IHS analysts participated in the Future of TV Advertising conference, in December 2016. This year, targeted TV advertising and issues around data and measurement dominated the discussions. Other key themes discussed included programmatic TV, TV audience measurement, and the role of sports in TV advertising. Below are our key takeaways:
TV is still regarded as the most effective medium to reach a mass audience
From the beginning of the conference, advertisers, agencies and media companies quickly established a consensus that TV advertising is still the most effective massive medium and this view was repeated several times during the two-day conference. Traditional TV is the best option for the top of the funnel advertising across media and advertising formats.
However, the interesting discussion centred on how to transform the role of TV and make it effective down the funnel beyond just brand awareness creation. The role of technology, data and to what extent to leverage them promises to generate incremental revenue for broadcasters. Yet it also challenges traditional sales models, threatens to cannibalise incumbent TV ad revenue and struggles from insufficient actionable data, which is why it is still met with resistance from most TV broadcasters.
Data plays a crucial role in addressable TV, but is still scarce and difficult to measure
Addressable TV advertising, the hyper-segmentation and selling of audiences, agnostic to the TV programme, was another key theme at the conference. AT&T, Dish and Sky’s AdSmart shared their experiences, claiming high growth rates though still small shares of total TV advertising revenue.
However, as cable providers and satellite companies, the aforementioned three have a wealth of data and some available ad inventory (2 minutes per hour). For others, addressable TV faces several data limitations: 1) panel data is not adequate in an online space, 2) census data is very expensive and spread unevenly, and 3) it is difficult to compare data across devices even if the data is available.
While participants (delegates represented by broadcasters, agencies, and advertisers) at the conference acknowledged it is a good practice to share data, they were split between the extent and ways data sharing should be. Broadcaster representatives at the conferences were not hesitant to admit their unwillingness to share data openly, which they see as their gold dust.
Therefore, as IHS Markit observed, it is politically correct to advocate for closer data sharing and collaboration for the mutual benefits of media players, but in reality the TV industry is far from data transparency. Instead of full transparency, we expect to see more joint deals like the recent acquisition of INVIDI by a consortium composed of AT&T, WPP, and DISH (a telco, an agency and a satellite provider).
The common currency that BARB provides for TV has not yet been adopted in the online space as the Dovetail project has been slow, flawed and not accepted by all parties. Standardisation of the online data by an independent service (broadcasters have bespoke solutions on a company level for the time being), would effect a better understanding of the market, improve transparency, and help promote the impact of programmatic in the online video space and bring video prices closer to TV levels.
Some representatives also warned about the promise of data. They suggested that it is beneficial for TV ads to be supported by data, but media companies should avoid making the TV industry overly complex like the online advertising market. Media players often struggle to identify actionable insight from the enormous sea of data. This warrants increased investment in data analytics capabilities, an area which is increasingly interesting for broadcasters according to the IHS Markit Advertising M&A Market Monitor.
Programmatic TV is still nascent globally
The programmatic TV panel revealed that despite universal interest in programmatic, it is still in nascent stages in most markets. Many broadcasters are employing programmatic buying for their VOD inventory, but most are still using traditional methods for linear TV. From the discussion, it was apparent that a wider consensus in the definition of programmatic is also lacking. Some focused on programmatic as an automated transaction and optimisation process, while others considered it an audience-based, data-powered advertising method. For some it is an offshoot of addressable TV advertising, while for others it is a first step towards data-driven advertising in the TV space. Broadcasters are still reluctant to start deployment as demonstrated in the table below, where each panellist has indicated how much of their linear TV advertising will be executed programmatically by the end of 2017. The lack of universal, consistent measurement was a key impediment identified by the panellists and until there is more standardisation between video and TV, programmatic TV is likely to be very limited.