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Fear and Misconception: Why Television Disruption Isn’t What You Think

With media consumption fragmenting and the television industry confronting uncertain trends, we find ourselves in a strange place

If you’re a sports fan who has cut the cord, you may have noticed something strange whenever ESPN goes to break. Instead of an ad, the screen goes blank. Doesn’t ESPN want to sell this time? Aren’t my eyeballs worth something?

Yes, your eyeballs are valuable. But at this moment, with media consumption fragmenting and the television industry confronting uncertain trends like cord cutting and the rise of video streaming, we find ourselves in a strange place.

A show viewed on linear television comes with the usual ads. But the same show, viewed via streaming or on-demand, may run the same ad again and again, or simply run blank pods.

The pipe delivering the content dictates the experience over and above any consideration for the audience experience. So for now, advertisers miss linear audiences with un-targeted ads, annoy on-demand audiences with repetitive ads, and fail to engage streaming audiences because they run no ads at all. It’s a lose-lose-lose situation.

Eventually, digital and television will integrate and resolve these kinds of disconnects, not because streaming and on-demand will completely replace linear television (they won’t), but because we’re much more likely to live in a world where the various models compete side-by-side, and consumers choose.

In that world, media companies will thrive based on what they know about their audiences. But in order for media companies to leverage the powerful technology behind this disruption, we first need to address some misconceptions and fears.

Misconceptions

Misconception #1: An audience is an audience regardless of the screen, right?

In television, audience means “those who saw the show” within the specified subgroup that’s most relevant to advertisers. In industry shorthand, this is the demo, a broad category of viewer types that hasn’t changed much in decades.

In digital, audience boils down to any piece of actionable data around which an advertiser can build a campaign. That means advertisers aren’t limited by finite concerns like who’s watching a given show. Instead, advertisers are free to build a specific population of consumers based on whatever relevant attributes they can gather data around.

Misconception #2: Audience demos represent the maximum value in a media transaction and cannot be enhanced with additional data.

For decades, demos have represented maximum transactional value because the demo reflected the most precise audience block that could be carved out of the larger viewership. But when you think about demos, you have to admit that they really aren’t all that precise. Men between the ages of 18 and 34, for example, can’t possibly share all the same beliefs, interests and needs. The category is just too broad, compared to the more granular, advertiser-centric digital audience. But if there was ever value in creating broad demographics (and there certainly was), then there must be greater value in creating more specific categories that reflect additional data points. In other words, the more you know about your audience, the more valuable that audience becomes.

Fears

Fear #1: Digging deeper into audience data undermines media values because doing so reveals the gaps in the demo model.

Networks and advertisers have long known that demographics are useful, but imperfect. Unfortunately, because that model went decades without disruption, the television business had every incentive not to address the imperfections lurking beneath the surface. As a result, it’s not surprising that there’s resistance to adopting a more granular, digital definition of audience. Just like putting off a visit to the doctor, it’s more preferable to transact on an imperfect model than it is to confront the gaps in that model.

Fear #2: Granular audience is a precursor to programmatic, which will decrease the value of television inventory.

For some online publishers, programmatic has depressed media value, and as a result, that experience has caused some in television to fear adopting granular audience tools associated with programmatic. But when making that comparison, we need to keep two things in mind. First, successful online publishers have turned programmatic to their advantage by layering additional audience data on top of what they already offer. Second, unlike online media, television inventory is finite and therefore much more responsive to the laws of supply and demand. In fact, the number of networks and the high barrier to entry in terms of content production put the entire television ecosystem in the premium category.

Together, these factors not only insulate television from challenges faced by some online publishers, they present a unique opportunity. The floor for television inventory has nowhere to go but up. The unsold units with low viewership can show much more value when there is audience data around those few viewers. Meanwhile, new methods for articulating valuable audience segments raise the ceiling on upfront sales as well. How high that ceiling goes depends on the content, but it also depends on how well networks use audience data. The more they know about their audiences, the more value they’ll capture.