Commentary

How Data Will Do To TV What the Internet Did To Computing

Last year in March, Wired ran a story with a fairly provocative headline: “The Nielsen Family Is Dead.”  It touched on many of the emerging trends that are turning the TV business upside down, from social media and the advent of the second screen, to cable networks becoming destinations for quality content and taking over award shows like the Emmys.

The article’s thesis is that the old-timey ways that TV used to do business don't apply in today’s world. TV’s future, and much of its present, is all about data: data predicting which actors will play well for a specific show; data gauging the tweetability of a new series; data used by Netflix to target genres of original content to invest in, and so on.

Data, data everywhere.

And all of this experimentation, driven by data, is quickly changing the way a $70-billion-a-year business is being run.

We’ve read through this script before -- more than 20 years ago, when the Internet achieved critical mass and powered a revolution in business and culture. The connective tissue that the Internet formed, enabling the organization and delivery of information to humans like never before, is akin (albeit on a smaller scale) to where we are arriving in media. 

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TV advertising has lagged behind cutting-edge advancements in digital and social media, but that’s quickly changing. And data is the driver behind the oncoming shift in television. The question is, what does this all mean for today’s TV networks, MVPDs and advertisers?

Here are a few lessons we can draw from the transformations brought by the Internet:

Automated technologies will make TV advertising go. While data may be the “new oil” for TV (as some have proclaimed), it needs to be managed efficiently for users to reap the rewards. When the Web started out, the amount of information available was sortable and findable within directories. But directories quickly grew unwieldy as the number of users and websites exploded, paving the way for search engines to organize information.

The amount of data available and applicable for television advertising -- viewing data, purchase behavior data and customer data -- is approaching, and may have already exceeded, the threshold of manageability for many organizations. This demands platform technology that can ingest, organize, and make sense of it all in an automated fashion, and leverage TV-specific information in conjunction with data from other relevant media channels, such as online video and mobile. Data only has value when it can be accessed, analyzed and acted on quickly and efficiently. 

TV advertising needs to catch up to consumers. For too long, television has been valued on antiquated age and gender demographics derived from a .00008% sample of the U.S. population. The industry as a whole needs to move beyond the age and gender demographics that TV has traded on for the last 60 years (e.g. , adults 18-49), and shift toward buying, optimizing and measuring on psychographic, purchase behavior and interest attributes that have proven to drive elevated sales (e.g., basketball enthusiasts, who like a specific sneaker brand).

As Kris Magel, Initiative’s chief investment officer, told me at this year’s New York Advertising Week: “18-34 males, 35-44 females is a family reunion, not an audience.”

While the advent of set-top-box data and other sources of audience insight have created new opportunities for marketers, an open approach to data management is needed. This means allowing disparate systems to talk to one another, and ensuring the portability of data signals, rather than locking them into walled gardens. The value of data is exponential when it can be analyzed holistically. 

Change is inevitable. While many are bullish on the prospect of automating the television industry, there are others who scoff at the idea of programmatic technology playing that big a role in the buying and selling process.

One well-known example of the latter type of thinking is Clifford Stoll, a scientist who in 1995 wrote a book and a Newsweek article   calling the idea of commerce and business moving to the Web as “baloney.” Obviously, Amazon, eBay, and others have disproven him. In retrospect, more sophisticated technology and the power of the Internet to connect people made the huge growth of online commerce inevitable.

Nobody knows what the future may bring, but TV as we know is going to change. It already is; see HBO, CBS and others rolling out untethered subscription services as another proof point. And it’s already happening on the business side, with marketers and publishers taking advantage of data as never before to grow their revenue.

We’re still at the beginning of it all, but the Internet revolution shows where we’re headed. Here’s to an exciting journey toward the convergence of digital and TV.

2 comments about "How Data Will Do To TV What the Internet Did To Computing".
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  1. Ed Papazian from Media Dynamics Inc, October 24, 2014 at 3:19 p.m.

    I agree with most of what you say, Dan. Nevertheless, it's important to remember that TV ad sellers are players in the game as well as advertisers. The moment that it becomes clear to the sellers that time buyers are valuing one form of programming---or daypart----much higher than others----regardless of how this was determined, they will jack up the prices, or CPMs, for the more desired fare. And history tells us that advertisers will pay, because they are wedded to national TV. Net, net: higher CPMs for more desirable forms of TV will nullify any advantage gained by using data to fine tune one's targeting.

  2. Herb Lair from CUO,Inc., October 24, 2014 at 5:34 p.m.

    Cable has missed several opportunities in behavioral marketing and targeted sales - if they had been proactive Google would never ben a threat to their ad dollars.
    Article that I wrote for CED Magazine May 1999 - predictions are spot on https://sites.google.com/site/cuoirent/home
    Article below --
    Introduction
    While cable operators and their subscriber management system (SMS) providers are busy battling the Y2K bug, the “stealth war”, for the subscribers’ eyeballs, is being won by the Internet. The Internet has added in excess of 50 million users over the past four years, something that radio took 38 years and even television 13 years to accomplish. The percentage of homes with PCs will be nearly as high as homes with cable by the year 2002, according to forecasts. Current surveys indicate people with Web access are spending as much time online as they do watching TV.

    As convergence becomes a reality, the service providers who survive will be those who develop customer loyalty. Customer loyalty is a direct result of being able to measure customer preferences and then deliver customer satisfaction. The reality is that the Internet Web-site database managers are doing a much better job, managing customer expectations and building databases. Often providing gifts, even PC’s, for subscriber information. At risks: substantial advertising dollars, e-commerce sales and commissions, and subscription fee revenues. Couldn’t happen? Systems who focused on subscriber retention, without a concern for total subscriber revenues, are losing another quiet war with DirecTV.

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