How TV Buyers Can Capture the Value of Digital Video

For decades, television has maintained an air of prestige among brands, and not without reason.
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Ads on television, seamlessly woven into studio content cast in full-screen, capture the audience’s attention, enabling brands to outright own the largest of screens, thirty seconds at a time.

It’s not just TV content. It’s engagement on the living room screen. TV content is accessible through virtually any device in this day and age, but unlike desktop or mobile video environments, the television screen offers a “lean-back” engagement experience; no cursors or touch screens inviting viewers to navigate away from their chosen programming. TV is a pure medium, and one of the reasons ad spend in traditional TV has continued to grow year-over-year, into the blustery headwinds of audience fragmentation.

As a medium, TV is still the top dog, reaching about 96 percent of U.S. households.

But every veteran TV buyer longs for the days when reach could be easily achieved across a narrow selection of linear TV channels or dayparts.

Consumers have become their own TV programmers, accessing content across an expanding array of providers. A recent survey by SNL Kagan revealed that less than 45 percent of households rely on a single service for delivery of content to TVs and only 33 percent confirmed the service to be over-the-air broadcast or a pay TV service.

TV’s reach dominance notwithstanding, digital ad spend in the U.S. surpassed that of TV in 2016 (recorded at $72.5B and $71.3B respectively) and last year, global totals followed suit.

And now, the overnight success of connected TV and over-the-top content channels (and the enhanced targeting, attribution and accountability that they bring,) is challenging the ways in which advertisers have traditionally valued the TV medium.

Brands are searching for increasingly precise insights into whether their media investments are demonstrating desired outcomes. While you’d be hard-pressed to find many people who’d advocate that television advertisements “don’t work,” the medium’s effectiveness has always been difficult to consistently quantify or precisely articulate in absolute terms.

But this is old news, isn’t it? Buyers in this context recognize the value in connected TV and over-the-top channels for advertising, but valued against what?

What the industry is lacking is visibility into how a $5,000 ad unit converts to a CPM in the natively addressable world of CTV.

The value center of TV is rooted in content and daypart, and is largely managed on a unit rate model whose efficiency is gauged on a Nielsen rating.

The value center of connected TV, on the other hand, is where an individual impression intersects content in a live, linear or on-demand environment. A CPM is the unit of rate, belonging to the targeted audience attribute. That attribute value exists alongside the value of content in traditional TV.

A ‘Total Video’ approach to convergence requires the ability to connect value between unit rates and impressions. That doesn’t necessarily require linear and streaming to be measured similarly, nor does it require CTV to be bought like traditional TV. While traditional TV and CTV can easily co-exist (or converge) in the context of GRPs, what we are measuring in traditional TV doesn’t fit the model of literally counting every ad served to millions of targeted devices.

Nielsen doesn’t actually measure audience, it measures content viewership. The insights tell us how many viewers tuned in to a show, and what they look like demographically. But in terms of audience, the currency is incapable of reporting anything more granular than what a panel of 40,000 households can reliably produce.

Contrast this with CTV’s ability to serve ads specifically to your designated target audience across live, linear and on-demand streaming on the living room big screen. A census accounting of ads served, along with completed view rates, provides a precision in reporting that naturally makes contextualizing audience value in TV terms clunky at best. Considering this, the thought of trying to make TV and CTV work together can be daunting.

But here’s the good news for traditional TV buyers: the ability to build GRPs across the CTV landscape is real. Across programmers, vMVPDs, and device manufacturers, OTT and AVOD, audience is everywhere.

While that might sound like hyperbole, consider this simple scenario: Could a single TV buyer today activate a CTV/OTT campaign that amassed impressions to the equivalent of 100 GRPs against Women 18-49 in 25 DMAs?

The answer is yes, and this scenario is probably what the industry will come to know as the broadest application of “addressability” there will ever be—simple targeting based on age, gender and DMA.

While not yet a market of overwhelming reach, the ease with which CTV audiences can coexist within the traditional markets of TV provides buyers with tremendous flexibility in how they build GRPs across their DMAs. TV will remain a mass reach vehicle for the foreseeable future, but the ability to manage effective frequency across the CTV marketplace gives brands a new way to strategically use this flagship medium known loosely as TV.   

Randy Cooke serves as VP of Enterprise Solutions, shaping SpotX’s Audience EverywhereTM strategy, which focuses on helping TV buyers value the live, linear and on-demand audiences of connected TV and over-the-top streaming as integral parts of the modern TV ecosystem.

With more than a decade in advanced qualitative analytics, and experience in developing custom media marketplaces around data and insight, Randy is helping buyers and sellers connect the value centers of TV and Audience.
Prior to joining SpotX in 2014, Randy served as Vice President of Research at NCC Media. Randy lives in Dallas, Texas and holds a Bachelor of Science from The University of Texas at Austin.

SpotX is a video ad serving platform providing media owners with monetization tools for desktop, mobile and connected devices.  

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