So it sounds as if the TV ad business is on a slippery, data-driven, audience-based digital slope headed to an inglorious commoditized future like online display, with falling CPMs, where content-driven adjacency and brands have largely been kicked to the curb, doesn’t it?
No, TV’s not going to get kicked to the curb. But let’s face it: TV advertising is already commoditized. The majority of TV ads today are traded on the basis of sex/age demographics and gross rating points, allocated and rotated by network, day and daypart, and little else. They are not bought and sold according to the specific spot or show. The brand of the show only matters if it appears on an exclusion list.
It’s getting worse. As audience fragmentation worsens, fewer and fewer shows are able to break through and stand out with large audiences on their own. Already, more than two-thirds of all TV ad impressions are on episodes with national ratings under 0.5 -- a metric that’s quickly moving up to 75% of all ad impressions. So it's getting more and more difficult for most individual shows and episodes to stand out and be valued uniquely.
Data can only make it better. No one can argue that the best way to value a TV ad spot is solely on the basis of broad sex/age and day/day-part segmentation. More data about people viewing that episode, from previous purchase behaviors or actual sales caused by ads viewed from that episode, can only add value. More data means more markets for every spot. In a world where there is robust data on viewers and their behaviors, the notion of “non-endemic” advertising will go away. Every spot will have certain “endemic” advertisers who may find a special connection to a show and its audience, and many other advertisers who will find lots of counterintuitive spots to buy as they match a show’s deep viewer and performance data with their own data about target customers.
Finally, it wasn’t data that commoditized the online display market anyway. It was the way the online industry counted and sold advertising. Online ad impressions are everywhere, in numbers increasing faster than the amount of time people spend engaged with digital media and services. There may be 15 impressions on a single page. Many of them may not be viewable. Fundamentally, there are more online display impressions than there is demand for ads, and the ratio is getting worse.
TV, by contrast, sells on a time basis. TV’s ad impression load grows or shrinks with the overall amount of audience time spent on ad-supported TV shows, with a few exceptions. Today, largely because of careful management of ad loads, pricing, packaging, and commitments, demand for TV spots exceeds the supply.
Thus, data-driven, digital approaches to advertising won’t be TV’s demise. Instead, it has already met its nemesis by making sex/age GRPs its primary currency. It is already commoditized. Data could save it.
What do you think?