What the future of TV looks like for marketers

Will changing consumption lead to fully automated ad buying?

The way people view TV is shifting, and as a result so too is the way brands buy their advertising. As with online advertising, it looks increasingly likely that one day all TV

will be bought programmatically.

Along with the channels and devices available for watching TV, the ways for brands to reach consumers through the medium are proliferating. June saw the announcement of Daily Mail TV in the US with talk show host Dr Phil, which will launch next summer with aims for “global scope”. Revealing the details at the Cannes Lions festival, the Mail claimed that “advertisers were increasingly asking for video and TV experiences that bridged both TV and digital channels”.

In the same week, Unilever and Vice partnered on a new female-focused online video channel called Broadly. Unilever’s CMO Keith Weed said: “Vice is not something people go to; they’re part of it. That’s something we want with brands such as Dove and Tresemmé. We want to be part of people’s lives, we want to be in there.”

On the technology side, meanwhile, AOL launched a programmatic TV platform at Cannes that offers targeting of audiences using data from set top boxes combined with third-party data of offline purchases, so brands can book TV ad inventory based on who is watching and what they buy.

Why TV buying needs to change

Otto Rosenberger, CMO at Hostelworld.com, believes that TV buying is changing, and with good reason. He says: “It really always starts with being obsessed about where the customer is. It’s about where they are and what drives them, which drives our creative and media decisions.”

Research released by Ofcom earlier this month shows that while live television remains hugely important, catch-up TV viewed via the internet and programming premiered online are taking up an increasing share of viewing time for younger audiences in particular. It reveals that today, only 50% of 16- to 24-year-olds’ TV consumption is through live television, rising to 61% for 25-to 34-year-olds.

The overarching shift, therefore, is in the power of technology and the internet. It is not only changing the way people watch TV, it is also creating a significant change in the way TV advertising is being traded towards targeting specific segments of audiences known to be watching rather than programmes that research panel data suggests they might see.

Rosenberger adds: “The system of buying TV audiences ought to give to a more sophisticated way of driving performance. [Brands should] have more ability to buy in a targeted and programmatic way – buying with a full understanding of who is sitting in front of the box. I can see a future where [TV is] programmatically traded but that depends on the sophistication of the content providers.”

There are providers taking these steps in the UK TV market already. Sky’s AdSmart tool enables advertisers to deliver campaigns to specific households at specific times via its set top box.

Last November, Channel 4 also announced it would let advertisers use programmatic technology to purchase ads on its All 4 digital service as part of a wider bid to guarantee ad impressions are served to specific audiences, rather than using traditional viewing figures published by the Broadcasters’ Audience Research Board (BARB).

However, the question is not whether the industry should step up to behavioural changes in TV viewing and the rise of data-enabled buying, it is whether it can. Is it affordable, for example, to achieve sufficient reach in this way compared to traditional TV spot buys?
Is this method of buying suitable for all sectors? And do brands and suppliers have enough data to make it happen?

The future is automated

Research commissioned by the Internet Advertising Bureau shows that programmatic’s total share of online advertising in the UK rose from 28% in 2013 to 45% in 2014, and will soar to 80% in three years’ time. Just as this way of buying online ads was adopted in the US first, it seems the move to programmatic TV could follow the same pattern.

This year, Mondelēz, with its video provider TubeMogul, ran ads during the NFL Super Bowl for its cookie brand Oreo; it was claimed to be the first programmatic TV ad buy for premium inventory in the US. The brand wanted to “explore what the emerging world of programmatic television looks like”, according to chief media and ecommerce officer Bonin Bough, who believes that “every market will go this way”.

However, he adds: “I’m not sure it will be the programmatic [TV] landscape we see today, I think it will be more like an automated landscape. That’s what a big part of the future is going to be.

“There are different kinds of organisations that are building that automated pathway alongside broadcasters and that’s really exciting right now. It’s going to unlock even greater value than we have seen before for the broadcaster.”

Of the conversations Mondelēz is having on programmatic, Bough says that 80% is about premium quality inventory that exists in linear broadcast TV, and not video-on-demand (VOD).

TubeMogul published a report in April outlining why the UK could be the next market to introduce this new purchasing method. It argues the case for programmes that attract certain audiences that do not show up in the BARB ratings system used by advertisers.

The report states that “almost all interview subjects taking part in the research for the white paper agreed [programmatic buying] could transform demand for ‘zero-rated’ programmes [those with no measurable audience] as demand wouldn’t be reliant solely on BARB panel ratings”.

It adds that “currently, 30% of all broadcast programmes register a 0.0 rating – in part because BARB’s national panels do not represent smaller populations with statistical significance”.

The suggestion is that BARB ratings, which record data from a panel of 5,100 households via special set top boxes, are not capturing the full potential of a programme and its audience.
The solution is adding supplementary data to allow better measurement of programmes. This is where programmatic comes in, as that data can potentially increase the value of a TV spot.

Joining up data sets

AOL’s programmatic TV buying platform, which it calls ‘audience addressable’, is already live in the US and Australia, and there are plans to launch in the UK and France. To understand what people watch and when, it joins up set top box data tied into the household, so it knows who viewers are, and then matches this to third-party data on offline purchasing through partnerships with credit card and store card providers.

In the US, buyers can log in and plan campaigns beyond simple demographics and current rating systems. For example, an automotive brand can request for men aged 34 who have bought a car, and the system will build an optimum TV schedule.

Sky’s AdSmart tool enables advertisers to deliver campaigns to specific households at specified times via its set top box

The only difference between buying TV programmatically as opposed to online ads is that there is currently no real-time bidding. Lewis Sherlock, commercial director EMEA at AOL Platforms, says: “It complements the way the traditional TV is already executed but allows data targeting and work flow automation in a way that you are able to buy audience beyond age and sex.”

One stumbling point for the UK, says Sherlock, is that it does not have the right data strategy in place for programmatic TV to happen and the company is looking for a set top box and agency partners to help drive the market forward.

He says: “Australia was a good market, they were willing to launch and had all the data assets we needed. In the UK it’s different, there are four to five players in the set top box market and none have a data strategy, apart from Sky. There are a few set top box providers that are thinking about it, but are not really at the stage to know what to do and organise themselves internally to make that data available.”

AOL’s capabilities are also set to change as Verizon completed a $4.4bn deal to buy the brand this month, with a view to launching a mobile first video service that will include
live TV. Microsoft has also handed over its display advertising business to AOL.

Weighing up the costs

The price tag of programmatic TV is an issue, as the cost per impression rises when buying specific audiences compared to just ABC1. For start-up dry cleaning and laundry company Laundrapp, marketing spend on TV has to be smart and although it finds programmatic interesting, it is costly, according to founder and CEO Edward Relf.

“[Sky’s] AdSmart is an incredible technology but it’s in its infancy and very expensive,” he says. “In terms of being able to programmatically drill down to a specific audience and buy against that instead of a network or show, it’s appealing but not if it’s costing you 10 times more budget to do it.”

The brand instead applies real-time tracking to traditional TV ads and is able to change its channel mix and the spot times based on results from the past week’s data.

Laundrapp uses real-time tracking to target audiences

In response, Sky admits that “targeted TV is more expensive” but that it depends on the comparison. For example, deputy managing director at Sky Media Jamie West says that if a brand is looking to target the top 10% of an ABC1 audience, the headline price might be low as a cost per thousand but the effective cost of reaching the actual audience a brand wants to target would be higher.

West explains: “Value per pure target audience is better value – if you have a broad reaching campaign and you just want your brand out there, then addressable advertising is not for you.”

Relf also shows concerns about what data the brands need to bring to the table in order to be addressable. He says: “With programmatic TV you need to know who exactly is your target audience before you do it because it is not going to answer that question for you. You need to have data before going to someone like Sky – you need to give them that insight so they can target against it.”

Sky’s West warns that it might not be the right strategy for all brands and therefore does not believe that the entire industry will move to programmatic, data-enabled or fully targeted advertising “because if you look at those brands that are broad, be it washing powder or toothpaste, they’re universal products so targeting is not relevant”.

He adds: “However, there is definitely an argument that says being able to reach your consumer efficiently is a benefit, [particularly] the difficult-to-reach audiences. To get that final 5 to 10% of the audience is difficult when you’re buying a broad media schedule.”

It is clear that TV buying is starting to change, but as West says, this change might not affect all advertisers. What will change is that brands that are looking to reach a specific audience, rather than run broad campaigns that might work for some, will have the option to do so.

Read our Q&A with Avivia head of marketing Neil Costello, on why the brand wants to buy linear TV programmatically.

Linear versus digital

The idea that a family huddles around a television in the corner of the living room still exists. However, in the same household family members also watch TV on different devices in different rooms.

This is not the end of linear or live TV consumption as many have predicted. Instead, it is the year for integration of data sets, bringing linear and digital together.

For example, Sky announced plans to expand its viewer panel, which collects TV viewing data from consumers via the set top box, to 5.2 million by 2015 from its existing 500,000. It will enable Sky to both build an understanding of linear TV viewing and extend this knowledge into digital.

It will aid the brand in delivering sequential advertising by extending audience segments and creating seamless campaigns across platforms.

The challenge lies in the integration of old audience ratings and data with the new ways that brands measure audience behaviour, particularly when viewers watch linear and digital TV on various devices.

At this year’s Cannes Lions festival in June, Linda Yaccarino, chairman of advertising sales and client partnerships at NBCUniversal, called it “a year for transition in the way that traditional ratings are meeting behavioural targeting”.

Referring to Nielsen ratings, the US version of BARB, Yaccarino says: “Not all audiences are measured, yet that is the currency in which we transact in our business.”

NBCUniversal uses sister company Comcast’s set top box data to offer brands a ‘refined media plan’, which Yaccarino describes as an “aggressive step” because it “exposes the value of data in different ways other than just a rating”.

The integration of digital into TV ad spend also requires consideration of the content. As well as audience targeting, Brands should be rating a programme by its quality and the audience it attracts.

Jamie West, deputy managing director at Sky Media, says: “The core principles still apply. It’s risky to not have control over where your brand message is served.

“Losing control over your inventory and allowing brands to trade and buy into it programmatically means that we give ourselves significant risks – we could be fined millions if we surface the wrong ad in the wrong content. Environment and protecting the consumer experience is key.”