Transacting TV in 2021 and Beyond

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

What does the future of TV trading look like?

Technology and data are accelerating TV’s digitalization, transforming it from a monolithic channel to a multifaceted, dynamic medium. TV has evolved from a single platform traded exclusively on content and panel-based demographics to a platform consumed cross-screen and increasingly traded on audiences defined by behavioral and deterministic datasets.

With that evolution comes more sophisticated transaction practices. Orders via the once almighty fax machine were replaced by the efficiency of email, and now that mechanism is being supplanted by automated technology. Buying platforms plugged into publisher platforms and marketplaces fueled by data now make decisions dynamically based on demand and supply variables.

However, unlike the longtail digital media that TV now mirrors, supply is not infinite. It is scarce and made even scarcer by the fact that there are large amounts of premium inventory in the linear space that cannot be transacted in real-time or that have yet to be made available to marketplaces. Ultimately, buyers and sellers want control over how that inventory is bought, sold, and allocated.

Economics and Experiences

In television, whether in a traditional linear stream or digital distribution, the user experience is everything. Programmers and distributors have built their businesses on ensuring that nothing breaks when it comes to delivering content and supporting commercials to the viewer. “The fundamental monetization challenge for TV sellers will be how to maximize the value of their inventory in a world where every ad exposure can be sold across multiple flavors of campaign execution,” says Jason Malamud, general manager of advertising at Verizon Consumer Markets. That will include traditional content buys, data-driven audience buys, and household addressable buys, among others. “All while ensuring that the user experience is maintained,” he adds.

On the flipside, buyers have a shared interest in the advertising experience. It is important for buyers to manage the frequency and quality of delivered impressions across all campaigns and for publishers to maintain positive brand affinity. As important as the publisher yield equation, advertisers seek efficiency and value to maximize return-on-investment metrics. At times, this need among buyers and sellers to drive value is at odds, but keeping these two groups happy does not need to be a zero-sum game.

Making It a Win-Win

Transaction and marketplace dynamics — and the underlying technology that supports television trading — are evolving to create opportunities for both sides of the trade to achieve fair value.

Data is now the leveling mechanism for the marketplace, and what was once a nondescript impression is now an aggregated audience that has significant value for any number of marketers.
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The availability and application of data has enabled advertisers and publishers to understand so much more about the audience that is consuming TV content, and now the marketplace is allowing both sides to maximize value from impressions and create efficiencies in audience reach. Layers of identity management technology, device graphs, and matching capabilities against first- and third-party data and customer-journey insights enable buyers and sellers to trade more intelligently than ever on TV inventory.

“Cross-screen audience-based executions enabling incremental reach and optimal frequency management practices that were a pipe dream only a few years ago are now commonplace in this evolved TV ecosystem,” says Kelly Perone, SVP of product at Effectv. “Levels of sophistication are increasing at exponential speed.”

The dynamics of the TV marketplace have always been dictated by “forward markets” (private agreements for future media based on timing and price), with the traditional upfront model determining demand, supply, risk management, and, ultimately, pricing. In a world where ad decisioning can be managed by technology platforms, the desire on both sides of the equation to manage the allocation of advertiser to impression can often be at odds. Sellers require the ability to manage their inventory, yield, and campaign choreography through direct and indirect sales channel management. Buyers want scale, efficiency, and flexibility to allocate campaigns toward media that may have been purchased or committed to up front but now need to meet the campaign goals of the day. How the marketplace evolves will be influenced in part by how the ad decisions are made as part of the transaction, and buyers and sellers will need to strike a balance around control and flexibility that enables them to reach their business goals.

Scale and Efficiency

The cross-screen nature of the new TV viewing experience means that viewing is fragmented, and it takes effort for buyers to find audiences at scale in one location. However, there are scaled marketplaces emerging that aggregate quality, transparent inventory from trusted sources, and are plugged into demand-side and data-enablement platforms to create increased buying efficiency. It is key for buyers to ask questions of their marketplace partners and push the envelope on what is possible from an audience-matching perspective.

Brand safety, invalid traffic, and transparency do not have to be areas of compromise when it comes to buying premium video via a marketplace, but marketers do have to pick their partners carefully. Quality inventory will always command a premium price, but there are very few times when the value can be found in cheaper marketplace inventories. Fraudulent behavior and poor viewability from lower quality, less transparent sources may have an appealing price tag, but they rarely deliver on the back end.

Bringing the data needed for smarter trading is an essential part of the equation, says Amanda Richman, U.S. CEO of Wavemaker. “Progressive marketplaces not only enable more data utility through robust technology integrations, they also bring unique insights and datasets to the table to augment buying intelligence,” she says.

For example, data from cable and satellite TV distributor companies can be used to reconcile audience exposure information across linear, set-top-box, video-on-demand, and digital, and it has the opportunity to stimulate smarter market transactions. Privacy-compliant audience curation by sellers can also solve for any lack of targetability in emerging media, in addition to channels that are not digitally native.

One of the other emerging technology and data trends for TV is the evolution of attribution. Once confined to the world of digital, attribution is now an integral part of TV investment strategies and is another way in which advertisers can treat TV similar to other media that has traded via marketplaces for longer. Assessing performance and ROI enables even smarter allocation of funds and audience optimization tactics — even mid-flight — to upweight in channels and audience segments that are driving results.

Tomorrow’s Marketplace

The future of the TV marketplace has scale, quality, interoperability, data-enablement, and efficiency. Of all these attributes, it is marketplace efficiency that will enable both buyers and sellers to value each transaction equally. For a true win-win scenario, both buyers and sellers will need to identify and prioritize what they truly need to control while also finding agreement with the right partners to help them achieve their goals of scale and efficiency. For example, a buyer may never share proprietary audience data, but may allow decisioning in certain cases to ensure scaled delivery against an audience segment. Likewise, a seller may be willing to provide more decision flexibility to the buyers in exchange for improved economics.

“The 2021 TV buying season will be a year unlike any other. To achieve success, both networks and advertisers need to rethink their TV strategies, particularly as it comes to connected TV and its available inventory,” says Jon Tabak, general manager of strategic partnerships at The Trade Desk. “This means allowing for more flexibility in decisioning and a mutual understanding of our collectively shared goals. This will bring the industry forward as we continue to grow together.”

There will be a tipping point where quality supply and data-infused insights will attract quality demand. The resulting flywheel will bring in more supply, demand, and intelligence. This will in turn enable TV trading to reach new heights and support the economics needed to maintain quality content for audiences and scaled advertising opportunities for marketers.

For 2021 and beyond, the path of the TV marketplace stakeholder, cut with the information and tools for unlocking new value and scale, is clear. It is up to all members of the value chain to guide that path forward and invest in its future.

About Author: Mark McKee is the chief revenue officer at Freewheel, a partner in the ANA Thought Leadership Program.

 

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