Commentary

As T/V Fragmentation Explodes, Need for Aggregation Increases

What is aggregation?  Miriam-Webster defines it as “a) the collecting of units or parts into a mass or whole and b) the condition of being so collected.”

Both the production and distribution of programming that collected audiences to sell to advertisers were simple and straightforward in the 1960s and 1970s.  Just look at Harry Crane, the head of media at “Mad Men”’s agency, who is rarely seen stressing over where the ads will run. He had three networks and 28 hours of prime-time television to deal with, where a single top-ten show could reach 23% of all U.S. TV households.  And with the remote control a new technology, ad avoidance was a far-away dream for viewers.  Networks, programs, advertisers and agencies had a captive audience.

The Fragmentation/Aggregation Path

As audiences and programs began and continued to fragment, more energy has been focused on aggregating audiences by all parts of the traditional television ecosystem:

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In the 1980s, cable distributors (system operators) aggregated viewers on non-overlapping geographic footprints, having been awarded local monopoly status in exchange for the investment in the cable TV infrastructure.  Ad agency media departments served to aggregate media buys and plans for advertisers. By 1990 there were enough channels on most systems to inspire Bruce Springsteen's "57 Channels and Nothing On.” And around 60% of US Households had Cable TV. 

Satellite appeared and grew through the 1990s so that by 2000, 80% of U.S. homes subscribed to cable or satellite. Operators could sell ads within their footprints, but there was no national distributor, so as distribution channels further fragmented through the early 2000s, advertisers and agencies turned to broadcast and cable networks to aggregate audiences now delivered through multiple platforms on hundreds of channels/networks competing for in-home “eyeballs.”  And those networks were further aggregated as major media holding companies like Viacom, NBC, Walt Disney/ABC, CBS, Comcast, Cablevision and Hearst bought and in turn sold ad packages across multiple television networks – both cable and “broadcast on cable.”

At the same time, full-service ad agencies spun off their media departments into stand-alone media services companies like OMD (Omnicom), Group M (WPP), Carat (Aegis) and Starcom/Mediavest (Publicis), to capitalize on the need for advertisers to get a handle on the expanding number of ways to deliver ads to TV viewers.

TV (television) then became T/V (television/video), as the Internet arrived: the most fragmented and global distribution system ever imagined for any product in the history of media. This increased pressure on advertisers, agencies, media companies, cable and satellite system operators and emerging technologies to figure out how to buy and sell an infinite number of possible ad buys to advertisers with very finite budgets. 

Digital advertising networks led by Google/YouTube’s AdSense emerged and began to include video by the late 00s.” From 2007 to the present, ad networks for video have risen, fallen and are being transformed into Big Data programmatic buying and RTB (real-time bidding) platforms. Here buyers and sellers can be matched, not just on low-cost remnant inventory, but in a more direct and transparent form of execution being referred to as “programmatic premium.”  Like high-powered electronic stock trading, the marketplace can move quickly, as buyers and sellers set criteria and execute purchases quickly and in real time without the now sluggish process of direct selling: proposals, reviews, revisions and insertion orders. This new kind of buying is not widespread yet. Still, it seems significant that The New York Times has hired ad veteran Matt Prohaska (a former colleague of mine at BBDO Media) to head up its new programmatic buying efforts, which will compete with traditional television sales organizations in the video arena.

Conclusions

I believe technology will continue to be more of a player in the emerging T/V business model in this incredibly complex point in history. Here are some of the changes I can see:

  • Consolidation of programmatic buying players (see Video Lumascape for a snapshot of the complex and confusing current ecosystem).
  • More “programmatic premium” buying technologies and options.
  • More advertiser-friendly addressable advertising methods and technologies.
  • Mobile platforms solving the “no-cookie” problem of how to provide addressable ads to advertisers.
  • With more addressable advertising, a shift from advertisers’ focus on buying a programming environment (traditional surrogate for audience) to audience itself.
  • Platform-neutral T/V buying strategies by advertisers and agencies

My reference source for the history of transitions: "Television’s Next Generation: Technology/Interface Culture/Flow" by William Uricchio (MIT) from “Television after TV: Essays on a Medium in Transition” by Lynn Spigel and Jan Olsson, Duke University Press (2005).

2 comments about "As T/V Fragmentation Explodes, Need for Aggregation Increases".
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  1. Douglas Ferguson from College of Charleston, June 4, 2013 at 9:56 a.m.

    The ad-blocking conundrum applies to online, too. AdBlock Plus on my computer handily dispatches all the careful "programmatic" buying efforts, by rendering them invisible.

  2. Paula Lynn from Who Else Unlimited, June 4, 2013 at 8:14 p.m.

    Just to add to confusion, local and regional is more fragmented and more complicated with individual markets sprouting its own communication channels.

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