TV and Video Convergence: Piecing Together the Puzzle
Picture it. 1965, the golden age of television. A family huddles around the household’s only TV set, tuning into one of only a handful of channels, to watch a scheduled show that attracts millions of viewers each evening. For an advertiser looking to connect with consumers, they would run three ad spots and reach around 75% of the total TV audience. Cut to 50 years later, and the landscape is dramatically different. In order to reach the same audience on TV in 2015, you would need to run over 350 ads, as the viewing of audio visual content continues to fragment across screens.
This seismic shift in viewing behaviour has created a disconnect within our industry. For the first time since the invention of television, we’re seeing a sizeable gap between audience behaviour and the advertising industry’s ability to reach them at scale.
In this new reality of multi-screen viewing, siloed media channels and legacy infrastructure incompatibility, the convergence of TV and Video presents a huge opportunity for advertisers to piece back together the fragmented consumer puzzle. 2016 sees us on the cusp of a new golden age of television, one that’s data-enabled, screen-agnostic and on-demand.
In 2015 we saw Verizon pay $4.4 billion dollars for AOL citing video and the opportunities for cross screen engagement as the key motivations for the purchase. In Australia, MCN launched their programmatic marketplace, and we’ve seen rapid growth in subscription on-demand, led by the Australian launch of Netflix.
Established business models are being disrupted and globally we’ve seen a lot of uncertainty from advertisers, with billions of dollars currently under review. Many in the industry, including Omnicom’s global CEO John Wren, have cited the impact technology is having on media planning and buying as the principal cause.
So why is this happening? We believe the disruption is being driven by several factors:
- First, WE are redefining the rules. We as consumers – posting to social media as we watch TV, watching apps like Foxtel Go while commuting to work. We’re now moving seamlessly across screens as matter of course.
- The other huge game changer – is Data. Data is becoming the new currency and it’s redefining the winners. As such, new players sitting on huge volumes of data are disrupting the status quo.
- Distribution models have changed as well, which means there are new paths to the consumer, from connected TV to laptops, tablets and smart phones featuring screens that get bigger with each release. This is really forcing broadcasters to rethink their business models, especially in the US where we have seen both HBO and Showtime offer pay-as-you-go apps that don't require a cable subscription.
- Finally, the result of all of this is that advertisers have more options. There’s no doubt that TV is still the dominant media channel in every world market, but is it enough? TV isn’t going anywhere, however it will increasingly become re-tooled, re-engineered and re-orientated with TV content increasingly being distributed digitally.
While ad serving to multiple screens does provide greater opportunities to reach your audience, it is only a small piece of the puzzle. True convergence across screens will rely on insights into the value of each screen and the relationship they have to each other. The real opportunity comes from solving convergence for the total video market; 100% of Digital Video and 100% of TV. This not only includes RTB, but also upfront, planned Video, which will increasingly include Over The Top (OTT) and Video On Demand (VOD), as well as data-enabled linear TV and finally addressable linear TV. Digital Out Of Home (OOH) and Cinema will also form part of this converged future. That’s the 100% opportunity, but in Australia, alongside the majority of other world markets, we’re still a long way from the true convergence of addressable advertising.
So what’s it going to take? We believe a different approach is required, one that breaks down existing silos and addresses the three dimensions of true convergence; Technology, Time, and Data.
Firstly, we need to account for the myriad legacy technologies that power the current TV & video ecosystem. One set of technologies provide platforms that support addressable media transactions, primarily on a bidded basis via exchanges and DSPs. The other set of technologies are platforms – primarily ad servers and linear allocators - that support the execution of scheduled transactions on a non-addressable basis. Both have a role to play, but we need to unify these technologies if we want to holistically deliver relevant advertising to consumers.
The second factor to consider is time, and specifically the need to account for the different frames that TV and video are planned upon. TV and premium upfront video are planned in a way totally disconnected from the immediacy of RTB. Breaking down these silos and adopting a planning approach that takes these differences into consideration is key to a converged future.
The final factor is data and unification is needed here too. It is one thing to have insights into who consumers are – advertisers and DMPs are sitting on huge volumes of this data. But the difficultly comes from the fact that data is also siloed. In Australia, no one data company can currently provide a single view of a consumer that ties offline data to online at scale. Tying those insights together and linking it to media consumption across every device is the challenge for agencies and advertisers trying to understand how, when and where to target a consumer.
So why does it matter? At Videology we are beginning to see an increasing number of businesses on both the supply and demand side reap the rewards by applying this technology, time and data approach. Convergence is driving greater ROI for advertisers and their agencies, and as a result greater monetisation for media companies.
Evolving consumer viewing habits are driving this trend and as an industry we are still piecing together the puzzle. The benefits of convergence for advertisers are significant and the future potential across the entire audio visual landscape, is staggering. We know that TV - and by extension premium video - is great for driving ROI and always has been. When you add data to the mix, it gets even better. When you create a complete view across the entire path to purchase, personalising marketing across every consumer touch point, the sky really is the limit.