After years of U.S. print advertising dollars shifting to online, the expectation has been growing that television, the largest ad category by far, would soon experience a similar siphoning away of budgets in favor of greater digital spending. Dave Morgan, CEO of TV ad targeter Simulmedia, concedes that his belief that TV budgets aren't shifting to the web is fairly self-serving.
Speaking from this past week's Consumer Electronics Show, which attracted top executives of every major ad agency as well as auto and tech marketers, Morgan did say that spending on both online and TV will become more complementary. As such, cross platform planning and buying needs to grow beyond simply extending a campaign from the TV screen to the PC, mobile and tablet. But like all the promises of "smarter" media spending, the rise of cross-platform is still hindered by the lack of solid metrics.
"Among other trends I’m looking to this year, we’re now going to see more audience data coming from TV sets," Morgan said. "There’s a lot of rumors about Samsung, LG, Vizio and other sets having the ability to identify the kinds of content being watched and having that anonymous data be available to advertisers. We will see better cross platform measurement, which will drive more of those kinds of campaigns. The critical step for brand dollars will be in trying to figure out the balance between online and offline spending, since they’ll be able to stitch the two more closely together."
According to eMarketer's most recent spending forecast at the end of last year, 2013 ad growth is looking a little weaker. For 2012, eMarketer expected to see marketing spend up by 4.9 percent; in 2013, it's calling for gains of just 3.4 percent. Part of the slowdown stems from continued battles between Congress over taxes, spending and debt, preventing an anemic recovery from gaining any real steam.
All of that ads up to continued uncertainty by major marketers -- something that Simulmedia and other companies who are regarded as scatter market media buying tools could benefit from. Given that continued focus on marketers who are spending now, as opposed to later, Simulmedia will not have a major presence during the TV upfront season this spring, though Morgan does expect to use the gathering of TV buyers to present Simulmedia's story and pick up some new business.
"Our growth is coming from categories that are already heavy spenders on TV," he said. "These are categories that are also heavily contested by major rivals. You buy TV because you have intense competition and if you don’t advertise, and your competitor does, they tend to take more of the market share. I’m talking about quick serve restaurants, auto insurance, credit cards, mobile/telco. TV absolutely drives sales for those marketers because it’s the main way to get an edge."
Morgan first became well known as the CEO of behavioral targeting pioneer Tacoda, which was acquired by AOL in 2007. Shortly after leaving AOL the next year, Morgan started Simulmedia with the idea of helping TV networks figure out when best to place their network promotions, before evolving into offering solutions for targeting TV audiences. Whereas companies like Mediaocean recently said that it is enlarging its focus from TV to display advertising, Morgan said that Simulmedia will remain centered on TV ad technology.
"I would say that market woke up to the fact that TV budgets didn't shift to online, at least not in any wholesale way," Morgan said. "Web video still has the challenge of a lack of premium inventory. We’ll see if the rise of connected TV changes that. But if anything, we’ll likely see online video budgets being managed as part of larger TV spending plans – that’s clearly what’s happening with Hulu and other large video sites. And that's the direction our view of the company is looking in as well."
That's not to say that there aren't problems with TV media buying. In a white paper being released this week, Simulmedia identified a "measureable level of inefficient spending" in primetime.
Primetime, when CPMs are highest, still garners the lion’s share of ad spending. But the report says that it does not deliver a proportionate amount of viewing from audiences. "In a given two-week period of TV, 54% of all ad spending (more than $91 million) went to primetime, but only translated into 34% of all impressions during that time," the report states. "Unlike internet advertising, where dayparts don’t matter as much as audience, traditional TV advertising has large, quantifiable gaps in efficiency that are just waiting for savvy advertisers to exploit."
In other words, audience buying is coming to TV. While audience began fragmenting 30 years ago, as cable emerged along with the idea of a TV in each household member's room, the TV ad sales process has remained pretty much the same, relying on contextual buys -- sports for men, drama for women -- and related program adjacencies.
"By complementing contextual TV advertising plans with audience-based buys from a growing number of vendors that are applying data and technology to the TV world, forward-thinking advertisers will be able to efficiently find their audiences across the rapidly expanding video ecosystem while still maintaining the mass reach and brand conducive environments they expect from TV," Morgan said. "As consumers continue to shift their video consumption habits, 2013 and 2014 will be watershed years for TV audience-based buys."
So what's the solution? Morgan points to the report, which tells advertisers that they need to work harder to understand their audience on a much deeper level.
"In the years to come, there will be standard currencies for trading media but there will an abundance of 'data lenses' that will be used to create nuanced portraits of customers based on their media consumption, shopping preferences, and psychographic behaviors," Morgan said. "Combine third-party data with first-party data to build rich audience profiles that can inform all media planning and buying moving forward."