“On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Lance Neuhauser, CEO at 4C Insights.
A decade ago, big brands had it easy when it came to media. They had big ad budgets and bought a lot of ads. The more ads they bought, the lower their rates declined. They used the savings from those lower rates to buy more ads, which in turn drove bigger sales.
It was a glorious upward spiral with an even more glorious end result: Based on the sheer volume of ad space that big brands could buy in this bygone era of limited inventory, these companies could essentially box out any potential competition from a media standpoint.
Then programmatic came along and turned the media world on its head. And it’s led to an era in which the quality and sophistication of a brand’s data has replaced the size of a brand’s budgets as the currency for media’s new economy of scale.
This history lesson matters because history is repeating itself within the world of TV, which is flush with billions of dollars in ad budgets that are genuinely up for grabs as TV and digital converge. To be sure, it’s going to take many years for programmatic to take hold in TV, and it’s actually more of an addressable proposition than what we know as programmatic in digital.
But the application of data to TV advertising is happening today, and the brands with the data know-how are separating themselves from the pack. In this year’s upfronts, a number of brands leveraged data to determine which placements were most likely to reach their primary and secondary audiences. Such insights enabled them to place a proper value on inventory and negotiate their prices accordingly.
As TV becomes addressable and supply extends from a linear TV feed to an infinitude of consumption touch points, the power of data will once again supersede the power of a larger war chest. This is why content companies and data companies are converging like never before, and it’s why brands are in a mad rush to build robust first-party data assets to give them an edge.
Today’s war for attention is being waged with data, and a new battleground is about to open before us.
Realities of the newly democratized marketplace
The emergence of programmatic changed everything because it democratized digital advertising, moving mom-and-pop advertisers toward equal footing with Fortune 100 brands when vying for placement. Meanwhile, supply increased, with ad inventory rapidly proliferating into the infinite new real estate of an ever-expanding digital universe.
By outbidding major advertisers on desirable placements that cost mere cents, nimble organizations secured the modest media exposure and clicks needed to move the needle for their businesses. Suddenly, small businesses or new direct-to-consumer upstarts grew into real competitors, and the list of top brands worldwide experienced its first real volatility in decades. Legacy brands that once ruled the airwaves and print world by sheer force of spend could no longer box out their competition in a digital world of endless media proliferation.
In the coming democratized TV marketplace, brands will no longer exert market power via raw TV ad budgets. They will do it with data. As we’ve seen elsewhere, the power comes not from having more data than your competitors, but by applying it with a greater level of sophistication. A company can carry more weight by extracting more value from similar inventory than its competitors.
In the data economy, as we move into the realm of addressable TV and data-driven buys, brands must focus on extracting the right data on TV viewing habits and correlating those habits with media preferences. Those that can extract such data and apply it smartly to their cross-media campaigns, including TV, will have the upper hand. Boxing out competitors through TV advertising won’t be possible due to the continued proliferation of digital programming and over-the-top access. But brands that know and can find their audiences best have the opportunity to eliminate competition when it comes to those target consumers.
It’s all about extracting the right data on a brand’s target audience, honing the messages that appeal to that audience and finding the strategic cross-channel placements that will enhance the lifetime value of those consumers for a brand.
Today’s tens of billions of dollars of traditional linear TV investment are shifting as TV and digital converge more deeply. It’s imperative that advertisers adjust their data strategies accordingly if they are to remain competitive in a world where big media budgets no longer translate to the competitive advantage they once did.
Follow Lance Neuhauser (@LanceNeuhauser), 4C (@4Cinsights) and AdExchanger (@adexchanger) on Twitter.
