How Mobile Data Is Helping to Transform the Television Industry

When the major television networks come to Madison Avenue for the annual Upfronts in May, expect to hear a word seldom spoken among the TV community: data. Some of the largest cable and broadcast networks have already announced unprecedented data and analytics initiatives, leading many to believe that the small screen may finally be responding to the call of the web.

Discovery Communications, the TV behemoth that owns Animal Planet and TLC among others, said last week that it has assembled a new suite of analytics and targeting tools to buttress its ad sales efforts. The announcement followed news that ESPN, which is owned by Disney, would use Clypd, a programmatic ad-buying platform for television, to handle the web-auction sales for the network’s “SportsCenter” program.

Marketers and advertising technology companies have urged the television industry to offer media buyers more transparency around audience and performance for nearly a decade. But the industry, which still generates more ad revenue than the entire digital media ecosystem combined, has managed to remain relatively opaque largely due to the sheer size of the spending and the relatively minimal impact which digital alternatives have had on its viewership.

“The commercial inertia of television is a very real factor [in its transformation] because of the structured and repetitive way in which TV time is bought,” said Jeff Dow, EVP and director of digital strategy and analytics at Starcom MediaVest Group. “But as you see the problems to the model materialize, we’re starting to see not only the stick side of the equation — but he the carrot side of the equation materializing as well. TV sellers are starting to provide some of this data back that is atomic around who was shown which advertisements when.”

The growing appetite within the television industry for modern analytics and targeting capabilities creates a potentially very large, new market for a host of advertising technology companies — including those working around location data. One of the critical problems facing television marketers, says Dow, is that most of their sales happen in the real world, where the traditional digital signals that inform modern approaches to media buying and measurement do not exist.

“When I look at a client advertisers portfolio like ours, I see a lot of advertisers that have struggled on both sides of the equation, both in terms of targeting and measuring the performance of audiences,” said Dow. “This is, in part, because the creation and measurement of their audiences revolves around real-world behavior.”

Late last month, the agency rolled out a new product, SMG Maps TV, that allows advertisers to buy certain television media based on where a user goes in the physical world. The product, which was built on data provided by PlaceIQ and an existing relationship with data broker Acxiom, builds on the growing amount of “addressable TV” inventory sold by cable operators, which allows marketers to buy ads based on household, rather than network.

Addressable inventory now reaches over 42 million households, but the total amount of inventory — traditionally on digital and video on-demand offerings — remains a small part of the overall pool of TV ad revenue. However, the ability to buy television spots by household, rather than by network, ties into a much wider shift in the advertising community toward buying an audience rather than media. And, it allows the companies to begin to layer in the massive amounts of data originally collected about individuals and households for digital marketing purposes.

“All of those forces occurring in television paired with the evolution of the agency mindset, means that we’re starting to see an acceleration in the number of people starting to think audience-first,” said Duncan McCall, chief executive at PlaceIQ. “TV is rapidly getting to the point where it is just another view of a consumer.”

At SMG, Dow offers a somewhat more incremental view of the television market, but believes that market will eventually end up in a similar place.

In the meantime, marketers are already using the location data generated on users’ mobile devices to inform how they spend money on television. New York-based Arrivalist, a mobile attribution company focused on the travel industry, has worked with multiple state tourism boards to determine where the organization should buy television spots, in some cases using digital video as a testing ground for more expensive television buys. The startup analyzes data from mobile ad networks to identify when users move from one place to another.

“More and more, we’re seeing clients use one media to test another,” said Cree Lawson, the company’s chief executive. “It’s like advertisers are using online media as target practice for their TV ads.”

For instance, the company recently worked with the Kansas State Tourism Board to help determine whether to buy television ads in Chicago, one of the more expensive TV markets. The Tourism Board ran six different digital video spots on the web, and used Arrivalist’s technology to measure whether the devices of viewers appeared in the state within the next three months. The board then took the highest performing commercial and bought television ads in Chicago.

The shift in the advertising industry from a media-driven taxonomy, where advertisers buy media, to an audience-driven approach, where advertisers buy user’s attention, will have deep implications for the way ad technology is structured. Most importantly, more niche technologies such as location, which traditionally have been viewed as features, will begin to play a more defining role in the way the industry is segmented. As the type of media becomes less important in the buying process, the data behind that media — information about the audience — starts to define how and what a market buys ad space.

To an extent, the ongoing digitization of television will play a critical role in the emergence of location marketing as a category. In order for location to become a category, marketers needs to change the way they structure budgets from type of media to audience. And for that to happen, the most important media of all, television, needs to get onboard.

Steven Jacobs is Street Fight’s deputy editor.

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PlaceIQ’s Duncan McCall will be joining top speakers from Pinterest, Google, NextDoor, Yelp, and more in San Francisco on June 2nd at the fourth annual Street Fight Summit West. Click here for tickets and more info.