New approach needed to online VOD advertising

The media planning and buying process is increasingly failing to keep abreast of technology developments and consumer behavior, still relying on the traditional metrics of reach and frequency and focused on broad demographics when it should be focusing more on outcomes and harnessing rich data to target consumers more precisely.

That is the view of Rhys McLachlan, Director of Corporate & Business Development at Videology and formerly Managing Partner, Implementation & Futures Investment at MediaCom, a major media buyer. He thinks that, partly because of risk aversion in tough economic conditions, agencies have been deterred from innovating. This could change as new ad decisioning and targeting technologies prove their value in the online VOD market.

Videology is an advertising technology business that says it “applies maths and science” to the process of matching advertisements to inventory and the consumers looking at that inventory. For online VOD, that means making decisions like which 30-second advertisement should be run as a pre-roll or mid-roll against any given piece of content online, for example. McLachlan believes there is now so much data available, from so many sources, about our consumer behaviour and purchasing decisions that advertisers could dramatically improve the relevance and therefore impact of VOD advertising. This requires an acceptance that more targeting is a good thing, and it also requires excellent data analysis, since it is the analysis of the data that will determine its real value when placing advertisements.

“Consumers are becoming screen and device agnostic and insensitive to time and date when it comes to media consumption but the media planning and buying process has not changed that much,” McLachlan argues. “That includes measuring for reach and frequency and that is wrong in a world where markets can be evaluated on outcomes and actions.

“The industry could be much more sophisticated and effective than that. Today, the more impressions you get as an online publisher, the more money you get from agencies. Media is essentially measured against the ability to hit a certain number of people a certain number of times but while that approach is pervasive today, it is now a legacy metric.

“Media behaviour and purchase behaviour both occur online today so we should be able to understand the output and the actions from video advertising. We have data on purchasing but also on our expressions of interest. These outcomes are more important than whether 12 million people saw an advertisement 12 times.

“At some point, there will be a significant change to how media is bought, executed and assessed. That change could be dramatic or slow but it is coming. Today people are inherently risk averse because nobody got sacked for repeating last year’s media plan but we need to acknowledge how media consumption has changed and adjust to it, otherwise when we exit this economic uncertainty the industry will be scratching its head and wondering what happened.”

McLachlan uses the example of an advertising campaign for a yoghurt brand to demonstrate how current buying metrics can be improved. The brand knows that the people who buy are young mums with young children, typically at pre-school and primary school, and that they tend to shop twice per week (one large shop, one smaller) and they like two-for-one offers. Today the conventional buying target would be ‘household with children’. Any home that matches this, including those with kids aged 15 and 17, count as a valid impression for the campaign, though they are way out of the target market. The yoghurt company still pays for the impressions. And of course, if you can factor in all those other characteristics like shopping habits you can target the message to those who are most receptive.

“We live in a world where we are awash with data. You can narrow the target market down; there is more than enough data,” McLachlan declares.

Videology spends hundreds of thousands of dollars per month on data, so when a request is made to match an advertisement to a viewing session, the company harnesses all its data sources to find out as much as it can about the IP address in question. This could throw up the most simple but valuable nuggets of information, like the fact that someone has just signed up for a store card at John Lewis (the big UK department store), for example.

McLachlan dismisses the idea that some parts of the population will have less information about them. In particular he says there is adequate online activity and data to target older consumers and low-income groups. “There is sufficient data to plan and execute against all consumer groups, unless you are talking about 80 years and over,” he says.

McLachlan insists that Videology is primarily a decisioning business. “We enable publishers and advertising clients to maximize the value of every single impression,” he says. “Data is the most important thing in the media market today and we know how to analyse it to optimize the decisioning for the most desirable outcome.