a US Perspective from clypd
The digitalization of media consumption and distribution, along with the skyrocketing advertising businesses at Facebook, Google, and Amazon have pushed the United States TV industry towards datadriven advertising solutions. Industry reports indicate that data-driven TV advertising will account for 20% or nearly $15B of US television adspend in 2021. Data-driven linear advertising solutions have become a critical tool for media owners and buyers alike as they navigate the new media landscape. Let’s take a look at some of the components driving the industry’s success.
In an effort to create a more digital-like ad buying experience for their advertisers, TV media owners are investing in technology to automate the end-to-end workflow of TV advertising. Historically, this has been a very manual process hindered further by legacy sales systems with closed architecture. Over the past few years, the industry has leapfrogged in progress, with external technologies integrating into media owners’ sales and trafficking systems. On the buyside, new industry standards such as the TVonTap (TVOT) open API spec allow for digital buying platforms to extend into the $72B US TV ad market. Workflow automation and connectivity between the media owner and buyer systems are imperative for data-driven TV advertising to scale.
TV forecasting and campaign optimization
Several critical inputs such as inventory availability, rates and estimates are required from media owners to help power a sell-side optimization platform. These three inputs provide the foundational drivers but a critical element remains – the ability to forecast advanced targets, or audience segments which extend beyond age and gender. The clypd platform uses sophisticated techniques to forecast future viewership against advanced targets. These forecasts, along with campaign specifications and inventory availability and pricing, are fed into the clypd scheduling engine to generate an optimized plan that meets the requisite campaign parameters while maximizing against the advanced target. Hundreds of plans generated by clypd clients have shown an average 40% performance lift over conventional TV plans.
As data-driven linear optimization tools began to scale in the US, it was evident there was a need for a common set of standards and frameworks to enable more rapid and consistent adoption of advanced audiences to be transacted in linear TV. In August 2016, the Advanced Target Standards Group (ATSG) was founded, a consortium of industry -leading network TV programmers. With clypd chairing the consortium, other participants include Discovery Inc., Disney | ABC, CBS, ESPN, A+E Networks, AMC Networks Inc., Fox Networks Group, GSN, The Weather Channel, 20th Television, Omnicom Media Group (OMG), and the Coalition for Innovative Media Measurement (CIMM). This group has created open-source standards and calculation principles that have been broadly adopted across the industry.
As data-driven linear advertising has become more mainstream in the US, a handful of marketplaces, each with unique business rules, have emerged, including private, open and semi-private marketplaces. Private marketplaces are typically deployed with large network groups such as Discovery, Fox and A+E, as an arrangement between the media owners and their buyers, providing them enhanced control over inventory access and pricing. Open marketplaces typically consist of co-mingled inventory from multiple media owners. Open marketplaces provide scale and attract buyers that wish to execute advanced audience campaigns across a diverse portfolio of networks. Lastly, semi-private marketplaces have curated inventory based on a single buyer’s needs. Typical users of the semi-private marketplace are agencies that wish to transact advanced audience campaigns across a select group of inventory at pre-negotiated rates.
What about Europe?
Market forces that are driving data-driven linear in the US are starting to spark in Europe. Of course, each TV market in Europe is drastically different and the economics of supply and demand vary greatly. In Germany for example, the power skews in favor of the buy-side. Little data is utilized by the media owners to determine the underlying value of the inventory and ultimately the rates they provide to buyers. In France and the Netherlands, on the other hand, some media owners have invested in data and optimization tools to unlock the value of their inventory and develop new pricing strategies. Recent developments in Europe, such as GDPR compliance and the staggering $5 billion anti-trust fine from the European Commission to Google, may deter the hyper-growth of digital digital adspend. Data-driven linear solutions may prove to be the perfect balance of better targeting and automation without the messiness, complexity and concerns that surface in digital such as ad blocking, transparency, ad fraud, viewability and now GDPR regulation. End-to-end data-driven ad solutions will likely be slower to evolve across the European TV market, but modular components of the overall solution such as forecasting will play a critical role in this emerging opportunity. European media owners are beginning to recognize that investments in forecasting technology and industry collaboration on methodologies for forecasting is increasingly valuable. A sizeable opportunity exists for companies that are first to market and will create the best defense against the digital competition. A phased approach that starts with investments in data and forecasting tools is a sound and shrewd strategy.
Much of the efforts to incorporate data into the TV advertising process has focused on the planning, pricing and execution. The next few years will include further investments across the front-end of the workflow, but also a new focus will be placed on attribution as a way to prove the efficacy of these TV ad innovations. The continued convergence of digital with TV will demand cross-screen advertising solutions to allow for holistic buying and selling processes across media. Television remains the most powerful marketing medium and the early investments by the advertising stakeholders have been fruitful, but the game is not over. Look for continued innovations in this space!
Discover the TV Key Facts publication here.