Maybe the Future of Advertising Will Be Televised After All

Thanks to a lot of help from the cable industry, television’s role in the future of advertising is looking a lot brighter tham many had expected. For several years, there have been predictions that television advertising would diminish as marketers moved more of their ad dollars to digital media platforms.

There is certainly data to support that prediction. Ad spending on Internet-based advertising platforms has been growing in double digits compared to single digit growth for traditional television. In its latest projection, Interpublic’s Mediabrands Magna Global unit predicted that digital media, which includes online display, search, mobile and social ad spending, will grow by 14.4% in 2014 and then overtake TV as America’s biggest ad medium by 2018. However, as Mediapost reported, “those categorizations may be a misnomer due to the rapid convergence of TV and online video and the blurring of lines in terms of what constitutes digital.”

What has helped to blur those lines? Technologies the cable industry has been pioneering since the days of the MTV generation. Glance back through the archives of Cablefax and you will see that the capabilities that attract advertisers to digital media platforms, such as addressability and interactivity, have been morphing right along with the convergence of traditional and Internet-based video platforms.

Jim Nail, a Principal Analyst at Forrester Research, describes this shift toward TV Everywhere advertising as the “biggest evolution since the ascent of the 30-second ad in the 1960s.” Nail sees Comcast’s acquisition of Freewheel (and I would add Suddenlink’s even more recent deal with Visible World) as the latest example of a series of developments that will allow cable MSOs and programming networks to offer advertisers exactly what they want: cross-platform reach, the level of engagement that video-based content can offer and the chance to reach the right consumer with the right message at the right time. “In a few years, short- and long-form video content, both user-generated and broadcast-native, will be bought programmatically in an inevitable takeover of automated trading that has already started today—and will work all the way up to TV buying,” Nail said in a blog summarizing his recent report “How Software Is Eating Video Ads and, Soon, TV.”

While most of us are familiar with the technologies like DAI (digital ad insertion) that can meet the marker’s demand for addressable advertising, enabling programmatic buying of ad inventories is a little harder to imagine. It’s one thing to see it implemented in the highly commoditized online space. But buying a national, regional or local cable avail using the same online ad management tool?

Nail says two forces are making programmatic buying unavoidable. The first is the “explosion of new platforms and ways of viewing videos” that makes it “increasingly difficult for advertisers to reach the desired number of viewers through linear TV alone.” He says, “Traditional manual buying approaches simply can’t cope with this volume of video sources and the shift to addressable advertising.”

Secondly, Nail sees programmatic in video taking a different shape from programmatic buying of online display ads, where it is equated with auctions and real-time bidding. “Programmatic is really about the automation of audience-based buying, not the financial transaction. As a result, we see different forms of programmatic buying developing, driven by the dynamics of supply and demand in different tiers of inventory.”

Attendees at last year’s Media Finance Focus conference had a chance to explore the role of a programmatic buying solution driven by supply and demand in a presentation on yield management delivered by Chuck Davenport, a senior manager with Deloitte Consulting. To give you an idea on how yield management works, just think about the last time you purchased an airline ticket online. The airline company uses supply and demand metrics to ensure it optimizes how much it charges for each seat on a given flight, with the most expensive tickets selling at times of peak demand.

With media companies now a year closer to the programmatic future of ad sales outlined by Jim Nail, we will be providing an update on yield management and other ad sales trends as part of our agenda for Media Finance Focus 2014, which will be held May 19-21 in Miami. More information about our 54th annual conference may be found on our Web site (www.mediafinance.org). We hope you will be there with us. It will be a great way to understand why the future of advertising is going to be televised after all.

(Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at mary.collins@mediafinance.org.)

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