Programmatic Advertising: TV Audiences Meet Digital Targeting
In the TV Advertising space, Nielsen ratings have long reigned supreme. Advertisers pay for viewers in certain demos who often represent only part of the total audience, leading to inefficiency and waste. However, the rise of the Internet has produced a new way to reach consumers. Digital advertising’s personalized and targeted approach has many advantages, yet television remains the preferred medium for many advertisers due to its broad reach and demonstrated ability to monetize audiences.1
As live TV ratings erode due to time-shifted viewing and online streaming, Viacom is embracing new trends in advertising in order to better monetize viewers. One example is the growing megatrend of programmatic advertising: data-driven TV buying that unites the reach of television with the targeting of digital and uses software instead of people to optimize ad buying. 1 By collecting cross-platform data on consumers’ television viewing, internet searches, and other relevant information, programmatic advertising enables buyers to target precise audiences with personalized ads. 1 For example, Viacom is able to identify and reach 18 – 35-year-old females interested in purchasing a car who make at least $150,000 annually and serve them targeted TV ads. 2 Combining television’s large audiences with detailed viewer data results in a highly personalized experience that delivers accuracy and efficiency for advertisers’ favorite medium. 1
Viacom’s Short Term and Medium Term Initiatives
Today, a majority of Viacom’s advertising is still via traditional methods. Nevertheless, Viacom’s management has taken several steps to increase its use of programmatic advertising in both the short and medium terms. Management’s overall goal is to better monetize viewers of Viacom content across all platforms and to increase the value of the entire TV ecosystem.
In the short term:
- Freewheel Partnership: Viacom and Comcast’s Freewheel announced a deal to partner together on advanced advertising and data in April 2018. 3 The partnership combines Viacom’s deep knowledge and strong connections with both advertisers and audiences with Freewheel’s sophisticated advertising technology to create a platform that allows marketers to reach consumers in a more efficient, accurate manner. 3
In the medium term:
- Viacom Vantage: In 2015, the company launched Viacom Vantage—a data-driven product that enables marketers to reach custom segments. 4 In using cross-platform data to understand how specific customers watch content, Vantage predicts which shows on MTV, Nickelodeon, etc. will capture the most value for clients. 5 Vantage also provides operational and inventory management so that each client receives a customized media plan tailored to its advertising needs. 5 In August 2018, the company licensed its Vantage product to 21st Century Fox in its growing effort to transform the entire television advertising industry. 6
- Open A.P.: Finally, in 2017, Viacom, Fox and Turner Broadcasting formed a partnership and created a new platform called Open A.P. 7 Open A.P. provides advertisers with standard sets of data when targeting specific customer segments such as frequent moviegoers or pregnant women. 7 ComScore’s set-top box data and Nielsen ratings information from all three companies are combined on the platform to create the data sets. 7 Advertisers can then reach consumers by buying cross-platform media plans through any of the participating companies. Open A.P. is attempting to standardize data sets across the TV industry and create a new advertising currency. 7
While management has made recent strides, programmatic advertising still represents only 3% of the total TV ad market. 2 To stay ahead of the curve on this growing trend, Viacom needs to double down and aggressively expand its programmatic advertising sales and capabilities.
In the short term, Viacom should explore partnership opportunities in the connected TV market. Connected or “Smart” TVs capture a lot of consumer viewing data not only from set top boxes, but also from apps and websites visited by any device connected to the same WiFi network. 8 Viacom should talk to market leaders such as Samsung or VIZIO about partnering to use this technology to serve its entrenched advertiser and consumer base. If Viacom was the first traditional media company to play in this space, it could develop a first mover advantage.
In the medium term, the company should set the goal of reaching 20% of all ads sold being done so through programmatic advertising by 2022. Tactically, management should drive this increase by selling more of its prime-time ad slots through data-driven advertising instead of the traditional method. Unless you seek to disrupt yourself, it is likely that someone else will use innovation to disrupt you.
- How can Viacom continue to increase its reliance on programmatic advertising when it requires buy-in from advertisers, many of whom still prefer Nielsen ratings?
- In the future, will there still be a market for broad advertising campaigns aimed at all adults, such as Super Bowl Ads? Or will television advertising become entirely personalized and targeted?
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- David Abecassis, Yuliya Guitard and Dr. Michael Kende, “Convergence of TV and Digital Platforms: Increased Innovation and Competition for Advertisers’ Budgets,” Analysys Mason, December 21, 2017, via Business Insider Intelligence, accessed November 2018.
- MediaPost, “Programmatic TV Future Coming Into Focus Slowly, But Surely,” May 7, 2018, via Factiva, accessed November 2018.
- FreeWheel, “Viacom and Comcast Announce Advanced Advertising Partnership,” April 23, 2018, http://freewheel.tv/viacom-and-comcast-announce-advanced-advertising-partnership/, accessed November 2018.
- Business Insider, “What You Need to Know in Advertising Today,” August 10, 2018, via Factiva, accessed November 2018.
- Viacom, “Viacom Unveils ‘Viacom Vantage,’” April 29, 2015, https://news.viacom.com/press-release/ad-sales/viacom-unveils-viacom-vantage, accessed November 2018.
- Viacom, Q3 2018 Earnings Call Transcript, via ABI/ProQuest, accessed November 2018.
- Brian Steinberg, “Turner, Viacom and Fox Debut ‘Open A.P.’ Ad-Targeting Plan to Broader View,” Variety, April 7, 2017, https://variety.com/2017/tv/news/turner-viacom-fox-open-ap-advertising-digital-targeting-1202026262/, accessed November 2018.
- Alan Wolk, “Why ACR Data is Poised to Become the Future of TV Measurement,” Forbes, February 19, 2018, https://www.forbes.com/sites/alanwolk/2018/02/19/why-acr-data-is-poised-to-become-the-future-of-tv-measurement/#501d9f011821, accessed November 2018.