Today’s news of Clypd’s acquisition by AT&T’s Xandr is another notable development speaking to the inevitable — albeit complex — extension of addressable and dynamic insertion capabilities to national television advertising inventories.
“It’s exciting for national networks to be able to offer the addressable inventory that marketers are demanding,” says Jane Clarke, CEO of the Coalition for Innovative Media Measurement (CIMM). “Though there are still challenges with opening up national inventory, there’s no better time for our industry to be working toward a robust and diverse addressable TV data ecosystem.”
So what, exactly, is going to have to happen to take addressable beyond the two minutes per hour of TV ad inventory controlled by MVPD operators, to the 16 minutes of national inventory?
In July, CIMM held a members-only workshop on addressable. Speakers included Cadent, Xandr, Sling TV (Dish Media), NCC Media (now Ampersand), Publicis, Merkle, Nielsen and Inscape, among others.
There are complex, broader data standardization and data quality issues that must be dealt with across addressable, both local and national.
But without getting too heavily into those for now, here are some key points about addressable inventory expansion and smart TV implementation that were discussed during the workshop, from a report by Gerard Broussard of Pre-Meditated Media.
Requirements for Addressable Inventory Expansion
According to Mike Bologna, president of addressable at Cadent, about 75 million of the 120 million U.S. TV households are already capable of receiving dynamically inserted ads.
But enabling the commercial overlays on smart TVs within national TV network ad inventory needed for addressability will require tackling three operational issues, he pointed out.
None of these (intentional understatement alert) is a cinch to pull off. But Bologna says that they’re all achievable.
First, since dynamically inserted ads happen through set-top boxes or smart TVs, TV networks don’t have the ability to “light up” their national addressable inventory on their own.
That means that the networks, MVPDs and smart TV manufacturers will have to fashion contractual agreements based on cooperation and compromise.
For example, TV networks and MVPDs would likely need to modify existing carriage agreements to accommodate execution of commercial overlays. Such contracts would, among other things, need to specify the revenue shares for each of the three participants, plus any caps or restrictions on the portion of ad inventory enabled for addressability.
Second, TV networks will need to develop pricing models that make addressable profitable and thus worthwhile. Models will need to enable increased per-capita inventory revenue so that addressable yields more revenue than standard linear ad units, while also providing advertisers with a material discount from effective target CPMs.
Bologna says this is a matter of the networks doing the calculations to determine which programming is most suited for addressable insertion, and will generate the greatest yield.
The report offers this example: When a unit is divided across Brand A and Brand B,
both brands would pay a higher CPM against the segment of women 18 to 49, but a lower effective CPM. The effective or ECPM might reflect medium/heavy buyers of organic shampoos, or buyers of high-end
cosmetic products, for instance.
The third challenge is the previously noted need to standardize target segment definitions and consumer data sources across TV networks.
report doesn’t state this, the reality is that when it comes to the national scenario, the industry would do well to avoid the complications already in existence in employing addressable at the
local level — complications that are being worked around, but are hardly ideal.
What the report does point out is that disparate definitions and data sources make it difficult to compare TV networks when developing ad schedules, establishing audience delivery counts and evaluating outcomes.
It also points out a fourth challenge discussed during the workshop: uncoupling measurement and reporting of addressable spots from national C3/C7 ratings.
Sounds like a pretty full plate. But again, history tells us that what the market demands will come about sooner or later.