U.S. cable operator Cablevision is starting to revolutionize national brand advertising on television by giving marketers a way to buy linear spots using the audience targeting, aggregation and buying models similar to those already used online. Brands can target segments of viewers who are spread across a long-tail of smaller channels or who are watching larger channels but in low numbers during certain day-parts â€“ audiences too small to register on a traditional audience measurement panel but which can now be identified thanks to set-top box measurement data.
Just as importantly, the advertisers can then buy these audiences on the basis of CPM (cost per thousand) multiplied by the number of impressions. This is the way online advertising is bought and differs to how television ads are traditionally traded using GRP (Gross Ratings Points), a measure of reach (% of the audience reached by the ad) multiplied by average frequency (the number of times that audience sees it).
Cablevision data is based on tuning records of 98% of the set-top boxes in its homes. This means it can provide far more granular audience measurement than an audience panel. Tad Smith, President, Local Media at Cablevision Systems Corporation, points out that the traditional measurement model is pretty robust for national advertisers targeting the major demographic groups on the top 100 channels. But it can under-report on small audiences and is also less useful if you are targeting a cohort (an audience that is more defined than the general demographic categories) in a local market, too.
Cablevision has figures showing that in July the most popular 100 channels available on its platform accounted for 83% of the live audience (based on their cumulative tuning hours). That means the long-tail of channels had 17% audience share. Cablevision is giving advertisers the means to measure the audiences across this long tail (and across other channels) more effectively and therefore make them a part of their campaign.
â€œIf you are prepared to embrace new methods of measurement, like set-top box data, you are able to find audiences that before were not visible with traditional measurement,â€ says Smith. â€œYou can put advertisements on a network that appears to have almost no reach but which, when analyzed with set-top box data, is actually well travelled. Before, there was no evidence that anyone was watching the channel or show.â€ For this reason he talks about the â€œnewly discoveredâ€ long-tail.
Traditionally brand advertisers on TV have tried to buy audiences, like men aged 18-49, by using a primetime spot on a suitable show (with the ads valued on the basis of GRP). But using this new approach, the advertiser buys an audience rather than a show that they expect to deliver the audience.
Once the advertiser defines its target audience the advertising system correlates its requirement to the characteristics that have been associated with a given household (using all the necessary checks and balances to guarantee privacy). If the set-top box in one of those homes is tuned to any number of channels then a suitable advertisement is delivered and the advertiser is charged on an impression basis or on a CPM basis. So television advertising becomes more like direct mail and the Internet. â€œThis is pretty revolutionary,â€ Smith declares.
Cablevision is already selling advertising in this way and Smith says this model represents a small but rapidly growing part of the advertising market. â€œIt attracts national advertisers because it looks like Internet programmatic buying but without the automation. The advertisers who use it love it.â€
It creates a new revenue stream for Cablevision. â€œTraditionally our ad revenue comes from local spot sales, so from car dealers, for example, in the New York metropolitan area. This is new money for us. This approach allows us to sell difficult-to-sell inventory to national advertisers who want to buy an audience. We can monetize the inventory now.â€
He accepts this model is not for everyone. â€œIf you want to buy reach then it makes sense to buy in the traditional way, but for brands that are focused more on audience and less on context, and who do not need a particular show placement, this new approach gives them extremely good value.â€
This initiative is separate to Addressable Advertising products, another weapon in the advanced advertising arsenal. Cablevision has already showed that it can split a linear audience into two sub-segments during an ad spot, delivering different messages to each group. Overall the companyâ€™s ambition is to make advertising more relevant and more efficient to the benefit of advertisers and also subscribers.
Tad Smith will be speaking at Future TV Advertising Forum in London (December 3-4) when he will give more detail and insights into how digitally-minded marketers can harness the long-tail audience. He is speaking during a session dedicated to â€˜Managing data-driven advertisingâ€™ that also features the direct marketing specialist RAPP, Facebook, GroupM, Time Warner Cable and Operative. You can download the full agenda here and find out more about the conference here.