Inside TV's Power Play to Target Audiences

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Rival TV titans including A&E, CBS and Turner are considering banding together for a project, dramatically code-named Thor, to prove to marketers their commercials worked no matter where they ran on air. One goal is to break a stalemate that's delaying TV's crucial move into precision marketing.

It's been about four years since TV networks set their sights on revamping commercials to compete better against digital by letting brands target audiences with more specific criteria than the traditional age and gender. This spring, several networks made some bold statements and took some big swings in the name of advancing audience buying on TV. But a power stuggle is holding back progress: TV networks are eager to sell targeted audiences, which allow them to raise prices on inventory, while buyers don't want to pay more or risk their place at the table.

"We are the agents of our clients, not the networks, and we have to make sure we are not giving clients' info away to them," says Catherine Sullivan, president of U.S. investment at Omnicom Media Group.

"Agencies want to own this conversation with the client, not the sellers," echoes one TV ad sales executive. "If the clients can go directly to the seller to optimize what does this mean for the agency?"

To advance audience buying on TV, the networks have to prove it's worth the costs—for everyone.

Great expectations
In a grand flourish last March, just ahead of TV's annual upfront ad bazaar, NBC Universal set aside $1 billion of ad inventory to sell using metrics other than creaky Nielsen age and sex demographics. It was an ambitious number for a fledgling effort. NBCU's total deals in the prior upfront ran somewhere around $6 billion. The same month, Turner, Fox and Viacom made a rare show of cooperation with a venture to help marketers find the same bespoke audience targets on any of their networks.

The sellers say real headway followed. OpenAP, the Turner/Fox/Viacom product, moved out of beta at the beginning of the month.

So far it seems OpenAP does what it set out to do—making people likely in the market for pickup trucks, for example, almost as easy to transact against as adults 18 to 49. Up until now these segments were "being defined in just slightly enough ways to make buying across publishers difficult," says Bryson Gordon, who leads Viacom's advanced advertising group. It also analyzes whether the segment size is big enough that it's worth targeting, or whether it's so big that is can be reached effectively without targeting. Afterward, Accenture reports how many people in the target were reached on each of the OpenAP network groups.

But for some agencies, OpenAP solves a problem they didn't have. "It's really for advertisers and agencies that haven't identified a data stream they want to use for targeting and need to lean on the networks for an easier way to implement these audience deals," says David Campanelli, exec VP and managing partner of video investment at Horizon Media.

But about a dozen marketers are using it to run advanced audience campaigns this quarter, Gordon says. One participant had previously refused to buy targeted audiences because it couldn't do it in a consistent way across network groups, he says.

As for NBC Universal, the company won't disclose how much of that $1 billion in inventory moved in the upfront. Krishan Bhatia, executive VP of business operations and strategy, says 50 new advertisers used its audience targeting product.

Agencies are recommending that 10% to 20% of their clients' TV spending should go to audience-based buying, according to the TV ad sales executive. Whether that's a lot or a little depends on your perspective.

Media buyers say they're testing audience buying for brands but movement has been slow. One buyer estimates NBCU struck about $500 million in deals on non-Nielsen guarantees during the annual upfront haggle, about double its 2016 level—and half the $1 billion set-aside.

"There are plenty of clients who say they want to do it but don't follow through. It's still small portion of clients' buys," Omnicom Media Group's Sullivan says. "I wouldn't say we have made meaningful progress yet."

Tricia Wolfer, associate director of broadcast at Empower MediaMarketing, a Cincinnati-based agency, says two of her clients have abandoned age and sex demographics completely to put all of their TV money into audience buying. And a large client rooted in traditional media is allocating 10% to 15% of its TV budget to audience buying, she says. It's all nonetheless well short of critical mass. "There's not a ton of business being done this way," she says.

As it tends to be with much of the innovation being attempted in TV, one of the biggest hang-ups is pricing. Michael Strober, executive VP of client strategy and innovation at Turner, argues that marketers aren't actually paying a premium for audience buys. "They are getting more precise, targeted impressions," he says. "They are paying less than if they were going to pay against a Nielsen demo."

But buyers don't necessarily agree. Their prevailing notion is that identifying brands' most efficient targets hands networks the ability to charge more for the inventory that serves that exact audience. It needs to be proven, they say, that buying more targeted audiences won't ultimately be more expensive.

Turner's Strober believes "legacy thinking" is holding back some progress. "Agencies, by their nature, were set up for the last 40 or 50 years to buy like machines," he says. "We are throwing a wrench into the gears that move the agencies." He notes that agencies are in a tough position as clients continually challenge them to hold the line on costs.

"What we are running into a good amount is clients ... wanting to know how it impacts their business; what's the proof," Horizon's Campanelli says. "That's the part we all need to get better at—how to prove to clients this optimization resulted in more sales."

Viacom's Gordon says the evidence will follow as more audience-based deals are done.

Thor could be part of that progress. The idea is to adopt a "multi-touch" attribution model as a new common yardstick for networks to prove their ads' effectiveness. Such a platform would allow TV networks to show clients not only that their ads reached a certain audience but that they produced specific effects.

Whether enough networks join in remains one of many questions. OpenAP hasn't had an easy time of finding additional members. OpenAP founders previously said they expected to have at least one other network signed on by the Cannes Lions ad festival last June. But the summer came and went with no news.

At least several TV networks that have considered joining the consortium have said the biggest deterrent is the price for entry. Gordon argues it isn't expensive to join OpenAP, but networks need to come in with comprehensive advanceed audience buying platforms in place; they can run into additional costs getting those systems up to snuff. "We ran into realities with things like budget cycles," Gordon says of the glacial enlistment drive, "which wasn't something we were contemplating." He now expects two or three networks to join OpenAP in the next few months.

While currently OpenAP is focused on activating precision audiences on traditional TV, its backers envision expending to streaming and on-demand platforms next.

Wile Bhatia says NBC Universal is not planning on joining OpenAP, it is "leaving the door open" and supports any initiative that helps the industry move away from its legacy system. All of these efforts are steps to "rid ourselves of legacy TV metrics that have no base on driving outcomes," Bhatia says.

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