Fox, Turner And Viacom announced their new ad targeting platform, Open AP today. The platform will allow advertisers to buy against specific audience segments across all three network groups, a big plus in an otherwise siloed industry.
While Open AP is definitely a step in the right direction, it’s still what’s known as “indexed” advertising: advertisers can buy against shows that index well for specific demographics.
It is not “addressable” advertising, where the network can actually show different ads to different viewers. That capability is currently only in the hands of the MVPDs who have the technological ability to deliver addressable ads during the two- to three-minutes per hour of ad space they are allotted.
AT&T, Dish and Altice all have strong addressable advertising programs and are slowly but surely educating advertisers and ad agencies as to the benefits of addressable TV advertising, which more closely resembles what is available digitally, where visitors to the same page see different ads depending on their demographic profile or location or device.
And make no bones about it—that is where the future is headed.
Over the next 18–to–36 months, we will see a rapid increase in the amount of TV that is watched over digital platforms, mostly MVPD TV Everywhere (TVE), much of it time-shifted. Now that Nielsen’s Total Audience Measurement (TAM) plan is in place, look for TVE to take off, and with it the audience’s propensity to watch TV on their own schedule. This will create a stronger need for dynamic ad insertion (DAI), or the ability to insert ads on the fly, based on the viewers demographic profile, location or device. TV-based DAI is in its nascency right now, though the technology to make it more robust is not that difficult, the business case for it is still lacking.
Most network inventory is sold during the upfronts, a period during the spring where the next season’s ad inventory is bought and sold. Advertisers buy specific shows at specific time slots, so programs like Open AP fit in nicely. But the networks will need to change the way they structure the upfronts in order to account for both addressable and DAI.
It’s certainly an achievable task, but it’s not one the network ad sales teams are eager to undertake: both addressable and DAI, and their partner-in-crime, programmatic ad buying (e.g. ad buying that’s done via an algorithm rather than a person) represent an added layer of complexity and uncertainty to the ad sales process. And many older network ads sales reps see them as potential threats—we have heard the addressable/programmatic/DAI triumvirate referred to as “a race to the bottom” more times than we can count.
That said, we feel that they are the exact opposite, that they represent a way for ad-supported TV to remain relevant and profitable in light of future changes ahead. The holy grail for the future of TV advertising has long been fewer, better targeted ads that the networks can sell for more money. That means addressable advertising that is inserted on the fly (dynamically) via programmatic bidding apps that allow for more precise targeting and serve up different ads to different viewers.
While Open AP is most definitely a step towards achieving that goal, the really big changes are yet to come.