After years of resisting change, the industry is beginning to
sell commercials with an emphasis on precise audience targeting,
similar to how ads are sold online. The practice, still in early
days, can't yet reach every household and has been primarily
adopted by TV-service providers. But the tech has finally arrived,
and it's poised to play a big role as the industry gets used to
it.
Pushed into
it
Until recently, the nearly $70 billion TV-ad industry had excelled
at warding off tech-fueled disruption. The benefit of unparalleled
reach kept dollars flowing into the category. Add in woefully
old-school technology and TV seemed nearly impervious to
change.
But then things really started to shift. TV audiences have been
fragmenting since the advent of cable, but that process is now in
overdrive thanks to hundreds of channels, video-on-demand options
and devices. At the same time, spending on digital started growing
at a pace faster than TV. Now, the TV industry, or at least parts
of it, is turning to advanced targeting to help retain its
dominance.
"Over the years, billions of dollars have flowed out of
television and into the online space because it is more
measurable," said Mr. Guyardo. "We believe that this addressable
form of advertising is going to bring money back to
television."
Data-driven
Advanced TV targeting, while small, is starting to build momentum.
In addition to DirecTV, which claims addressable TV sales now
account for 10% of its ad business, providers such as Cablevision and Dish Network offer
similar capabilities. "It's very small and growing rapidly," said
Tad Smith, president of local media at Cablevision.
And then there's Simulmedia, a TV ad network that does
show-level targeting based on audience data. The company reaches
116 million homes, up from 15 million two years ago. "We now
out-reach any of the three biggest networks, broadcast and cable,
on any given day or week," said CEO Dave Morgan.
Bringing
advertisers back in the fold
Targeting technology can boost TV's appeal, especially among
smaller advertisers with limited budgets. Auto-parts manufacturer
K&N, for example, recently returned to TV advertising after a
years-long hiatus. Through Simulmedia, K&N placed spots not
only on shows similar to "Top Gear" and Nascar broadcasts, which
would seem intuitive for its target audience -- males 25 and older
who perform their own auto service. But based on Simulmedia's data,
it ran commercials during syndicated episodes of "Buffy the Vampire
Slayer" and a 4 a.m. airing of "The Rachel Maddow Show."
"This permits us to target television audiences much more
succinctly than we had been able to before," said David L. Smith,
CEO of Mediasmith, the agency that worked with
K&N on the ad buy. "It's a quantum leap vs. the older
ways."
No going
back
A world where TV ads are bought and sold through ad exchanges and
demand-side platforms seems far away. Many large advertisers will
continue to prefer buying in big chunks to reach mass audiences.
But what's happening today might be laying a foundation for a
future with more options.
Todd Gordon, an exec VP at Magna Global, a media arm of Interpublic
Group of Cos., said his agency is already buying a small amount of
TV in "an exchange-like platform."
The goal, he said, is to expand the pool of available inventory
to include more premium ad space. As part of that ambition, Magna
Global created a consortium of industry players this August to
further programmatic ad buying.
With recent buy-in from big networks such as ESPN, which joined the consortium last
month, automation has the chance to play a much bigger part in the
TV industry.
"It's an ambitious goal," said ESPN Exec VP Eric Johnson, of the
consortium's desire to move the industry toward more automation.
Mr. Johnson added that, in his view, technology doesn't allow large
national networks to sell their inventory efficiently.
Seth Haberman, the CEO of Visible World, a tech company that works with
Cablevision and others to develop these capabilities, said
advertisers are already dedicating percentages of their budgets to
buys with advanced targeting. He says it's not a question of "if"
but "how much" and "how fast."
"There's no going back," he said.
