Why This MattersDemand for traditional ads looked stronger than expected in the upfront, but precision targeting may still be the future.
After all the talk about data and audience buying before the upfront presentations, there was little word about advanced advertising as the networks tallied their take in an unexpectedly strong market.
That came as no surprise to Dave Morgan, CEO of Simulmedia, one of the pioneers in the data-driven TV advertising business.
We heard anecdotally that some of the networks were trying to create a dedicated bucket for advanced targeting as part of their deals, but it wasn't the most important thing, Morgan said. At the end of the day, the upfront is still price and volume. Everything is about price and volume.
Whether you're talking about addressable advertising, programmatic buying, audience buying or precision targeting, advanced advertising is a bigger part of the networks' scatter strategy than of their upfront strategy, Morgan said.
The upfronts are negotiated in gross. They're about big numbers, total volume: What's the price, what are my options, he said. In most cases, targeting is a campaign-by-campaign, brand-by-brand issue. So it is a little harder for someone to say yes. Someone can say in the upfront, we want 10% of our commitments this way,' but they're not going to let the tail wag the dog.
20/20 Hindsight, Insight on Targeting
After the dust settled, Morgan heard word that at some network groups, audience-based campaigns were a meaningful part of some of their agreements.
Morgan was one of the advanced- advertising industry executives that Credit Suisse analyst Omar Sheikh met with before reiterating his bullish forecast that targeted advertising represents a $100 billion opportunity for the TV business over the long-term.
Though he's obviously biased, Morgan said he thinks Sheikh is on the right track.
A lot of the inventory that's going to be displaced first will be direct-response dollars, Morgan said. There are also advertisers that are not currently upfront buyers who are buying TV on a precision target basis.
Many of them are digital-first companies such as Zillow, Expedia, Trivago, Chewy and Homeadvisor.com. Most of them are either doing it in-house or using specialty agencies that are focused on long-tail buying, Morgan said. So they're not buying like legacy TV advertisers.
Morgan doesn't think that the networks are resisting a shift from the traditional way of doing business to a more targeted approach. But I don't think that the heads of the networks or their heads of sales have their bonuses being paid on the amount that they sell that's targeted. I think they have it pegged on the amount they sell, he said. As it becomes a more meaningful contributor to how much they sell, it will be more important.
Simulmedia recently announced that it was going to make its targeting software - VAMOS - available to media agencies, clients and media companies. It also rehired John Piccone, who as president, chief revenue officer, will spearhead the software sales effort.
Encouraging Signs
Since the announcement, Morgan said Simulmedia has talked to almost all of the major agencies, groups, dozens of marketers and a number of the largest sellers.
There's a certain degree of curiosity because we've been doing this longer than anybody else. There was an expectation that we would always stay as a bundled tech and media service, only making money selling the media, and so I've been really encouraged, Morgan said. Some alpha customers have already been turned on and Morgan expects to be able to announce a next slate of customers in a month or so.
Surprisingly, the plan to sell software has boosted Simulmedia's media-buying business. Turns out the company's ability to manage a $1 million campaign that employs 6,500 spots on 71 networks versus the traditional 170 on 50 networks is hard for advertisers and their agencies to duplicate.
And even if someone would try to get a lot of smaller spots, they would just get run of networks. They wouldn't be precision directed, which ours are. When we create a campaign we pick the individual spots, he said.
TV's increasing ability to target is one reason why Morgan thinks the medium's midterm future is fairly bright. I think most marketers have realized they've over-rotated their spend to digital when the reach wasn't there, he said. I think a lot of marketers are now reassessing their pullback from TV. I think that's one of the reasons why this has been a pretty healthy upfront generally.
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Why This MattersDemand for traditional ads looked stronger than expected in the upfront, but precision targeting may still be the future.
