Claudio Marcus is Executive Vice President, Marketing and Research at Visible World, a targeted TV advertising company that currently focuses mainly on the US market. Clients include major agencies, pay-TV operators and TV networks. When strong-armed by VAN into describing his company in online ad tech terms, Marcus says the company’s programmatic TV subsidiary, AudienceXpress, would be ‘part DSP, part SSP’.
When we talk about selling TV programmatically, does this every mean TV inventory is being sold via RTB?
No, we’re not talking about real-time bidding (RTB). That was a big lesson we learned from the Google TV Ads experience when they tried to bring the Adsense model to TV inventory, but they focused on creating an RTB marketplace for that inventory. That model didn’t work for the TV ad inventory suppliers. And it didn’t work for TV advertisers either – large advertisers need to know they have sufficient weight, so they can’t hope to depend on whether their bids are going to clear at the last minute.
On the publisher side, the TV ecosystem players have a lot of clout and really aren’t interested in having the kind of transparency you can get with real-time bidding. So that’s a huge difference between the online and mobile space, where you have literally hundreds of thousands of publishers and tens of thousands of advertisers. When you talk about the serious buyers for TV, in the US we have eight companies that control 85% of all the TV ad inventory. Then you have about 200 brands who represent about 80 percent of the TV ad spend. So it’s highly concentrated and because of that the sell-side has a lot more say in how things get done.
Because we’ve had long-term relationships with the traditional TV companies and because we’re a technology company, we understood what their concerns were and decided to make use of programmatic to address those concerns, so you can make it work for the inventory that is undervalued today. So we’re not talking about the premium inventory that is part of the upfronts or the direct relationships they have with the large advertisers. We’re talking essentially about undervalued inventory that could be valued more as audiences than as traditional spots.
On the buy-side, how far do you think the big brands want to take addressability on TV?
It really depends on the brand and the mindset of the CMO. I think TV is prized because of its storytelling capability and because of its ability to efficiently aggregate large audiences – and much more so than the Internet. While TV is highly fragmented, it’s not nearly as fragmented as the Internet. The storytelling dimension of TV spills over into the watercooler conversations and into social and online. When you pair up the digital strategies with a TV campaign, you get very strong synergies. The advertisers who understand those relationships are the ones who come out ahead of the game.
People from a digital or direct marketing background tend to be more interested in the targeting side of things, mainly because they want to have better measurement and attribution. That’s a good thing too, but I think TV has compelling capabilities to service both traditional brand campaigns as well as response-oriented advertisers.
What proportion of TV spend in the US is bought programmatically today?
It’s still very small. The TV space is so huge that it’s still low single digits percentage-wise. But it’s obviously growing very quickly – and partly because it’s growing from a small base – but also because the sell-side is starting to embrace the fact that they have to be proactive about this instead of being defensive. I think they’re starting to realise they now have a way to exert some control over the process from a pricing perspective, a transparency perspective, and an execution perspective.
Automating the buying part is one component, but you also have to automate the traffic part. On the Internet you can take for granted that the ad server will take care of the traffic. On TV it’s not like that. Until we implemented our targeted TV traffic automation and married that to the buying front-end. For example, it is relatively straightforward to identify and target audiences more efficiently, but then when you turn it over to the sell-side it’s a total nightmare to execute those campaigns, because you’re talking about weaving a number of small audiences into a much larger audience. So from an execution perspective it was a major pain. Now that that’s all automated, the sell-side is much more willing to say, ‘Okay, I’m going to take this undervalued inventory and turn some of it over to this platform, and because I don’t have to worry about the execution of it I’m simply just going to make more money than I otherwise would for that inventory’.
What kind of data sources and targeting options are available to programmatic TV advertisers?
There are two sets of data sources available. You have the kind of data sources that are the ‘coins of the realm’ for the transaction part of the equation, which for the most part is still Nielsen. Then we use Rentrak data and we’ll soon be using some smart TV data that let’s us be much more granular in terms of understanding audience segments in a way that is different to what Nielsen typically reports on. Nielsen have an excellent grasp of the national representation of the audience for certain specific demographics e.g. gender and age-based demographics. But when you’re trying to do something much more refined around audiences, such as ‘Hispanic families with more than two kids’, then you can’t do that with Nielsen as your estimates just fall apart.
So you still need Nielsen as a transactional currenty, but we need to use a host of third party data in order to understand the segments first. So to understand the specific advertiser-defined segments on a campaign by campaign basis. And we can do that by doing matches against their customer database and identify what those segments look like; if they already have segment definitions we can find and apply third party data to identify those segments in terms of audiences on TV. Then once that’s done, the system then automates the programmatic buying of those audiences, even though the transaction is still taking place using the traditional metrics.
What type of brand uplift do you see with addressable TV when compared with traditional TV campaigns?
It really depends. You have traditional TV advertisers and more DR-focused advertisers. On the direct response side, they tend to be much better at measuring the response as they can look at the number of calls they got in the call centre, visits to the website or actual sales, so you can measure the impact pretty quickly.
From an overall reporting perspective – just because you get reports overnight on the reach of the specific segment you were going after, the frequency, the impressions etc. Historically you would have gotten this data at the end of the campaign, but being able to get that data overnight enables them to match it up with their website data and call centre logs. It’s still early days, so the lifts vary quite a bit, but the way we like to describe it is as a toolkit that allows you to improve your performance, rather than having a base lift that you can expect, because that would be unrealistic and would fail to take into account the offer, the creative, the product etc.
Is the TV industry looking for a way to provide addressable advertising using their current infrastructure, or is there a general acceptance that the future is IP-delivered content?
I think there are some technological factors that make addressability easier to implement on an IP platform. So from a technology perspective, it certainly makes it easier to implement at scale. But from an opportunity perspective, it’s interesting that the operators in particular are recognising that addressability is important to them on the advertising side, but where the push is really coming from is there own marketing organisations.
You have to keep in mind that these pay TV operators get most of their revenues from subscriptions. Advertising is a small portion of their total revenues. In the US it’s just 10 to 15 percent of their total revenues. Subscription is what really matters, so the marketing divisions have been the most aggressive in pushing for addressability as they’ve got short-term incentives and competitive pressure for making the most of the TV ad inventory they use for their own marketing efforts. Cablevision have been one of the more aggressive cable operators in the US and they’re the most advanced with addressability.
The other groups that are interested are the networks as programme promotion as TV shows tend to be very broadly targeted, so you might promote shows alongside similar shows or on networks that carry similar shows. But if you went down to household addressability you could do a much better job of targeting your product promotion inventory. But that also has some challenges in that it requires working closely with the operators to change how they currently work and very few have been willing to do so thus far.
Are you looking beyond TV in terms of your own offering?
For the most part, we are very focused on the TV space. We’ve got some exciting announcements around Smart TVs coming up. We’re leveraging a consumer application from smart TVs to be able to generate insights than can be used to provide a much better standing of the program promotion campaign effectiveness.
Again, you’ll have overnight reporting so you can actually do something about it. Historically the only way you could do the type of analysis that this new offering makes possible, was to take all of your ad logs after the campaign, marry them with the set-top box data, and then – after some research – six weeks later you might get a report, which is obviously a costly exercise. We have automated the process completely so all the networks have to do is tell us what networks a spot is going to be running on and then – once it’s on air – we track everything and give them overnight web-based reporting.
Beyond that, we expect to develop other advertiser Smart TV related offerings, but cannot go into details. One of the things we think differentiates ourselves from the rest of the TV ad tech market is that we don’t make announcements and then build the product. We like the product to be live when we make the announcement.