TV's Data-Fueled Ad Sales: Finding the Signal in the Noise

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Ahead of this summer's annual upfront bazaar for ad time in the new TV season, nearly every network group was hawking new data-driven targeting products, upgrades to previously released audience optimization technology and opportunities for marketers to move beyond traditional Nielsen guarantees.

Both Fox Networks Group and NBC Universal said they were ready to strike deals with advertisers using metrics that weren't based on Nielsen age and sex demographics; Viacom introduced five products designed to make audience buying more accessible to a broader pool of marketers; and Discovery Communications announced its own data and analytics platform.

It was a strategic move by network groups, which have been looking for ways to make themselves more valuable amid sagging ratings and to offer alternative metrics while the industry awaits more comprehensive, cross-platform measurement by Nielsen. And it seemed an opportune time because the marketplace was in their favor as more marketers shifted dollars back to TV.

So what came of all of these announcements? Not much.

When asked about how data deals progressed during upfront negotiations, several media buyers scoffed. Some network groups that issued press releases on data opportunities didn't actually have flushed-out products, they said. "It was noise more than reality," said Jon Stimmel, chief investment officer, UM. Other buyers echoed that sentiment.

Network executives said that data draws more curious buyers each year, but Nielsen remains the coin of the realm for now.

"There were more discussions and more material role around our data products," one executive said. "But the reality is these are advanced conversations. Our announcements opened the door to allow us to have these conversations, but a large bulk of the money committed doesn't have a data contingency or commitment."

There are plenty of obstacles: A lack of standardization makes it impossible to target audiences across the TV landscape. Each network group is using different data sets, algorithms and technology, which means you can't compare one to another.

Some agencies and marketers remain wary of using ad sellers' data to make ad-buying decisions. And there just isn't much evidence yet that the extra work and time is worth it.

Still, deals are coming along, albeit slowly, at least at NBCU, Viacom and Turner, which are furthest along.

NBCU saw 400 clients transact with its Audience Studio, a recently formed division that houses all of its data tools, said Krishan Bhatia, exec VP-business operations and strategy at NBCU. That's up from about 250 clients that used NCBU's suite of data products in 2015. But even 400 is a small share of NBCU's overall ad business at the upfronts.

These buys typically included not only TV, but ad inventory in digital and social media as well. About 90% of the Audience Studio deals gave advertisers guarantees other than the traditional Nielsen demographic measures.

NBCU's data products are now responsible for more than $100 million in annual revenue, Mr. Bhatia added. Of course, this pales in comparison to the roughly $6 billion in ad commitments that NBCU writes during the upfronts.

Turner did about 100 audience-targeting deals, about a quarter of which used non-Nielsen metrics to set guarantees, said Donna Speciale, president-ad sales, Turner. But targeted deals represent less than 10% of Turner's total upfront business. "Audience targeting is still at the early adoption phase," she said. "We have experienced gradual year-over-year growth since launching products a few years ago and anticipate this pattern will continue."

Viacom secured 40 deals for its Vantage product, up from 11 last year and three in 2014. More than half included non-Nielsen guarantees, said Sean Moran, head of ad sales at Viacom. Early Vantage deals may have tracked non-Nielsen metrics, but they were still negotiated using age and sex demographics.

Vantage is attached to 25% of Viacom's advertising business, according to Mr. Moran.

It's important to note that 100 deals do not necessarily mean 100 different clients are using one of these data products. One brand may sign on for four or five campaigns, so 100 deals could mean there are only 50 or even 20 advertisers actually testing these products.

"The expectation was never that we were going to move fast or that a majority of core business would be transacted beyond Nielsen age and gender over the next one or two years," Mr. Bhatia said.

Sellers found more of a willingness this year from marketers and agencies to move from the existing model. "Those first years we really had to pull it along. There was a lot of hand-holding, coaching and incentives," Mr. Moran said. "But this year, something clicked. There was an appetite for non-Nielsen metrics."

This year also saw more ad categories using data products. While auto and consumer packaged-goods marketers tested audience targeting early on, this year has seen retailers, financial service companies, tech players and movie studios, among others, sign on.

Viacom introduced a personalized Vantage product for movie studios this spring. Vantage Movie Edition can look at title-level movie ticket purchase data and match it with TV household viewing behavior. Kern Schireson, exec VP-data strategy and consumer intelligence at Viacom, expects Vantage to support eight-figure spending in the 2016-2017 TV season based upon upfront commitments.

The big obstacle is clients getting impatient with the idea of having to do separate, differently structured deals for each network. "We collectively need to figure out how to make a standard across portfolios," Ms. Speciale said.