Vantage Points: Addressable TV Status in Local Markets
In this edition of BIA Advisory Services’ Vantage Points series, Alan Wolk, Co-Founder/Lead Analyst, TVREV has a conversation with BIA about his new special report on television and The State of Addressable Advertising.
The report is available to BIA readers for discount using the code BIA.
The Vantage Point series taps the perspectives of various lookout points from around the local media and tech sectors. Email us to discuss a topic for consideration.
Rick Ducey: Alan, based on your report, addressable TV advertising in 2020 will be the national TV market. Initiatives like Project OAR and Nielsen’s Advanced Video Advertising group are primarily focused on the national TV market. What do you see happening for addressable TV for local TV groups and MVPD operators in 2020?
Alan Wolk: Local markets can still take advantage of the inventory provided by the MVPDs in the area. The national inventory will also be available on a local basis—one of the benefits of addressable is that it can be served up locally and thus advertisers can use it to increase frequency in specific geos.
ATSC 3.0 is being touted as a way to increase local advertising as well, but large scale adoption is still a long way off and it’s based on over the air transmission which is still not the primary way most people watch TV, so it is limited.
Finally, the programs from Project OAR and from Nielsen will eventually be available for local inventory as well.
Rick Ducey: You have some interesting insights about ATSC 3.0, aka NextGen TV and the addressable TV opportunities this platform creates for local TV operators. Both over the air signal and Internet connected devices (CTV, mobile, laptop, etc.) can be part of addressability. But as you call out in your report, for NextGen TV to offer addressable ads the receive devices must have the ability to operate an ad cache with pre-stored advertising assets.
Alan Wolk: This is not my wheelhouse (Tom Morgan wrote that section) but it seems that the ability to cache is in the end device (ATSC 3.0-enabled smart TV) as opposed to on the broadcast end—the TV or set top box needs to have enough cache to store at least two or three commercials in order to serve them up in something approaching real time. Meaning that the addressable ad needs to come from the device when the call is made, rather than from the broadcaster.
Rick Ducey: With addressable TV, the audiences get sold by segment and served different ads. This has positives, but what about the downside of no longer qualifying for C3/C7 reporting? If a local TV station sells part of its audience in an addressable buy, it can’t use Nielsen or Comscore data to sell the rest of the audience. Is this the case?
Alan Wolk: Nielsen is actively looking to make that not the case. They have plans to introduce C3/C7 ratings for addressable ads this year. Some broadcasters, particularly those in smaller markets may find that they do not have enough of a sample for accurate ratings, at which point we assume Comscore will step in.
Rick Ducey: You conclude that addressable TV faces more significant business than technology hurdles, but the prize is worth the pain to push towards resolutions. For broadcasters, they could translate into higher CPMs but also higher costs for data and technology in the value creation chain. There may also be a price to pay in C3/C7 ratings if these data can’t be used to sell inventory. Bottom line, while gross revenues may increase, and linear TV may become more competitive with OTT and digital, is the expected margin and scale attractive enough for local TV to full commit to addressable inventory? Or should they keep to being the “reach and frequency” medium and leave addressability to other platforms?
Alan Wolk: I don’t think it needs to be an either/or situation. Some inventory, say higher rated news programs can be sold on the classic reach and frequency basis, while less valuable day parts can be sold on an addressable basis using programmatic buying tools. This allows the broadcaster to get the best of both worlds and to get the maximum value out of their inventory.
More details about Alan’s report can be found here. The report is available to BIA readers for discount using the code BIA.