Transparency is coming to television advertising – radical transparency – and the marketplace will never be the same.
While the US television market is much more fragmented and competitive than any other in the world, it is still pretty concentrated by most measures. Eight multichannel operators (cable, satellite and teleco companies) control 80+% of the country’s TV distribution. Six media owners (companies holding TV networks, studios and their syndication arms) capture 80+% of the national ad spend. Five holding companies (marketing service companies) control 80+% of the national TV media buying. One company provides the “stewardship” system for 80+% of that spend. And, one other company provides the core currency for all of that spend, with three or four other companies providing the bulk of the “secondary” currency measures used by the market.
One of the reasons that the TV ad marketplace has grown so large (more than $74 billion in ad spend this year) is that the TV ad industry’s processes are so efficient. Phone calls, handshakes and faxes may seem archaic, but they’re efficient. Further, love it or hate it, the whole Upfront process has worked very well for ad buyers willing to take risks to get first dibs on the best shows while, at the same time, helping media owners manage the massive and risky investments they need to make to finance and create those best shows. In the relatively closed and concentrated of TV today, these negotiations don’t need to be very open. When you have just few companies negotiating with a few other companies for control of a few essential packages, and buyers can not leave empty-handed or risk losing their clients, sellers can each keep details of their pricing and packaging and inventory avails pretty opaque.
However, this opaqueness is going to start giving way to transparency – maybe radical transparency – over the next few years. Alternative sources of TV viewing data are already starting to flood the market, led by companies like Kantar, Tivo/TRA and Rentrak. Their data is much more robust and granular than the market has ever seen before. TV ad occurrence data – which ads ran where and when – has historically only been available from two vendors, and its availability usually trails the ad delivery by two weeks. We are now starting to see a number of new sources emerging, using “DVR’s in the sky” and automatic content recognition systems.
These two developments alone mean that TV advertisers will soon be able to know the exact results of their TV campaigns with a degree of granularity and timeliness (it’s not unheard of for it to take agencies many months to recover and re-aggregate post-logs from TV campaigns). They will know exactly where their ads ran, who saw them, exact reach and frequency measures (not data extrapolated on a network/day-part basis) and they will have this data in relative real-time (certainly hourly). This data will be instantaneously associated with syndicated pricing data, or integrated with next day “resonance” measures and correlated to just-in-time syndicated purchase data from credit card providers and banks). In other words, every TV advertiser will be able to know exactly how well their ads did irrespective of their objective – reach, frequency, awareness, store sales, competitive share-of voice, ROI, and they will know this the same day or next, and they will know if for each and every one of their competitors. Compared to the TV ad world of today, this is radical transparency.
This world is not years away. All of the components above exist in the market today. All that remains is for them to be stitched together and delivered broadly and in real-time. Watch out. It will probably all be here by the end of the year. What do you think? Is radical transparency coming to TV?