As programmatic TV advertising continues its slow march towards becoming a reality, it is becoming increasingly clear that the revolution will be very different to what we saw in digital advertising, with a whole new set of legacy technologies and market dynamics. Here Joshua Summers, CEO at Clypd, and Henry Rivero, Clypd’s GM for EMEA, compare the US and European markets and discuss the future of TV advertising’s in a media industry increasingly dominated by platforms.
What are Clypd seeing happen in the US TV market? Would you say the shift is towards addressability or are we seeing ‘true programmatic’ trading of TV yet?
JS: This is becoming a common response in the industry, but it really depends on your definition of true programmatic trading. What we are seeing is true optimisation against advanced targets with end-to-end automation improvements. We are beginning to see this on a large scale in both the upfronts and scatter markets here in the US.
The same programmatic models of real-time bidding that we see in the digital marketplaces are a long way off. Given the differences in the types of inventory and the supply and demand of these two marketplaces, we may never see the same models deployed in both.
National cable programmers have made major advancements towards yield optimization around the effective use of data sets that extend well beyond age and gender. This has enabled improved inventory utilization and a much more efficient selling model as they engage on advanced audience campaigns.
As far as addressability goes, this has been relatively limited with deployments by a handful of MVPDs in the US. This is starting to shift and we may see interesting trials that take it beyond MVPD inventory into programmers and broadcasters over the next year or two. How it scales from there remains to be seen, but it is definitely an interesting development to track.
It’s no secret that on the whole Europe is trailing behind the US on programmatic TV advertising. What is holding back progress in Europe?
HR: We’re seeing a good level of interest in a number of Europe’s 28 markets, from both buy-side and sell-side players. The question is whether there is currently enough alignment to accelerate the adoption of automation and data-driven sales.
When it comes to automation, the leading European markets, such as UK, Germany, France, and Italy, already have quite established examples of inventory booking solutions that provide interfaces between sellers and buyers. Some of these are market-level/shared platforms, others are siloed publisher solutions. But, while these are good for injecting efficiency into the booking process, they are a bit of a dead-end as they preclude the possibility to develop and open up the discussion of the inventory’s value. Also, such booking platforms and workflows are generally built for specific needs of specific partners but, not scalable or open to readily provide for new market entrants (buy-side and sell-side), and thus, limit more liquidity coming into the market.
When it comes to data, we have to look at how TV is currently sold. Across Europe, the predominant sales models are GRP and spot-based, in contrast to CPM-based models in the US. As far as sales is concerned, there hasn’t been much motivation within GRP and spot-based sales models to explore the value of data for the sales process. We see an increasing interest to leverage data for yield optimization and advanced pricing models – these are applicable to GRP and spot-based models. In addition, there is also interest in converged TV and video sales, i.e. audience extension – this should facilitate CPM-based models. As data becomes more central to sales strategies, we should see an evolution of the sales process to become more data-driven.
All that said, we are in the process of launching in Europe. It requires an acute awareness and appreciation of the market environments. While adoption is at an earlier phase than in the US, there are good indicators that the European markets will catch up. Watch this space!
Do the arguments for efficiency through automation stand up for TV in the same way they do for digital?
JS: The digital and TV markets are very different. In digital, there is effectively unlimited supply. In TV, it is the opposite – a fixed pool of inventory. Efficiency in advertising can be seen as the ability to reach the audience you are targeting and the return a marketer gets from that reach.
By this definition, TV is still a significantly more efficient model than digital, regardless of automation. While important, automation is not the only driver of efficiency. In TV advertising, efficiency is quantifiable through the ability to more narrowly define your target audience. The science behind choosing the optimized schedule is a major driver in overall efficiency.
What do you think the TV industry needs to put in place in terms of data in order to compete with companies like Google and Facebook? How do you address broadcaster concerns that data-driven advertising could result in lower spend if the buy-side can target more efficiently?
HR: The TV industry has a very mature, well-governed, and transparent approach to audience data. The industry needs to ensure the evolution (not revolution) of the data will encompass and reflect TV consumption in all its forms. There are a number of examples of TV measurement organisations looking at the inclusion of set-top box (STB) data, over-the-top (OTT) data, etc. While companies like Google and Facebook have formidable data sets, there is little transparency to allow for direct comparisons with TV. So, in a way, the competition lies in each platform’s ability to demonstrate the effectiveness of the platform for delivering audiences and satisfying the advertiser’s goals. On the topic of advanced targeting, the TV industry needs to drive advanced audience standards for consistency of targeting, regardless of the source data.
Broadcasters should see data-driven advertising as a means to enhance their relationships with the buy-side, by delivering more value for the spend, while increasing their yield via better inventory utilization. Broadcasters are beginning to understand the potential benefits and are figuring out ways to add data-driven advertising to their sales toolkits.