Data-driven advertising will attract new money to TV

If someone is watching CBeebies at 10am you know the household probably contains children

Wherever you have connected TV with a broadband return path that can be used to monitor what consumers are watching, you have the opportunity to make advertising more relevant. Marketing can be based on behaviour and therefore known interests rather than just demographics. And as targeting becomes more personal, television will start to attract direct marketing (DM) budgets and therefore new money for advertising.

That is the view of Russell Marsh, Group Strategy Director at RAPP, a full service agency with over 40 years experience in customer focused, data driven marketing. He believes people with direct marketing budget will flock to television if it can slash ‘waste’ (i.e. reduce the number of people seeing marketing messages about products that are of no interest to them) and put them in front of people who are more likely to buy.

“Yes, DM money could be redirected to television. There is an opportunity there,” he says.

Marsh thinks we have a 5-10 year transition ahead of us when television advertising will become much more data-driven. The biggest cause of inertia will be the number and quality of broadband connections rather than advertising technology or industry attitudes. “This relies heavily on broadband so before you can do this you need the infrastructure in place,” he explains.

Marsh points out that TV audiences have fragmented and 9 million is now a big rating for a show in the UK. Either audiences have to grow again or advertising needs to become more relevant, he argues. Audience panels only paint a broad picture about an audience but with a broadband connection into our devices, a platform operator or CE manufacturer can see what we are watching, what advertisements we skip and which ones we watch, and so build a picture of what we are interested in and what that says about our household.

If someone is watching CBeebies, the BBC channel for pre-school children, at 10am it is a fair bet that this household contains small children. “That influences the type of toys or holidays you advertise. There is no point offering adventure holidays here, but instead Disney resorts or warm holidays in Spain. If people watch nature shows you can show them woodland holidays.”

He says the challenge is writing the algorithms that can identify an advertiser’s target audience dynamically and then deliver the advertising content that is best suited to them. This leads to Real-time Bidding, or programmatic buying [explanation at bottom]. “Then you have the Google model when you are bidding for eyeballs in an auction.”

Marsh points out that an understanding of viewing behaviour gives insights about our likelihood to engage or purchase. DVR ad skipping is a good example. If we skip most advertising but watch one, it is fair to assume an interest and maybe a propensity to buy. Then you become a more valuable target for anyone advertising the same kind of product or service.

In the data-driven world, demographic targeting can be improved. If you introduce Dynamic Advertising Insertion then viewers might see advertising for Red Bull or a chocolate bar during the Sunday ski show, depending on who they are. But it looks like the biggest change could be the growth of behavioural targeting via the TV.

RAPP has vast experience of direct marketing and one of its CE manufacturer clients needs to know more than your spending power or what newspaper you read. They want to know your propensity to buy a camera or computer during the last week, based on what you have been looking at. “It is not demographic targeting but interest targeting.

“Think about the profile of people buying big televisions: It is not only people with cash but every demographic,” Marsh continues. “You need a broad understanding of the audience first but then have to drill down into different segmentations, but not demographic segmentations. Look at Sky TV [the UK Pay TV service]: It appeals to very wealthy people and unemployed people so targeting on demographics is not the best way.”

Buyers who are interested in direct marketing-style targeting will expect TV to deliver branding, intent to purchase and actual purchases, among other measures, Marsh says. He stresses that whereas traditional TV advertising is creative-driven, DM is about ‘systemized communications’. “You need to think how the creative can be broken down into components that can be systemized.”

In the DM world that could mean a mail drop with standard written copy but customized names and pricing. In television it could be as simple as a 30 second ad where there are several versions of the ending.

Marsh says DM specialists have an understanding of behavioural engagement at a very granular level and this is part of what they can offer in data-driven TV advertising. But who are the companies who will be the gatekeepers to the additional data advertisers can harness? “It will be the company that owns the pipe into the home or the set-top box or it could be the television manufacturer like Samsung,” he says.

Russell Marsh will be speaking at this year’s Future TV Advertising Forum in London (December 3-4), when he will give more insights into what a direct marketing agency can bring to TV. He appears in a session dedicated to ‘Managing data-driven advertising’, which also features leading executives from Cablevision, Time Warner Cable, GroupM, Facebook and Operative. You can download the full agenda here and find out more about the conference here.

Real-time Bidding or ‘Programmatic buying’

Real-time Bidding (RTB), sometimes known as programmatic buying, evolved out of Internet display advertising and is now being used for a growing volume of online video inventory. An exchange/trading system has visibility of advertising inventory on digital media, like on websites or within apps. It understands the type of audience using the publishing site/media and what they are interested in and cross-references that against the audience advertisers are looking for.

The platform will bid for advertising space in a real-time auction where other advertisers may also be chasing the same audience profile and therefore inventory. Whoever wins the auction has their ad displayed. The combination of audience matching, bidding, automation and real-time decisions are key aspects of the technology.