Why would AT&T make ad inventory from networks like TBS, TNT and HLN available like that? Don’t digital exchange platforms commoditize ad inventory? AT&T will do it because TV has an iceberg problem.
Here's what I mean:
The majority of the selling and buying activity of TV advertising -- and the entire narrative around the upfronts -- is focused on the best prime-time shows and sports, the highest-rated programming on TV today. However, the vast majority of national TV’s total ad inventory on an impression basis today -- about 80% -- now occurs on episodes of shows with ratings below 0.5, episodes that less than one-half of one percent of American households are tuned to.
Imagine that. Just as with icebergs, everyone in TV is incredibly focused -- myopically, you might say -- on the tip of TV’s inventory that is exposed and highly visible, and totally misses that most of TV’s inventory is not hot, prime-time shows and NFL football. It is the hundreds of millions of people every day that watch small networks, small shows, less favored dayparts, niche programming.
All of that little stuff -- below the surface and invisible to most -- is five times bigger than the hot stuff.
And, just like icebergs today, the tip of TV’s inventory has another problem. It is melting. Most big shows and networks are losing ratings and audiences much faster than mid-sized and small networks, many of which are actually growing. Just check out Nielsen’s year-over-year ratings by network size. Big is shrinking. Long tail is growing.
TV ad buyers and sellers are quite expert today at transacting highly visible, high-rated programming, most of which goes at premium rates. As AT&T’s Stephenson noted at Communacopia, Turner’s NBA spots aren’t likely to be programmatically sold on an exchange for a very long time.
However, the TV ad marketplace is not very good at transacting and fully valuing long-tail inventory.
As I’ve written before, an enormous amount of television ad inventory in the U.S is sold at CPMs well below $2.50 when measured on a P2+. Yes, below $2.50.
Thus, everyone in the market would benefit from exposing the massive amount of TV’s iceberg – its long tail – that is invisible to most of the market. With apples-to-apples CPMs for premium digital video typically $10-@20 or more, buyers would benefit from access to lots and lots of cost-efficient TV inventory, and TV media owners would benefit from a lot more yield.
Not only would opening up TV’s long-tail inventory be a good thing, it’s probably an essential thing for TV’s survival. Like icebergs in climate change, the tips are melting really fast. TV companies better build a market for their underwater inventory before too much of their hottest shows melt away. What do you think?