Back in the year 1995, the now-ubiquitous Web ad server was born. Its job was simple: deliver an ad to a page, count the impression and the click. Voila! Internet advertising was born.
Dollars started to flow on the promise of the targeting users. Traditional publishers owned the sale to brand advertisers and the ad networks owned more targeted media buys.
Then, agencies got their own ad servers. Theirs were a bit different. They could follow the consumer after the click and measure ROI. This technological feature had a profound impact on Internet advertising.
The ad servers found consumers visiting content that human intuition would have ignored as worthless. Overnight the pool of inventory on the Internet expanded dramatically, advertising pricing dropped and the term “remnant” largely disappeared. Audience targeting (people, not pages) became the online advertising mantra.
Today’s television marketplace is starting to see the light, thanks to the onslaught of more granular viewing data, putting buyers and sellers through a similar learning curve. However historic and stubborn inventory systems and definitions are holding back the notion of separating people from programs and focusing on audiences.
The $70 billion of advertising on linear TV is typically organized into four main groups: Who (Demographics), What (Content), When (Primetime, Fringe, Late Night, Early Morning, etc) and How (Broadcast, National Cable, Satellite, Local Cable, Local Affiliate, Syndicated, Unwired, Barter). Buyers organize these fixed seller defined ingredients to satisfy the marketer’s reach and cost goals. Although this may simplify supplier inventory, it falls short on reaching consumer’s based on their modern viewing habits.
Consumers, of course, have no idea that their TV ads are organized in these ways. But they wonder aloud why they see a high-quality ad followed by a low-quality ad. Or why is it that one person will see the same advertiser’s ad countless times between 8 p.m. to 10 p.m., but the person working the late shift will never see that spot, even if they fit the same demographic profile?
It’s time for TV to update its interpretations of inventory value due to audience fragmentation and fluidity. Nielsen data shows that 65% of all TV viewing is on shows that have a 0.5 rating or less, but I would wager a bet that the majority of TV buyers still believe that there's a ton of remnant inventory devoid of the consumers they seek in shows with low ratings. The net result of this is a fictitious depiction of “finite supply” of “premium inventory” in “key day-parts,” which then impacts pricing for that cherished inventory mix.
This is puzzling. More audiences are watching more TV. More advertisers are spending more money on TV. But yet, more ads are going to fewer people.
Who will be first to break the inventory definitions that exist today? Will it be the buy side, which will reach more target audiences at lower cost? Or, will it be the sell side, which will make more money by expanding its inventory pool to include audience targeting beyond the demo?
It will be both, because as Ted McConnell, media math man extraordinaire, once said, “there is no such thing as a remnant customer.”