Commentary

Scale Matters As Advanced TV Advertising Matures

by Dave Morgan , Featured Contributor, September 26, 2019

I was particularly fortunate to speak to the Media Association of Pittsburgh last week on the present and future of advanced TV advertising.

I say “particularly” fortunate because I’m originally from western Pennsylvania (grew up in a small coal town in the mountains two and a half hours north of Pittsburgh), and I love getting the chance to visit the “big city” of my childhood.

After a warm-up session deciphering the alphabet soup of acronyms in the category, terms like AVOD, ATV, PTV, DDL and CTV (a good subject for a future column), I talked about the various flavors of advanced TV advertising today:

Linear addressable, which leverages infrastructure at some cable and satellite companies to deliver unique ads into some of the local ad pod positions on some of their set-top boxes.
Data-driven linear, which uses data, science and software to optimize campaigns on an audience basis, to reach specific types of people or to drive particular outcomes.
AVOD/OTT, which delivers ads, many of them targeted, into the streams of video services like Hulu, ESPN+ or CBS All Access.
Connected TV (CTV), which delivers digital ads into apps or streams on TVs connected to the Internet, which can appear as anything from banners in electronic programming guides, YouTube videos or inventory on premium programmers’ content through streaming devices like Roku or Amazon Fire.

I was asked if there was a characteristic that set any of them apart from the others.

I said that when it comes to scale, data-driven linear is significantly separated from the rest. A data-driven linear ad campaign can theoretically reach any and all audiences watching linear TV at any point in time -- hundreds of millions a day.

Meanwhile, all of the other techniques are limited to much smaller subsets of the total U.S. population.

Only tens of millions of households in the U.S. have set-top boxes that can be targeted within, the same for the number of TVs that are connected or the number of people that regularly consume ad-supported video streaming services.

Clearly, usage of each of those techniques is growing. Each also differentiates themselves in being able to deliver more precision with their ad deliveries.

But when it comes to reaching lots of folks quickly -- or ever -- with something more akin to digital-like precision, nothing compares to data-driven linear TV advertising.

As you can imagine, a potential reach of 10 or 20 million homes over a month might sound like a lot, but once you start adding targeting filters that narrow the target down to 15% or 20% of those, you’re now talking a campaign reach in the single digital millions. That’s quite different than data-optimizing your linear TV ad campaign that might optimally reach 35 million homes in a week, out of a potential reach of 110 million.

Does scale really matter when it comes to advanced TV advertising? Isn’t it still in the “proving itself” stage?

For sure, many brands and advertisers are still new to advanced TV and use it for testing. And many smaller, emerging brands have no issues with the sub-scale limits of the addressable forms of TV advertising since they value the precision more than scale. However, data-driven linear advertising stands out for large advertisers who need both more precision in their targeting but must have massive scale.

What do you think? Does scale matter in advanced TV advertising today?

advertising, tv

2 comments about "Scale Matters As Advanced TV Advertising Matures".

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Ed Papazian from Media Dynamics Inc, September 26, 2019 at 4:34 p.m.
Of course, scale matters, Dave. However, what matters more is whether the system is really as "advanced" as is claimed and whether it really provides the desired benefs---more sales---relative to the added costs.

I've covered the former point before. Many of the so-called "advanced" targeting systems, in reality. employ nothing more than household profiling methodologies. If a home is located in a zip code or some other sliver of geography where the average income is 35% above average or better and income is a key determinant in the targeting specs for an advertiser, all homes in that geographic get the ad as all are assumed to be above average in income. Worse, TV shows or channels are selected based on set top box ratings derived from big data sources and the resulting indices are applied to Nielsen ratings to create a "currency". This creates a great edge for the seller as the system has no way to know who in the home is watching and set uasge data invariably creates the false impression that the most desirable consumers---younger/upscale adults are watching when, offten, they aren't. Until these basic flaws are dealt with, "addressable TV",despite its obvious potential, remains problematic.

This brings us to the second issue. Does this approach apply to every advertiser---as some keep clqaiming--- or mostly to those with highly selective targets--high incomes, certain ethnicities, etc.? Even if a brand is allowed to buy its own TV and not forced into those low CPM "corporate buys" so popular in national TV, and even if the sellers are fully cooperative and will alow their GRPs to be cherry picked, the average CPM for "advanced TV" is usually twice as high as it is for normal TV time purchases. So the question will inevitably be raised, whether the brands that spend twice as much per targeted home can reasonably expect to get twice or more of a sales lift among such homes via "advanced TV". In my opinion, this is a tall order for many mass appeal or mass usage products. If the answer is yes, then, by all means, go the "advanced" route; but if your sales lift is only 25-30% at double the cost per home, why do it?
Reply

Dave Morgan from Simulmedia, September 26, 2019 at 4:42 p.m.

I agree Ed. This only matters if the "advanced" actually adds real value and drives real benefits. All to often solutions with fancy dashbords are pitched to "change the world" and turn out to be nothing more than Mechanical Turks with a massive upcharge and deliver no better outcomes. A key when it comes to "advanced" TV advertising is buyer beware.