The days when everyone in one household watched the same television show are long gone. Today, viewers have a wide array of programs to choose from as well as multiple ways to watch their favorite TV shows and movies. HBO Now, Hulu, Netflix, Amazon Instant Video, and other services that allow viewers to watch videos on a mobile device are on the rise.
Few marketers, though, understand the technology that's changing the TV landscape. Only 43 percent of marketers claim to be "very" familiar with connected TV or over-the-top (OTT) devices like Apple TV, from a survey of 215 marketers sponsored by the Association of National Advertisers (ANA) and BrightLine.
But despite a lack of familiarity with the advancements in TV, marketers are planning to allocate more ad dollars to it. Nearly 3 out of 4 marketers (72 percent) said they see advanced TV becoming an important advertising platform within five years, according to a survey of 255 brand and agency executives conducted by the Interactive Advertising Bureau (IAB). And while the current median budget allocation for advanced TV is only $1.4 million, 70 percent of advertisers expect to spend more on the medium within the next year, the study found.
However, a lack of reliable measurements and audience targeting capabilities continue to create barriers to greater spending on advanced TV, note marketers and industry experts. The demand for greater audience intelligence is thereby creating a perfect storm of opportunities to create more relevant and personalized experiences for consumers. Here are the data analytic trends marketers need to be aware of as advanced TV develops.
The Data Challenge
It's understandable that advertisers are hesitant to invest in digital TV even as reports show that online video streaming is booming, notes Anna Bager, IAB senior vice president and general manager of mobile and video. "Advertisers are interested in digital video," she says. "But as an industry we have to do a better job in describing the audiences we have and the power of engagement we can create when reaching across the digital medium." Brands, Bager continues, "want to know where should they be, who are they addressing, and what time and how?"
Netflix gave the public a glimpse of the types of data insights the streaming-video company has and how it makes programming decisions. Netflix analyzed viewing patterns in the first season of 25 of the most-watched TV series in its collection, including shows like Breaking Bad and Orange Is the New Black. The company identified the episode where 70 percent or more of viewers went on to finish at least the show's first season.
For instance, it turns out that viewers were hooked on The Walking Dead by episode two while Arrow didn't grab viewers until its eighth episode. Notably, the number of episodes it takes to get viewers hooked isn't correlated to audience size, which suggests that a show that grabs viewers early doesn't necessarily attract more people. Such data can help Netflix predict viewing patterns and determine how much it will invest in each show.
Other media companies and advertisers are also seeking similar insights into audiences, observes Ashwin Navin,CEOand co-founder ofSamba TV, a data and analytics service that measures TV viewership using data fromsocial media, connected devices, and set-top boxes.
"A meaningful percentage of our revenue comes from media companies that are looking at Netflix and want to be just as data-driven in their programming decisions," Navin says. "That's where we come in. Our thesis is that the only way to address the fragmentation of TV and changing consumer behavior is with better data."
Through partnerships with hardware companies like Samsung, LG, and Vizio Insignia, Samba TV collects real-time data on viewership for traditional and streaming TV using software that's installed in data centers and on cable boxes and smart TVs across the country.
With this information, Samba TV can determine in real time which programs and commercials people are watching and what devices they are using. Samba TV says its software is on cable boxes and smart TVs in nearly 10 million households and is integrated into more than 36 million devices.
Samba TV's clients include a mix of advertisers and broadcasters like ESPN, CBS Interactive, and Pepsi, who use this data to make more informed decisions on media buys and programming. While real-time programmatic media buying in TV is still in the infancy stages, Samba TV was "built with programmatic buying and ad exchange integration in mind," Navin says. "Eventually, companies will be able to bid on a one-to-one level, but you'll need data that's available in real time and in huge volumes to do that effectively."
For now, advertisers have limited targeting options when it comes to television. A TV advertiser, for example, can't segment its commercials for each member of a household. The alternative solution is to send targeted ads to mobile phones in a second-screen strategy, says Rory Paterson, product director at TVSquared. TVSquared is a data and analytics firm that also provides viewership insights that it collects from set-top and OTT boxes.
"Targeting ads at people based on what they are watching is difficult to do without it feeling intrusive or like Big Brother," Paterson says. "And second screen technology can be quite blunt when, for instance an ad gets triggered that takes over your screen." But Paterson is optimistic that the rise in video streaming and advanced analytics will allow brands to deliver more personalized content, from customized programming recommendations to targeted ads.
"As online video streaming grows, we'll have more shows and more opportunities to figure out what's the best way to segment for each person," he says.
Moving on From Nielsen
Nielsen has long enjoyed its perch at the top of TV audience measurement tools, but marketers and competitors are challenging its ratings model. As targeted online advertising continues to grow more sophisticated, marketers and TV networks grow more frustrated by the lack of insight into the viewing habits and characteristics of TV audiences.
In 2007, Nielsen launched a metric known as "C3 ratings" which is a combination of audience ratings for average commercial minutes for live broadcasts plus three days of playback on DVRs. It was heralded as the first time that networks and media buyers had a standardized way to measure the impact that DVRs were having on commercial viewing. However, C3 doesn't include viewers who saw the commercials more than three days after the live broadcast or those who are watching a channel throughout the day on a mobile device.
For its part, Nielsen is building out its analytic capabilities. In March, the company acquired eXelate, a data management platform and ad exchange, and in July, it launched the Nielsen Listening Platform which merges customer experience management software tools with business insights to provide more audience intelligence.
But Nielsen isn't moving fast enough, according to NBCUniversal's president of ad sales, Linda Yaccarino. Speaking at an IAB conference during Advertising Week in September, Yaccarino noted that her company has to prove the value of its audiences to advertisers and Nielsen wasn't providing the data they need.
In January, NBCUniversal announced that its business channel CNBC was replacing Nielsen's audience measurements with Cogent Reports starting in the fourth quarter this year. And also during Ad Week,comScore and Rentrak, two of Nielsen's top competitors, revealed plans to merge into a single cross-platform measurement company.
"One day I hope to wake up and Nielsen will actually be able to measure cross-platform viewership, but today we can't do itand I can't help our marketing customers as much as I would like to," Yaccarino said. "We couldn't wait for Nielsen any longer."