Analysts said the coalition formed by Viacom, Turner and Fox to standardize selling advertising by audience groups will help network owners in the long run but debated when its impact will be felt.
“While we think the initiative has positive elements, many obstacles remain before many advertisers might choose to prioritize the bulk of inventory they buy on any basis other than age and gender. Today’s news is neutral for network owners and for Nielsen, although we see some minor positives for them over time,” said Brian Wieser of Pivotal Research in a note Wednesday.
The coalition, called OpenAP, plans to standardize the definition of audiences and provide third-part reports on viewer delivery. Selling targeted audiences is designed to help TV compete with digital advertising, which has been growing quickly while TV ratings have been on the decline.
“This is likely welcome news for advertisers who have been forced to deal with a Tower of Babel of numerous network audience metrics,” said Tom Eagan of Telsey Advisory Group.
“The TV networks hope that by offering the reach of TV with the targetability of digital, ad dollar migration from TV to digital platforms will slow,” said Eagan. “Timing is good: marketers have increasingly voiced concern about digital ad fraud, viewability and revising Facebook metric definitions.”
But those benefits might be limited in the short term.
“It does solve several issues,” said Lyle Schwartz, chief investment officer for media buying giant GroupM. He said it gives the networks more consistent access to data and creates more transparency.
“However, as of right now, it is constrained by the current partners. It’s not as broadly accepted. But it’s a good start,” Schwartz said. “
Schwartz added that what OpenAP offers, GroupM has been doing for its own clients for the last few years.
“I’m hopeful that whether it be this rendition, or another rendition that this type of approach grows. I think that bringing more transparency and more uniformity can only help the situation and maybe it’s a signs of these players will work together to the betterment of the video marketplace,” Schwartz said.
Wieser had similar caveats.
“Efforts to expand the use of non-age-gender-based targets by more advertisers for more of their spending face several additional obstacles before they could become more widely relied upon,” Wieser said. “First, more network groups need to participate. The absence of NBC Universal from OpenAP at this time is particularly notable because they are the largest owner of national TV ad inventory and because they are already actively developing their own efforts in this space. Fragmented approaches are probably unhelpful to the industry.”
Wieser added that broadcast networks and primetime inventory needs to be opened up to targeting, not only non-prime cable inventory. Most audience buying systems add spots in other dayparts to the primetime programming advertisers primarily seek, increasing the demand and value for non-prime inventory.
“The biggest obstacle behind wide adoption of these efforts is that most advertisers who buy national TV need to reach essentially everyone,” Wieser said. “Even if they narrowly target some of the buys which run during campaigns, it is difficult to identify if benefits from targeting outweighs the incremental costs associated with targeting.”
Although Viacom, Turner and Fox are looking to sell more ads based on metrics other than the traditional ratings for Nielsen, Wieser doesn’t think the shift hurts the ratings leader.
“For Nielsen, the news is also neutral, as it seems unlikely that many advertisers are likely to shift away from age-gender-based measures that the industry relies on them for any time soon. Nielsen could also be a beneficiary to the extent that different data products are consumed by advertisers concurrently, alongside existing age-gender based data,” Wieser said.
“I think the Nielsen data is still going to be part of the backbone, but it will have the inclusion of other rating services and other data bases that will help reshape how people utilize the video marketplace,” noted Schwartz.
Nielsen on Wednesday released a statement saying it supported OpenAP.