The Evolving TV Landscape
The television landscape is more complex than ever before and it continues to evolve without any signs of slowing down. Find out what is driving these shifts and how the media industry is adapting.
“TGIF” & “Must See TV” have long been a thing of the past. We no longer schedule our TV consumption around dayparts and programming blocks, because we simply do not have to. The idea of prime time has been eclipsed by my time, on whichever screen you choose and whenever you want.
Technology Increasing Choices
Source: SpotXchange, A Programmatic TV Guide for Sellers (2015)
This shift has been largely driven by technology. The television landscape was previously ruled by one screen, on which consumers could only watch broadcast television. Fast forwarding to today, not only do we have more screens, but we also have more ways to watch them. According to Nielsen, Subscription Video on Demand (SVOD) services such as Netflix and Hulu saw a 40% US household penetration rate in Q3’14, growing almost 20% year-over-year. Perhaps most notably however, is the fact that broadband only households saw a staggering 112% year-over-year increase. This signals that the cord-cutting trend is gaining traction, as consumers place greater reliance on the internet to access video content.
Choices Increasing Control & Content Consumption
Source: Nielsen Total Video Report Q4, 2014
It is safe to say that consumers are now in the driver’s seat when it comes to video content. Although content still remains king, consumers now have the ability to steer their own experience. This is solidified by the fact that live television consumption has steadily declined since 2012, while time on smartphones, multimedia devices and gaming consoles have seen considerable gains (Source: Nielsen).
PTV to the Rescue of Advertisers?
Knowing that audiences are being fragmented into smaller and smaller factions, the media industry has been proactively working on a solution to deliver the audience volume linear television once saw. This is where Programmatic TV (PTV) comes in to play.
Source: TubeMogul 2015
First, PTV offers advertisers the ability to move beyond the age and gender based Nielsen TRP of Adults 25–54 to a hyper-targeted data driven buying model. Targeting parameters can include viewing behaviors, psychographics, purchase behaviors and automotive-related qualifiers. After refining a target audience, PTV partners value available inventory based on an audience index and will serve ads only to those that index highly against the parameters finding an audience wherever they are watching. Though the major benefits of PTV stem from the rich data available for the planning and reporting stages, for all stages in between, PTV allows for greater effectiveness and efficiencies due to an automated and centralized management system.
Source: TubeMogul 2015
We have seen this type of hyper-targeted audience buying in the digital space for years, so this should be easy enough for TV right? Unfortunately not. The new TV ecosystem is complex and layered, with many players standing in between advertiser and viewer
Source: Clypd 2015
That said, the PTV market potential in the U.S. alone stands at $74 billion, which is based on the potential for PTV to steal share from linear TV investments. Nevertheless, while the demand for PTV is certainly there, the infrastructure is still lacking. Chris Smith, VP of Emerging Media of ad tech firm, Turn, notes “the transition is complicated by the fact that a sixty-year old system of selling TV ads up front and in bulk will have to be at least partially reengineered for programmatic TV to become a reality.” Although it will take some time to create a turnkey system that can be activated across all parties involved, there is no doubt it will happen in the near future. In fact, PriceWaterhouseCoopers has forecasted that digital advertising spend will overtake traditional TV spend by 2019.
So What?
The advent of Programmatic TV leads to a couple key implications. First and foremost, advertisers are now able to buy audiences from both a qualitative and quantitative perspective. This allows for fewer wasted impressions and consumers benefit from more relevant ads. Secondly, the industry can transcend the outdated TRP model, allowing for better targeting, measurement and overall greater efficiencies across the entire buying process. Lastly, even under-valued networks could see benefits, as their ad revenue would not be based on ratings alone but instead their ability to deliver an audience in tandem with multiple other networks included as part of a PTV buy.
