Dave Morgan is CEO of Simulmedia, a television marketing company that optimizes the effectiveness of “on-air” program promotion.
AdExchanger.com: Have you tired of the online ad business, where you’ve already had success (Tacoda, Real Media)? Confess – don’t you miss banner ads? What prompted you to start Simulmedia?
DM: I am not tired of the online business, but I believe that there is a much greater market opportunity today in applying technology within the television industry. Today, television advertising is a $70 billion market annually in the US and television subscriptions represent another $130 billion per year, and neither side of that business has seen any significant technology-driven optimization for many years. Contrast that to the online world, where US ad spend represents $30 billion per year and, outside of search, it’s already optimized at a 70-80% level.
What learnings from your experience in the online ad business are relevant to TV tune-in optimization?
A lot of online experiences relate very well to the television business. First, the discovery problem in television – where it is virtually impossible to know everything that is on TV that you might enjoy – is very much like the problems that web surfers have finding content that they want. Second, television viewers prefer more relevant on-air promotions, and respond much better to them when they are relevant, just as web surfers do with more relevant ads. Finally, success in integrating technology into the television eco-system means finding a balance between art and science, just as it did in bringing better technology to web media.
For targeting purposes, has context become less important? Is it all about audience these days from the advertiser perspective? What’s the Simulmedia view?
No. Context is always critically important. However, viewers are different and they respond differently to different messages. Our view is that the company that finds the best balance between the “program” and the “person” in delivering relevant messages will create the best viewing experience and will be the most successful.
How does Simulmedia gather its audience data? Is it panel-based? Through the set-top box?
We license anonymous set-top box data from television system operators. We don’t know anything about the viewers except the zip codes where the boxes are located, but the set-top boxes record what shows are watched and when they are watched.
Wouldn’t the same targeting, multi-variate testing and analytics be useful for digital TV ads? Is this the next step for Simulmedia?
I do think that the same or similar approaches will be used for all digital TV ads over time. However, at this point, “tune-in” is a plenty big category for us. It is unique, since driving viewership is critical for the TV companies to support all of their programming and all of their advertising. Plus, our success can be directly measured, which is critical in this early stage of market development.
Assuming Simulmedia’s product offerings play out successfully, what does the TV viewer get?
The TV viewer will get better media choices. They will be more informed of programming that they might enjoy and they will receive fewer interruptive ads for shows that they are not likely to enjoy.
Who do you consider in your competitive set? With your indexing statistics (shown in a recent Simulmedia blog post about the Jay Leno show), it would seem that Comscore and Nielsen might have something to worry about, no?
We are not focused on any particular potential competitors. We are not in the measurement business, nor are we in the insights business. We deliver incremental viewership on a cost-per-viewer basis. No one else does that today.
How will the revenue model work for Simulmedia? When do you expect to start generating revenue?
We are paid to deliver incremental viewers to shows and networks and will generate revenue this calendar year. From that revenue, we pay our partners that provide us with inventory to air optimized promo spots and data to build our optimization models.
You’ve been fairly strident in your view that the interactive ad industry needs to take charge of its future when it comes to regulation and privacy protection for the consumer. How is the online ad industry doing? What improvements would you like to see in terms of self-regulation?
I am very hopeful about the work that the IAB, AAAA, ANA, DMA and others have done in developing self-regulatory guidelines. Now it is a question of implementation. I believe that legislators and regulators are going to give the industry one last chance to do this right.
New York City versus Silicon Valley (or east coast versus west?) – who’s got “game” when it comes to the online ad tech business?
Both the “Valley” and the “Alley” are doing great things in the online ad tech business, however, I believe that the Alley has gotten much better over the past 10-15 years when it comes to providing a home for tech companies relative to the rest of the country. We aren’t nearly as big as the Valley, but we’re getting better every day.
What’s your view on the recent launch of the Google DoubleClick Ad Exchange, and the increased focus on demand-side buying platforms – particularly for agencies? Is it time to say there’s a paradigm shift occurring?
To me, the announcement was a non-issue, since it has been operating for the better part of the past two years. As to exchanges generally, I believe that they are becoming significant factors in the marketplace and are certainly putting more and more pressure on both agencies and “tweener”-sized publishers, who lack massive scale and automated fulfillment of their own.
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