If you have been following the streaming wars this year, you have likely noticed something curious: while more and more viewing has shifted to streaming, ad dollars have not immediately followed suit.
While this has not stopped a number of previously ad-free services like HBO, Netflix and Disney from launching ad-supported versions, it is a problem the industry needs to address.
The problem, as we found out when researching our latest report, FASTs Are The New Cable, Part 2: Advertising, is a structural issue, or, to be more exact, a lack of structural issue. The absence of any sort of standardization across the various streaming platforms was cited as an factor by every single person we spoke with, regardless of whether they worked on the buy side, the sell side, an ad tech company, a network or a brand.
Fortunately, there seem to be viable solutions for all these disconnects and a realization that if they are not resolved, it will be to everyone’s disadvantage.
People vs Persons
Streaming TV ads are sold the same way digital ads are, on an audience basis, meaning they are targeted to specific persons in the advertiser’s desired demo. That's all well and good, but the problem is that on TV we really don’t know who is watching, whereas on digital we know with 100% certainty who they are.
Why is that? Because consumers have told Facebook and Apple and Amazon and Google who they are. Mobile and browser-based web usage is a solo activity and those companies have their users' account information and know all sorts of things about them from what they buy to who their friends are to what they search for to what apps they have on their phone ... not to mention their names and email addresses.
TV is different.
TV viewing is often a group activity, and so there is no guarantee that the account holder is the one watching.
Who is watching is important though, as the advertiser is paying to ad target their commercial to a specific demo.
Targeting Isn’t All That
It seems that there is also pushback to the notion of using precise digital-style targeting on TV and the pushback is coming from many of TV’s biggest advertisers. These are brands that spend hundreds of millions of dollars on TV advertising each year.
Their rationale is that they primarily see TV as a reach vehicle and a way to communicate a broader image or branding message, rather than to sell a specific product to a particular customer.
The goal of these image campaigns is to create a positive presence in the national consciousness and to have the brand wind up in the consideration set when someone is looking to buy their product.
These are often long term plays. Luxury car manufacturers, for example, don’t only want to target people who might be in the market for a luxury car. They want to get their image ads in front of teens and twenty-somethings so that they aspire to own those cars, and, when they are finally in the position to buy a luxury car, consider that brand.
Similarly, big brands are often happy to have their ads seen by people outside of their target because they feel those people can help validate their target’s purchase. Thus, if an older woman sees an ad for a product aimed at younger men, big brands may not be that concerned, as the assumption is she may have a grandson or younger co-worker who buys the product. And if she helps validate their purchase, all the better and the “spillage” was money well spent.
Thus they are looking for less prescriptive targets and broader reach. (Mostly. There are some products and promotions that they are interested in tighter targeting, but those are the exceptions rather than the rule.)
The Contextual Solution
One solution for the persons vs. households dilemma, as well as the problem of big brands not wanting digital-style targeting on TV might be contextual targeting — running ads against certain types of content.
Done correctly, that can mean anything from subject matter (science fiction) to tonality (funny moments) to a particular actor (Matt Damon).
What’s needed is a way to tag and categorize programming across multiple content owners and licensees. A universal content ID is one way that has been gaining favor, as it travels with the program regardless of where it's running and can be utilized by programmatic buying platforms, which allows buyers and sellers to take advantage of the efficiency of automation.
With contextual ads, brands are also targeting specific types of content rather than specific audience members, thus all but eliminating the “persons vs households” dilemma.
There are numerous other advantages to contextual, including greater transparency, better measurement and a solution to privacy issues, all of which are explained in detail in our report.
On a macro level, contextual unlocks some of the unique advantages of television advertising. Unlike digital display ads, TV commercials pack an emotional punch — it’s why people remember commercials they saw 20 years ago.
That makes matching the context of the shows the ads run on with the ads themselves far more important than just “hitting the target demo”, especially when that means running in an environment where the ad can be anything from jarring to simply out of place.
