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Guest Blog: Local TV Media Buys Need to Go Digital

The television industry talks about cord cutting as if its customers are disappearing into the ether. But perhaps a better way to understand the tectonic shift in the television business is not to focus on the viewers supposedly being lost, but on the technology that’s being gained. From content to distribution, digital is in the process of overhauling the analogue television model. But that transformation only begs the question, why are buyers and sellers still relying on an analogue currency?

One answer may be that Nielsen’s total audience measurement tool represents a leap forward in terms of measuring the number of viewers across platforms. That makes the ratings more accurate, but not necessarily more granular or better positioned to take advantage of programmatic, because the currency is still defined by demographics, rather than data-driven audience segments. Likewise comScore’s merger with Rentrak is also focused on multi-screen measurement. It’s good to have competition, but from a buyer’s perspective it’s also important to focus on audience. In an increasingly data-driven, programmatic world, it’s not just a question of how many people are watching and on what platform, but rather who those people are. Quantifying the nature of the audience is something digital does best; the question is where will we see digital audience data make its most profound inroads into television?

Related: Ratings Experts Split Over Future of Measurements

Local television’s dire inventory problem

Nowhere is the need for digital audience data greater than in the local TV market. Every four years, local TV stations get well on political media buys, then it’s back to the reality of lower ad rates. At best, targeting on local buys consists of the audience’s ZIP code—a far cry from even the most basic online targeting. By applying digital audience data to the local market, media companies can offer a new dimension of value to their advertisers. Just as important, the efficacy of hyper-local campaigns can be measured by cross-referencing campaign data with corresponding sales and CRM data—a process that, at best, has always been a guessing game for local advertisers. At the same time, advertisers can bring additional first and third party data to augment those local buys.

But the real boon for local television is the fact that a new buying currency based around digital audience data will attract new advertisers that previously limited their campaigns to digital. With television projected to account for only one-third of the total ad spend by 2020, it’s essential that local broadcasters look to expand their universe of advertisers.

Related: It’s Linear vs. Digital in Millenial War

Why local must come first

Smart TV sets are now the norm. The cable box is under assault from the president and the FCC, which has proposed that consumers be able to buy their own boxes from third party companies. These technological and policy shifts already weigh heavily on the television business, but they should also underscore the importance of implementing digital audience data in the local television market right now.  The automatic content recognition data from smart TVs present a significant alternative to set top box data controlled by the cable companies.  The ACR dataset is only going to get richer with consumers’ evolving viewing preferences. There is a tremendous opportunity to gain audience insights about who these viewers are by linking their viewership patterns with digital behavioral signals - all anonymously.  

By some estimates, programmatic television is expected to reach $17 billion a year. But despite those projections, programmatic television only accounts for about 4 percent of the current television media buy. Why the disconnect? For one thing, multibillion-dollar industries don’t turn on a dime. Moreover, why would anyone expect the television business to bet its most valuable assets—primetime programming—on anything other than the established ratings system?

Right now, the local market represents a sensible incubator for something new. On the sell side, that inventory represents the smallest possible risk. But on the buy side, it represents a tremendous opportunity.  The efficacy of the local media spend can be easily measured,  and can be compared to digital side by side. The core promise is that this inventory is becoming addressable. Local broadcasters have an opportunity to win back the dollars going to digital and the advertisers have finally an alternative to evaluate TV and digital through one lens.

The ultimate promise of true cross channel

For most of its history, television has existed as a distinct channel in a brand’s marketing budget. Moreover, television has been the crown jewel of marketing, not just because the cost of entry is high, but also because the caliber of television content is unparalleled. Increasingly, however, marketers have worked to tear down the silos that divide channels because consumers move so freely between platforms. Even in television, a great deal of attention is paid to the second screen experience. But without transitioning to digital audience data, television inventory won’t meet the demands of marketers running cross-channel campaigns.

Today, any advertiser that buys television inventory faces a mind-boggling disconnect when allocating media dollars. Digital audience data allows those advertisers to target their media buys with the utmost granularity across web and mobile. But on television, those same advertisers buy time that correlates to an approximation of viewership. Updating television’s media currency makes television more competitive with other mediums, but just as important, a common currency of digital audience data is essential for true cross channel marketing because marketers want to follow those audiences, not just the content, as they move from television to mobile to internet and back again.

Rishit Shah is head of strategy and innovation for Lotame, where helps the data management company capitalize on what's new and next in advertising.