Earlier this week, we held a webinar on programmatic television with guest speaker Jim Nail, Principal Analyst at Forrester Research. In his 30-year career, Jim has been at the forefront of applying new technology-enabled strategies to marketing and we were happy to have him present some of his thoughts on the future of television advertising – specifically on the evolution of what many people call “programmatic TV” and the rise of audience targeting.

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After Jim’s insightful presentation, I spoke more on audience targeting, why it’s become such a hot topic for television advertisers, and how social data could become a very useful source for audience segmentation.

The following are 5 key takeaways from the webinar:

Key Takeaway #1: The forces driving programmatic TV and vastly different than what happened in digital

In the mid 2000’s, digital advertising buyers and sellers began transacting via programmatic auction marketplaces to solve for rising needs on both sides. For online publishers, the programmatic revolution helped monetize remnant inventory that was unsold due to the inefficient process of selling ads manually. On the buy side, programmatic impressions available at scale enabled marketers to bypass the high margins from ad networks and access the inventory directly to apply their own data targeting to garner better ROI than previous methods.

As Jim explains in the webinar, the current model in TV is working well for both sides; there’s plenty of supply and demand so there’s not a lot of pressure for change. However, what will bring the evolution of programmatic buying and selling to television is advertiser interest in targeting audiences rather than using the legacy standard of demographic targeting. There’s a belief that if today’s overly-manual television transaction practices can be automated via technology, it will be easier to bring data into these systems for better and more effective targeting.

Key Takeaway #2: Technology is eroding TV’s traditional strengths

Another trend evolving television advertising is that media consumption changes from advances in technology.

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Jim points out how broadcast’s dominance has been eroded by the explosion of great content across the cable channels, resulting in audience fragmentation that makes planning and buying a much more complex process than ever before. As well, the proliferation of devices has stolen attention away from traditional television’s ability to deliver brand messaging constantly at scale. Time-shifting has also had a major impact on television consumption as viewers no longer have to be in front of a television to watch their favorite shows live as they air. Binge watching and other new consumption behaviors make it harder for television marketers to reach audiences as effectively as before.

Because of these forces changing the content consumption, television advertising must evolve in order to remain a dominant marketing channel. This need opens up new opportunities to change how television ads are bought and sold.

Key Takeaway #3: Audience buying is going to eclipse demographic buying

Audience targeting has become the hottest buzz phrase in television advertising and Jim illustrates why using a graphic from his brief, TV Planning Goes Data-Driven And Audience-Based.

 As you can see below in Jim’s example, when using the traditional buying method of age/gender, demographic targeting, an advertiser might be able to reach 690,000 households by buying a 3.0 rated TV show.

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However, using index-based, audience buying, the advertiser might be able to use emerging data sources to better identify programming that is less expensive (in this case, a show with a 2.5 rating) but is able to reach 750,000 in-target households because it indexes higher for the audience they desire.

Paying less for higher reach to audiences that a brand actually cares about is what marketers believe will help television advertising become more efficient and effective.

Key Takeaway #4: There are some limitations in today’s audience buying methods

Although television marketers are highly interested in buying audiences, this is a fairly new discipline. Some of the legacy data sets that have historically fueled TV targeting (such as purchase data, survey data, and CRM/1st party data) have some limitations that need to be addressed to fully enable proper audience targeting.

  • Suboptimal for prospecting new customers. Sales and CRM data are foundational to current TV audience modeling; the downside is that brands may end up overfishing the same ponds as they continue to market to existing customers.
  • Small sample size. Survey data – especially the 40,000 household standard – can introduce unneeded bias. For example, a handful of outlier households could potentially throw off segmentation models for niche’ audiences.
  • Lack of customization. Many of the legacy data sets don’t have the width and breadth of consumer detail to enable television advertiser to build a wide variety of audience types.
  • Lag time slows you down. It may take months or weeks to bring in these datasets, analyze them, build insights, share with the marketers, and get operationalized into the planning & buying cycle. By that time, market conditions may have changed and now the targeting doesn’t accurately reflect the right strategy that is needed.

Key Takeaway #5: Social is a valuable dataset for marketers to use in audience targeting

Since the datasets that are being used to build audience targeting for television advertisers have several limitations, I offered in my presentation a very interesting and viable alternative – social media engagement. Social data can enable TV advertisers to target customizable audience segments based on the real actions, interests, and connections of over 1.6 billion social media consumers. It has plenty of scale (comprised both of existing customers and prospects) and can be delivered to audience modeling tools within hours – not days or weeks.

The social dataset also is very rich with plenty of observed behavior on what hundreds of millions of consumers are saying, doing, sharing, and talking about. There are even unique kinds of audience targets that make a lot of sense for television marketers to get excited about, including some of the following examples:

Summary

Television advertising is changing. It must evolve to stay dominant due to many of the reasons presented in this webinar. No one is truly sure exactly what that path will look like, but most agree that audience targeting will win over demographic targeting and that the backend systems of television advertising will need to adapt in order to allow for data to be readily used for segmentation.

Legacy data sets as well need to be reviewed for how viable they will allow for proper audience targeting. Our point-of-view at 4C is that the social engagement dataset will emerge as a treasure trove for marketers wishing to reach people that make sense to target, not simply age/gender splits.

For more information on programmatic TV, check out the fourth installment in our Future of Media white paper series: The What, Why, How and When of Programmatic TV.