TV Year in Review: Andy Fisher, Chief Analytics Officer, Merkle

Over half of the US population will be watching streaming content on a connected TV by 2016 and more than 60 percent by 2019, according to eMarketer. The days of television viewers mundanely flipping through hundreds of channels are becoming a thing of the past. Content is on demand, ready instantly at viewers’ fingertips, whether those hands hold a remote, video game controller, or mobile phone. The television advertising industry is responding with newfound access to data and our own form of addressable technology solutions.

The changes brought about by this television evolution are happening rapidly, and 2016 promises to be a year when much of what we picture for the future of television advertising begins to take shape. Here are four major trends that the industry can expect for 2016.

Trend 1: A shift of guarantees from demographics to custom advertiser audiences

Today, television advertising is primarily traditional old-school demographic-based guarantees. However, custom advertiser audience with target guarantees are beginning to enter the mix. This demand for the same targeting seen across other channels has outpaced the media industry’s ability to deliver and measure its success within linear TV. The technology infrastructure is being put in place to meet these needs, and the 2016 upfronts are likely when we will see the early usage.

To accomplish this, networks and marketers are working more closely together to monetize campaign performance against the value of content reaching their targets. Merkle is seeing this with a number of media and publisher clients. In many cases we’ve seen a push in using a data-driven approach to bring audiences to linear and addressable TV. Merkle’s recently released MerkleONE platform employs a person-based identity management technology, coupled with third-party data and rich audience data, to deliver better targeting, greater consumer engagement, and improved measurement for media companies/publishers and marketers. Through the use of MerkleOne, media companies have an enterprise-level repeatable approach to better segment and target audiences for use in selling ad placements and increasing the value of their content.

Trend 2: Performance as part of the guarantee

In the new year, we can expect demand for more accountability from media buys both from an audience measurement perspective and a campaign performance perspective. A focus on impressions will begin to take shape, replacing the gross rating points we have all used for so long. We will eventually see measurement of the actual impression on a specific commercial take the place of average commercial ratings. While we are still some time away from impressions dominating how media is measured, we can expect a steady increase in the focus on new measurement approaches in 2016 and going forward.

Let’s face it. Leveraging Media Mix Modeling results for guarantees just hasn’t worked. Before the media industry can reach the individual level of measurement necessary for campaign performance, set top box data needs to become a true and accepted currency. 2016 will be where we begin to see the start of mainstream usage of set top box data to allow for such a granular use of impression and individual-level data. Companies such as Rentrak, Fourthwall and TRA are bringing this type of innovation to the industry.

Eventually both agency and advertiser will judge performance of ad placement based on business results instead of impressions or rating points. Guarantees will come with an increase of sales of “more than 3 percent,” or similar bottom-line performance-based metrics. The future is promising for advertisers’ ability to measure and evaluate ad placement success. Expect the birth of this new era in performance evaluation to take place in 2016.

Trend 3: Shift from embedded advertising to dynamic ad insertion

Dynamic ad insertion allows advertisers to use new, targeted ads within on-demand content over existing cable infrastructure. At the end of the day, it's about being able to put the right message in front of the right consumer at the right time and addressable is a great way to do that. The amount of MVPD ad inventory will likely double over the next 12 to 18 months. In many cases, those dynamic ads may also be addressable in nature. But at this point, it's really about identifying the content that reaches the right type of customer for the advertiser and ensuring those ads are served to them.

Expect MVPDs to get a great deal more inventory over the next few years as the long tail redirects inventory into them. Networks sell their content to MVPDs, and increasing the amount of ad inventory will only become a greater component of that conversation. The larger networks (or network groups) will likely try to maintain their inventory, but we can expect the smaller/independent networks to see the value and likely sell to the MVPDs. This is because an MVPD (with its access to subscriber) will be in a far better position to monetize inventory than a long tail cable network.

Trend 4: Cross-channel/platform measurement is now

The focus on viewer engagement, at the individual level across multiple platforms/viewing devices can be seen in one of the biggest sporting events of 2016. TiVo Research, RealityMine and NBCUniversal recently announced a “comprehensive single-sourced cross platform measurement” initiative for the 2016 Summer Olympic Games taking place in Rio de Janeiro. Together the partners will perform an in-depth analysis of how viewers consume 2016 Olympics content across their menagerie of devices, including mobile, desktop, and television. The aim is to gain a better understanding of how people consume content while improving cross-platform measurement.

Events like the Olympic Games can bring a tremendous amount of attention to cross-platform measurement and targeting, and some viable solutions that are more prevalent throughout the industry. In 2015 and into 2016 networks, technology companies, and data companies have been putting together tools that enable richer cross-platform measurement solutions, and the bet for 2016 is that these solutions will be more common place and readily available for networks and marketers.

2016 is only the beginning of a convergence of how television and digital advertising are evaluated together. Imagine someone views a brand’s ad while browsing the internet on their mobile device on a train ride home from work. Then that same person views that brand’s ad again at home watching an episode of “Blackish.” Soon agencies and advertisers will be able to put that data together to understand how many impressions were delivered in total. Television advertising will become part of the larger user level attribution picture.

2016 promises to be a big year in the television advertising industry with a focus on targeting and data playing out across the major themes of custom audiences, performance measurement, dynamic advertising, and cross-platform measurement.

Visit merkleinc.com to learn more about MerkleONE, Merkle’s person-based identity management platform.

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