Stations will lose out on the best opportunities for future growth unless they become more competitive with digital media rivals. The biggest competitors for digital ad dollars aren’t the other stations in a TV market; they are the major digital media platforms that are already attracting the largest share of local digital media dollars.
Audience metrics seem to be on everyone’s mind these days. Or, at least on the minds of everyone in media. Metrics were certainly a subject for discussion during May’s NewFront and Upfront presentations. They were also an important part of the agenda at last week’s Media Finance Focus 2018 conference, where the industry’s financial management community examined the future of media sales among a host of other topics.
Common to all of these forums was the recognition that stations will lose out on the best opportunities for future growth unless they become more competitive with digital media rivals. As one session panelist pointed out to our attendees, the biggest competitors for digital ad dollars aren’t the other stations in a TV market; they are the major digital media platforms that are already attracting the largest share of local digital media dollars.
While buying of traditional TV and digital media have largely been handled in separate silos, the lower margins for making and managing a buy on linear television have compelled media buyers to spend more with digital and make consolidated purchases based upon metrics such as viewability.
As Simulmedia CEO Dave Morgan pointed out in an article appearing in the current issue of MFM’s member magazine, The Financial Manager (TFM), “Key players in the television advertising supply chain — including many employed in corporate media departments — will find that the languages that they grew up with, like gross rating points and demographics, have become foreign.”
Three Change Factors
Morgan’s article, entitled “A Whole New Data Dimension,” identifies three developments that have allowed brands such as Zicam, Choice Hotels and The Home Depot to improve their ad-buying strategies through “better audience measurement and a clear indication of the impact [their] ads had on sales.” He describes them as:
- A new generation of measurement platforms ingesting second-by-second TV viewing data at the household level from tens of millions of cable, satellite and telco TV set-top boxes, as well as data from tens of millions of smart TVs.
- Privacy-safe data matching systems from companies like Acxiom, Experian and Neustar that connect this household-viewing data to advertisers’ proprietary customer data systems. This is accomplished, without revealing the identity of consumers, through the triangulation of customer data systems used across virtually all categories of consumer marketing. These include e-commerce systems, loyalty programs, data management platforms, customer relationship management systems, customer data platforms, point-of-sales systems and enterprise-managed media and consumer analytic systems.
- The availability of highly scalable, cloud-based storage and database systems such as Amazon’s AWS and Microsoft’s Azure that have made the aggregation, storage and analysis of massive amounts of unstructured data almost plug-and-play.
Simulmedia’s Morgan says it is essential for media sales teams to be empowered with these same capabilities. “Daily trading and optimization is how e-commerce is run. It is how most search, social and digital ads are bought.” Given the ability of these campaigns to demonstrate a specific level of return of for every dollar spent on a campaign, TV media buyers are going to require the same level of accountability from their TV sales reps.
What Lies Ahead
Broadcast and cable networks, along with national rep firms for cable MSOs are already taking advantage of these richer data services and tools. They allow them to provide national brands with greater accountability. “With unimpeachable data about how TV ads work in both reaching target audiences at a granular level and in driving sales, accountability is certainly going to change,” Morgan predicts. “Practitioners will need to assimilate math and science and a degree of empiricism that is similar to how Wall Street operates.”
These tools will also result in faster review cycles. When campaign audience measurement is being reported daily, the current quarter-to-quarter “clock speed” of TV media will dramatically accelerate.
Faster review and adjustment are already happening in political ad campaigns. As I’ll discuss in my next column, part of digital media’s appeal to campaign media buyers is its ability to support the testing and refinement of campaign messages virtually on the fly.
When TV’s return on investment becomes clearer, more predictable and measurable at the household level, it will allow TV sales teams to tap into marketing promotion dollars as well as the money allocated for TV ad campaigns. In this environment, Morgan says, “The brand-versus-promotion distinctions (for example, advertising Walmart’s grocery brand overall, versus promoting the sale of Kellogg’s cereal) will become meaningless.”
TV marketers have no choice but to accept the move to new metrics. As the imaginary race, the Borg, in Star Trek: The Next Generation are known for saying, “Resistance is futile.” The only question is when and how to start. There will be opposition from many existing vendors and partners. After all, these changes represent significant threats to existing, legacy business models.
With respect to when local TV stations adopt this new way of selling media, Morgan warns against waiting too long. “What will happen is not much different from what we saw in retail in the early 2000s,” he explains. “Retailers who pushed forward with e-commerce initiatives have great advantages today over both their historical and digital-native competitors. Those who didn’t invest in e-commerce, or who gave up early, either aren’t around anymore or are fast-becoming irrelevant.”
Zicam Zooms Forward
Morgan’s article appears in the May-June issue of TFM, which will be available on the MFM website for a limited time, describes how Zicam has become one of those early adopters. The company’s decision three years ago to apply digital media metrics to its TV media buys was a natural fit for its vice president of marketing, Lori Norian, who is also a former cellular biologist.
In addition to wanting a more scientific approach, Norian wanted a data driven solution. She was looking to combine the broader audience reach of linear TV with the measurement capabilities provided by digital and addressable TV solutions.
To that end, the company has taken advantage of partnerships in the digital ad tech space that allowed it to demonstrate a retail return of more than $4.50 on every marketing dollar and enjoy a dramatic increase in market share. “It’s very difficult to continue to grow a brand year over year with flat budgets if you don’t continuously get more efficient and effective with your media,” Zicam’s Norian said. Data and technology allowed Zicam to make it happen.
Insights From The Industry’s Experts
With more than a dozen sessions examining the state of media buying, audience measurement, and improving ad management, Morgan’s observations were widely evident at Media Finance Focus 2018, which was held last week in suburban Washington, D.C.
The 58th annual conference for MFM and BCCA, the media industry’s credit association, also featured a keynote presentation on the future of advertising by Todd Beilis, a partner at Deloitte Consulting. His remarks underscored the revenue opportunities available to TV stations that can offer advanced, cross-platform (addressable/OTT/TV), advertising solutions to today’s media buyers. I look forward to sharing those observations, as well as updates on the outlook for 2018 political advertising, in upcoming columns. We will also feature a recap of this year’s conference in the July-August edition of TFM.
In the meantime, I encourage you to reach out to your company’s finance executives and share your thoughts on how your organization can grow its share of the ever-increasing digital media ad market. With next year’s budgets looming, now is the time to ensure you are incorporating the organizational and technical stepping-stones necessary for realizing more of your market’s digital dollars.
Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedIn, Twitter or Facebook sites.