The future of TV advertising is at stake with more new developments than ever changing the way consumers view, yet marketers still face a frustrating lack of data about who is actually watching, finds Michael Barnett.
At dating site eHarmony, UK country manager Ottokar Rosenberger is concerned that he has no way of knowing whether the brand’s TV spots are watched by the single people it targets.
Buying from TV channels on the basis of broad audience profiles, using an inflexible and unsophisticated trading model, means it is not always possible to demonstrate the value for money that TV advertising delivers for eHarmony, Rosenberger believes.
“I do not feel that I am necessarily a hostage, but I feel I am paying for a lot of waste. I feel like I have to put up with the fact it is a very crude way to target a consumer.
“At the moment we are focused on buying from TV channels, but that is because we feel we have to be. I would rather have a much more engaged audience that actually reacts to my ads than strong channel branding but with a huge amount of waste in it,” he says (see Viewpoint, below).
Rosenberger’s view is despite a changing TV advertiser landscape as consumers increasingly view shows through time-shifted recordings, mobile apps, online players and internet-connected TVs.
Rather than being relatively unknown quantities, consumers are giving broadcasters and platforms more information about themselves by watching on the internet or via connected devices.
This means that there is an abundance of viewer data stretching across different platforms, and marketers are demanding a better overall picture of who is actually watching their TV ads, where they are and when. And according to figures released by internet body the IAB this week, 85% of marketers are interested in advertising on internet-connected TVs.
However, the lack of detailed information from TV measurement body BARB and power struggles between broadcasters and platform owners, such as Sky, mean that brands have yet to see the benefit of all this data. Marketers are frustrated by the lack of audience information.
Brands currently buy airtime from broadcasters on the strength of data collected by BARB from a panel of 5,100 homes in the UK, encompassing around 11,500 people. The figures become available the day after a programme’s transmission, and BARB also reports data on programmes viewed using catch-up services in the following seven days. TV viewing is high according to the latest statistics, which show that the average viewer watched more commercial television in 2010 than ever before.
But Santander director of brand and communications Keith Moor claims the BARB model now struggles to provide an accurate impression of who is watching what, and when and where they are doing it (see Viewpoint, below). “I do not think BARB measures TV data as well as it could for the way that TV is consumed any more. There will be a paradigm shift in the way that TV operates, which will show there need to be more connected ways of looking at where the audience is delivered,” he says.
BARB has been running a pilot project for a year exploring how it could report figures from non-linear viewing – TV shows that are not viewed live or in the seven days after transmission – and is about to trial new software for measuring the audience watching on laptops and personal computers in 100 homes on its research panel.
If successful, the laptop PC, and tablet trial will be rolled out to 1,000 additional homes in 2012. According to BARB chief executive Bjarne Thelin, the body has a strategy of developing measurements “beyond seven days and beyond the TV set”.
Yet eHarmony’s Rosenberger is looking beyond BARB’s enhancements: “It is a panel-driven model, and it needs to move to a real-time, real-action model whereby we buy against audiences that we know are actually there, and where we can target by household.
“We need to get to a point where we can say: ’Here are 300,000 households and these are all the things that we know about them. They are sitting in front of the TV right now and therefore in the next five minutes we are going to give them X, Y or Z as an ad’.”
Sky is likely to be the first UK broadcaster to offer targeted advertising on live TV played through its set-top boxes, although the real-time bidding for ad spots that Rosenberger wants is still some way off.
Sky’s AdSmart technology, which delivers different ads to different viewers, is already in use on its online streaming service Sky Go. Advertisers buy according to the genre of the programme, and can target their ads at more than 20 different audience segments identified from subscribers’ personal details, online viewing habits and data collected via direct marketing.
Sky plans to introduce AdSmart to its own set-top boxes in 2013. These will store different versions of ads on a hard drive inside each household’s box and play them during the ad breaks of live programming.
But one barrier to targeted advertising becoming universal practice is that it relies on proprietary data, owned by the platform on which the content is viewed and not by the TV channels broadcasting the programmes.
There is nothing to stop broadcasters selling targeted ads on their online media players, but Sky’s position of owning TV channels as well as a TV distribution platform is unique in the UK. It therefore has a head start in offering targeting to advertisers, and also the means to prevent competing broadcasters from entering the market.
Channel 4, like Sky, is now also offering targeted ads on its 4oD online player, but C4 chief executive David Abraham has ambitions to expand its use of viewer data to offer more segmented advertising opportunities to brands. At the Royal Television Society’s convention last month, he said: “We want our viewers to opt into a relationship with Channel 4. We want this to be a bigger part of how we explain the value we represent to advertisers.”
He also challenged Sky chief operating officer Mike Darcy to make available the data collected by Sky set-top boxes from viewers of other broadcasters’ channels, when viewers give permission for it to be shared.
Arguing that up to 70% of the programming viewed through Sky platforms is provided by non-Sky TV channels, Abraham suggested that broadcasters should expect to be given access to this audience data as a condition of providing their content. Sky’s Darcy made no commitment to supply it, however, saying that the technology only exists thanks to Sky’s significant investment in developing it.
Virgin Media’s TiVo set-top boxes are also likely to allow it to enter the targeted advertising market. Other potential competitors include web-enabled TV platforms from Google, Samsung, Apple, and YouView – the last of these is being developed by the UK’s terrestrial broadcasters in partnership with BT, TalkTalk and Arqiva.
Yet even if the market is moving in the direction of targeted advertising based on much more detailed viewer data, there are still doubts about how widely and how quickly it will become available. The technology exists, but the ad industry framework for buying, selling and delivering it does not.
In the US, even attempting it on a small scale has so far proved unworkable. Canoe Ventures, formed three years ago by a consortium of six cable TV companies, was forced to end a trial of targeted advertising due to technical issues. The project is now in danger of foundering according to a New York Post report in September.
Santander’s Moor also points out that a fragmented market where targeted advertising is sold by a variety of broadcasters and TV platforms using different management standards would also be highly complex. More data would need to be handled, more ads made and more spots negotiated with a greater number of companies.
“I do not think people are going to give away their proprietary software. If they have a much better measurement mechanism and that is a competitive advantage, I cannot make someone give that away. But I would like some kind of cross-platform, cross-media, comprehensive mechanism for understanding the relative value,” says Moor.
BARB chief executive Thelin says that the body is in talks with the TV industry to work out how audience data can add insight to what its own panel research reports. But for BARB to become a comprehensive source of real-time, actual audience figures, it would need to become “a data mining organisation as opposed to a research organisation”, he says.
“We do not have access to other people’s information, either because they will not share it for business reasons or they cannot share it for data privacy reasons,” Thelin explains.
It is not only the ownership of viewer data, but also the ownership of programme content that will determine what the market for TV advertising will look like in future.
One possibility is that TV platforms supersede broadcasters in owning programme content and selling advertising against it themselves. According to Moneysupermarket marketing director Paul Troy, content is now kingmaker rather than king (see Viewpoint, below).
This topic was the subject of debate at the RTS convention, where Gerhard Zeiler, chief executive of European broadcaster RTL Group, revealed that online TV streaming service Hulu failed to establish itself in Europe because broadcasters were unwilling to give up the right to sell the advertising against their own content.
In response, TV platforms are likely to compete more with broadcasters to buy programme content from rights holders or independent production companies. Google bought the rights to stream Indian Premier League cricket online for two years in 2010.
Moneysupermarket’s Troy predicts that in future Google, or another platform owner, could bid for rights to broadcast Premier League football games or American football in the US. The market for broadcasting rights could now be significantly disrupted by a European Court of Justice ruling that it is “contrary to EU law” for the Premier League to do exclusive deals on a country-by-country basis.
Google executive chairman Eric Schmidt also recently revealed that the search giant is teaming up with the National Film and TV school to sponsor an online film-making course, perhaps suggesting that it wants to produce its own content to show on Google TV.
With TV platforms distributing diverse content, offering on-demand viewing services and selling their own advertising, broadcasters’ own programmes are at risk of becoming separated from the TV channel brands they are associated with.
Instead they are increasingly accessed by viewers through homogenous lists rather than separate channel schedules. Though the vast majority of TV consumption is still on linear TV channels where people watch a programme as it is broadcast, the prospect of this “super à la carte” viewing, as Discovery Communications chief executive David Zaslav calls it, has broadcasters particularly worried.
“They would be,” says Moneysupermarket’s Troy. “You may not need TV channels in the future. If you think about it from an advertiser’s point of view, you are going to get more choice, more competition and real audience data instead of panel data.” This could be a reality in five years’ time, he suggests. But other marketers believe the outlook for traditional TV is less apocalyptic. Unilever communications buying manager Richard Brooke says: “Mass-market viewership for linear television will continue. The X Factor will remain a family show.”
Current viewing trends support Brooke’s analysis. According to commercial TV marketing body Thinkbox, linear TV viewing is at its highest level ever recorded, with the average person watching more than four hours a day for the first time in 2010. And while 47% of UK households now have a digital television recorder, only about 7% have a connected TV set.
However, internet advertising spend overtook TV spend for the first time in the first half of 2011, according to IAB figures revealed last week.
Brooke also says that the viability of targeted advertising and the measurement of real-time audience data has yet to be proved. Tailoring ads to the diverse interests of everyone in a household will be difficult, and fundamental questions of economics still need to be answered. “Is the technology going to be there? Yes. But how much will it cost me to access what I want from that technology? And is that a price I am prepared to pay given the uplift in sales that I may or may not see?”
In the meantime, brands still need to ensure they get value out of what TV can already offer. Moor at Santander says he is likely to observe an “80:20 rule”, with the majority of his resources dedicated to tried and tested mass-market ad formats.
Smaller companies might progress faster, he concedes, since their target audiences are more specific and they are likely to be priced out of the biggest advertising opportunities anyway.
As well as traditional TV ad spots, Honda currently focuses on sponsorship of Channel 4 documentaries and the idents aired between the programmes and the ad breaks. UK marketing director Martin Moll says that people are less likely to skip through them on catch-up TV services than they are traditional ads because they provide ’bumpers’ to the programme content.
But while it still may be possible to get visible returns from advertising against the most popular programmes, Moll is concerned about whether this will be maintained across the full breadth of commercial TV schedules (see Viewpoint, below).
“Channels will migrate towards the one or two big hits, the ’halo’ products that fill the prime-time slots and are the big draw. Everything is boom or bust on those programmes. What then happens is that daytime schedules will probably fall away.”
While Moll emphasises that TV advertising remains crucial to Honda’s plans, he also says that many brands are likely to be drawn to the transparent data that is available on the performance of online ads. If marketers can show they are hitting their business targets using online channels instead of TV, there is no reason to deviate from that.
“Once you have gone you have gone: there is no need to go back into traditional media.”
Ottokar Rosenberger, UK country manager
My biggest issue at the moment is that eHarmony advertises for single people and there is literally no way I can target TV ads to someone who is single. The waste is a massive issue.
As TV is increasingly delivered through the BT Vision box, Virgin Media’s TiVo service, or Sky, we are now entering a world where you ought to be able to bid on TV spots. We know exactly what the viewers are tuning into, so the challenge now will be understanding which part of the market we are reaching with our message.
European broadcaster RTL actually does consumer segmentation by siphoning off the Austrian part of its German-Austrian television network. People will see the same programmes but the ads are different, so it is possible. I am sure you could go further than segmenting the German and the Austrian markets. But what is frustrating is that the TV channels are not moving fast enough to get us there.
For example, Ford might currently choose one model out of a range to advertise. In the future, it might want to run a string of 11 different ads ranging from the Ka for single people up to the C-Max for families. In the same ad break, they fire off different spots to different people. That would make it interesting, but it is a challenge for advertising agencies because the client won’t pay twice the production money. Therefore, we will need a lot more content, a lot more ads and a much more flexible approach from the agency side.
I think what the TV channels will have to do is focus branding much more on the content rather than the channel. I can see them almost becoming production houses. Appointment TV [where people watch TV as it is scheduled, rather than on a catch-up service] will stay around for some time, but high-quality content will have to compete with what is available online.
Martin Moll, marketing director
Every marketer’s dream is to understand who their customer is and be able to engage in a very bespoke, measurable way and then find out what more they want, what level of engagement, and how far down the consideration path they are.
The more you are able to tap into your true consumer groups, the more you will find out what they want from you, or indeed if you have got your target group wrong.
The unique selling point is the TV programme content, but what broadcasters need to shift is how they can segment the audience. And they need to be flexible with the package they sell, as well as just giving you airtime at a market rate.
The challenge for a marketer now is that consumers have so much flexibility and choice; they have different expectations of engagement and involvement.
We have gone from what has historically been a passive model into something that now has to be interactive. You have to create a series of rewards and benefits for the consumer as opposed to your message washing over them, or hoping that by osmosis it will make them favour your brands.
Using idents on Channel 4 documentary programmes is a far better place to be. Conventional TV advertising has its challenges because the cost of the creative, the whole nature of the buying space actually limits you. It can pull your budget too far in one direction and you do not have the immediacy of measurement behind that either.
Ultimately, if you do find yourself with good content, a good idea will always out. There will always be a platform for it. If there is resonance with its market and it is congruent with what consumers are looking for, they will share your message for you and they become your advocates very quickly.
Paul Troy, director of consumer marketing
If you look at programming on ITV, for example, the content that attracts big audiences is billed to advertisers as specials. Brands have to put in new money or pay a premium. The big properties increasingly are bringing the audience. Outside of that you are not seeing the same level of quality in terms of content.
Broadly, the biggest properties are produced outside the broadcasting companies, such as The X Factor, produced by SyCo.
Web-connected TV now brings a real risk for commercial TV because you have new gatekeepers with people like Sony and Panasonic becoming the new platform owners [with their internet-connected TVs], but more importantly you can deliver programming direct to the TV platform.
It is now easier for Google to compete in the same space as ITV, which would have been unheard of only a few years ago. Platforms may well be able to tailor and sell advertising on demand. From our point of view it is probably good news, but from ITV’s point of view it is probably bad news.
In the next five years, or 10 at the outside, a whole generation will look at TV as just a big screen that delivers content to them. The whole concept of a channel will not be something that people will be wed to.
Initially it will not be as big as we think, but in the medium to long term it will have a massive impact. If Google goes into TV seriously, that could be a major challenge for broadcasters like ITV – which will underestimate the impact of such a move – or even Sky, Freeview and Virgin Media.
There is going to be more competition to buy TV content because it is content that brings the audiences, not the channel. That is the stark reality that many TV stations will have to face up to in the next five or 10 years.
Keith Moor, director of brand and communications
TV advertising is as important as it ever has been. At the same time, there are plenty of other delivery platforms for television opening up that people have to embrace. The problem in those platforms is the same thing that happened when the internet first came along – tracking is poor, audience data is generic and media owners have struggled to line up cross-platform deals.
I can have a very fruitful conversation with Google or Facebook, but I find it harder to have a conversation with a broadcaster and its different platforms – not just measuring, but buying, strategy and putting together ideas. The trouble with a lot of the cross-platform deals that I have seen is that they are made up of TV and then presence on the website. Frankly, I do not think that is a very sophisticated cross-platform deal.
We do a lot of work in sponsorship [of the McLaren Formula 1 team], and we have learned a way of using our sponsorship assets to work in broadcast television, social media and internal platforms. The trick is to start with the content and work from there. Match the content with the audiences, the right mechanisms of delivery and then you will get some resonance.
I still think there is an 80:20 rule to apply, and it will apply for quite a long time, which is that there are things that work now that will continue to work for the foreseeable future. I need to focus the majority of my team’s effort and budget on reaching the majority of average UK consumers, because we have 25 million of them.
We are probably a brand that will stick with the tried-and-tested methods for longer than most, and we will have the opportunity to test the smaller ones. But they are not going to overtake a 60-second slot on ITV1 in the middle of The X Factor for a long time.
Improvement in measurement will help more advertisers move towards that place. That is definite. In the meantime, people will keep doing what they do because it works.