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.
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.