"On TV And Video" is a column exploring opportunities and challenges in programmatic TV and video.
Today’s column is written by Jes Santoro, senior vice president of programmatic and advanced TV at TubeMogul.
I first started in this business nearly 20 years ago as an assistant national TV buyer at BBDO. Thinking back, it’s amazing how little – and how much – the TV ad market has changed since then.
The headlines remind us that the TV industry is not what it used to be. Audiences are more fragmented. There are more shows, platforms, devices and questions about TV’s future than at any point in its history.
Despite these developments, the upfront process never really changes. Most agree – correctly – that it’s a wise decision to lock in rates and a schedule, establishing a foundation of gross rating points (GRPs) that can be drawn on throughout the year.
That currency of TV – the GRP, or reach multiplied by frequency – hasn’t changed, either. For more than 50 years, the GRP worked because TV household penetration was high and content opportunities were consolidated, allowing for an effective combination of both reach and frequency with a handful of networks and programs.
But there is good reason to believe that is no longer the case. Today, nearly two out of every three programs delivers an average rating among viewers between 18 and 49 years old of less than 0.5, according to Nielsen – far below even 5 years ago. It takes a lot more spots to deliver communication goals. More spots equal more frequency but do not necessarily mean more reach. The results are often waste and perpetuating consumer disdain for oversaturated advertising.
This issue is common knowledge to most TV buyers. It is also widely recognized that the GRP isn’t going away anytime soon, given the relatively nascent stage of addressable advertising.
So what can advertisers do? They can alter their post-upfront strategy by thinking differently about how they allocate incremental investment.
Historically, after the upfront, most TV buyers call their network partners and ask to “write it flat” on scatter buys – extending the same rates negotiated at the upfront – or occasionally buy a few additional networks to go a little deeper with their mix. The pitfall with this approach is that any incremental spend likely exacerbates the frequency issue, adding networks or shows with high rates of audience overlap.
Programmatic TV can address these issues and help marketers navigate an increasingly complicated marketplace, weighing the potential reach of hundreds of potential TV plans at once. It can also amplify the effectiveness of a TV buy through the application of data and the speed through which a buyer can gauge results.
Of course, even the most data-driven TV buy can still have reach problems. It’s equally important for marketers to look beyond TV, weighing the potential incremental reach of a TV buy alongside video on demand, streaming video, social video and more. Adding in additional formats and viewers ensures that the frequency problem diminishes and GRPs retain their usefulness in the near term.
To realize that vision, traditional processes for planning and buying TV will need to change – no small task. Annual planning will need to become an all-year process of regular measurement and iteration. Planners and buyers will need to reboot their passive relationship and work together to meaningfully tie past performance to current plans and future strategy.
Despite the rapid rate of change, one thing always remains the same: Advertisers need to efficiently get their messaging in front of consumers. Today’s marketplace does not make that task easy, but those willing to think differently about traditional buying methods will prosper.