OTT Is Making The Same Mistake Local Broadcasters Made

On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Andy Monfried, CEO at Lotame.

Set in the world of minor-league baseball, “Brockmire” is IFC’s highest-rated program ever. The show also provides a useful metaphor for over-the-top’s (OTT) dependency on remnant inventory, an issue we first saw in the local market about a decade ago.

Watch “Brockmire” on demand, and you’ll notice the same three commercial spots are played over and over again. No, the ad-tracking team didn’t screw up; ad sales likely sold the OTT audience as remnant inventory because it lacks the necessary data to monetize the network’s most popular show.

In effect, IFC’s OTT play is running its talent into a major-league buzz saw because it lacks even a minor league system for validating its nonlinear audience.

Nielsen Devalues Local Television – A Wake-Up Call For OTT

Local television is actually quite popular, but you wouldn’t know it from reading the trades.

Cable news gets the buzz, despite prime-time audiences hovering around 3 million, compared to the 23 million Americans who tune in to watch their local evening news; a similar number tunes in to watch the late local news after network prime time ends.

Local news inventory typically sells out, but local broadcast content struggles to demonstrate its value to major brands because Nielsen panels are biased toward national audiences.

That ought to be a wake-up call for OTT, which is also shortchanged by Nielsen’s bias toward timely national audiences. But unlike local broadcasters, who failed to make the necessary technology investments to measure and target their own audiences, OTT players should know better. After all, OTT is first and foremost a digital creature, which is why it’s so surprising to see broadcasters repeating the mistakes of the analog era.

It’s Insane That Agencies Know More About Audiences Than Broadcasters

Advertisers have expressed doubts about Nielsen’s ability to deliver meaningful audience insights, especially when compared to digital. Meanwhile, content owners have been critical of Nielsen’s ability to capture a show’s audience in a media ecosystem that’s increasingly shifting away from live viewership. Given skepticism from both the buy side and the sell side, why does Nielsen remain relevant to a television industry that understands that the future is digital?

The typical answer is that buyers and sellers need a universal transaction standard, even if everyone knows it’s inaccurate. If your bank told you that it had a flawed, but universally accepted, method for counting your money, you’d run for the hills and so would the merchants you transact with. Nielsen’s rating system persists because of the media agency. Agencies love using the Nielsen system because it keeps broadcasters at an information disadvantage.

In the past, broadcasters accepted that disadvantage for two reasons. First, television inventory was once incredibly scarce, allowing broadcasters to command premiums that mitigated whatever money they left on the table because of poor audience measurement.

Second, broadcasters have historically lacked the technology to create their own audience measurement alternatives.

But today, those reasons are no longer valid. There’s too much content and competition for broadcasters to leave money on the table, and broadcasters need only look at what their digital publishing peers are doing to see the value and importance of building in-house tools for audience measurement and targeting.

Most US television sets are connected to the internet. Soon, television will become just another addressable screen. When that happens, the entity with the most audience data wins.

Right now, that’s the media agency, which can pick broadcasters apart by purchasing off GRPs or demos while showing clients how cheaply they reached the actual target of the campaign. This does not bode well for the future of OTT. And the more broadcasters shift toward OTT without capturing their own audience data, the weaker their position becomes.

Make no mistake: This is a fight to the death because audience data is where the money is. The less broadcasters know about their viewers, the less money they’ll have to produce shows like “Brockmire.”

Local And OTT Need A Minor-League Approach To Validating Audience

Right now, the trend is to process TV viewership to digital audience data. What’s lacking and what will make television more accountable to advertisers is the ability to go in the other direction. That’s doable, but to get there, local broadcasters and OTT players must invest in their own minor-league alternatives to Nielsen, so that they can validate and measure their own audiences.

This won’t happen overnight. As any minor leaguer knows, developing major-league capabilities takes time. But eventually, some of those investments will pay off, and content owners will be able to play ball without Nielsen.

Follow Lotame (@Lotame) and AdExchanger (@adexchanger) on Twitter.

1 Comment

  1. Hi Andy,

    Good point that local broadcasters and OTT players must invest in their own verification tech so they actually know what audiences they have for sale, but do you think this will be sufficient for advertisers/agencies? The 'grading your own homework' argument is inevitable. Should advertisers/agencies invest in their own solutions as well in your opinion? And if so, won't the market become too fragmented?

    I think it's either 1-2 universally accepted 'truths' (ie Nielsen & Comscore) each with their flaws, or everybody has their own versions of the truth which makes life hell for aligning media buys. The advertiser/agency verification will outweigh the publishers' verification in the end since that's leading to where the budget goes, which will make proprietary pub tooling obsolete.

    Would love to hear your thoughts on this!

    Reply

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