratton, because "media companies aren't data-oriented businesses. Traditionally they transact on very little data, because there wasn't a need for data and segmentation of audiences... But now you have the actual viewership, as opposed to panel representation."

All this is merely laying the groundwork for addressable, interactive advertising, whose potential remains largely unrealized. Stratton predicted: "In TV we're not going to see true targeting and addressability until not just the set-top box data but the trafficking systems start to change. It's the trafficking systems and the systems underlying the cable networks that are going to do it."

Cable executives also face daunting logistical issues, according to Chip Meehan, West regional SVP for Comcast Spotlight's integrated media sales, who cautioned: "This stuff needs to scale. In addition to being measured, it needs to work right."

One outstanding issue is the legal limits on the amount of information that can be collected about cable viewers through set-top boxes, including the ban on collecting personally identifying information. One compromise solution mentioned by Meehan is targeting consumers by cable TV "zones," using interactive TV ads that invite further engagement by interested viewers: "It's more inferential than going to actual individual homes, but you can still tell what's working."

Nor are the obstacles purely technical and legal, Stratton added: "Taking all that data, and boiling that down to a currency that a marketer or an agency can understand is really going to be the critical skill."

Ultimately, the transformation will be driven by the audience itself: David Prager, the founder of Revision3, predicted: "Everything that's going to end up happening will be dictated by user behavior. Analytics will be more precise, but ultimately technology empowers users so they can dictate how they want to behave in the media ecosystem." Meehan agreed: "We have to start with the consumer" because "the technology puts more and more devices in their hands so there are more and more screens where they are enjoying content."

There's no question that changes wrought by digital media pose a threat to traditional TV; on that note, Prager said advertisers are anxious because "audiences are shifting from traditional TV, and a lot of advertisers are afraid that they won't be able to reach their key audiences."

By the same token, the panelists agreed that change will take time, and new technologies will not ultimately erode the dominance of video in media consumption. "The vast majority of dollars are associated with television advertising," noted Stratton, adding: "Big markets that are represented in $70 or $80 billion don't change overnight. They take a long time to change."