Although TV tune-ins rose amidst #safeathome-driven viewing marathons, the surge in eyeballs did not result in a rosy picture for broadcasters. With traditional advertising revenues already under fire from the shift to digital, the broadcast industry is dealing with challenges on multiple fronts as persistent uncertainty takes its toll on ad businesses that were thriving just months ago.
Multiple factors – most notably mandated shutdowns of commercial activities, a lessening of purchasing power as unemployment rises, and the postponement of the Tokyo Olympics – have all impacted anticipated revenue expectations. Interpublic Group’s widely respected MAGNA unit recently predicted that the effects of the pandemic could slash traditional linear media revenues by 12%, while it predicts that digital revenues could rise by 4%.
Although the current crisis is temporary, it could accelerate linear advertising business trends that gained steam long before 2020. Nothing beats broadcast television’s reach, of course, but the reality is that time-shifted viewing, the rise of digital and increased competition for eyeballs have steadily eroded traditional ad revenues. Equally challenging has been the reliance of broadcasters on legacy constructs – systems that have been stitched together as needs have evolved, and sales and support models that rely heavily on platform-specific sales and traffic teams.
It’s true that broadcasters have recognised the need to create new platforms to reach viewers where they are by making content available via OTT and on-demand platforms. It’s also true, however, that the rush to capture viewers has not always been matched by the creation of new revenue opportunities. In some cases, broadcasters don’t take full advantage of linear opportunities; that becomes increasingly risky as traditional viewership declines. In others, avails sold on linear channels are given away or sold at a fraction of the price on digital counterparts. In both situations, money is left on the table.
Automation can crunch the data to find lucrative audiences
An automated, cloud-based approach removes silos and swivel chairs from the sales and management of platforms, and allows ad sales operations and agencies to let technology suggest how to achieve advertiser goals. It can take the form of new tools that can optimise linear bottom lines by enabling the shift from spot-based sales to impression- or audience-based selling, resulting in more efficient use of existing inventory and significant reduction in operational costs. More broadly, automation can create 360-degree monetisation opportunities by freeing broadcasters from the need to sell spots on individual networks and instead leverage audiences across every available platform. For instance:
- When implemented as a linear tool, automated, audience-based selling can significantly reduce the inventory waste that occurs when spots on major programmes hit a range of unintended audiences. In one case, the success of automated solutions has prompted an international broadcaster to increase audience-based sales from 30% of its business to 50%. Studies have shown that inventory efficiency can be boosted by as much as 20% when broadcasters can guarantee a specific audience and deliver it by placing a range of programmes that most efficiently will reach the target audience.
- In cross-platform environments, automation can be used to provide cohesive delivery of a single ad in a given programme to a target audience dispersed across multiple platforms. Using IP systems that are compatible with legacy architectures, broadcasters can unify buying, selling and delivery of ads, automatically blending digital and traditional video eyeballs while reducing the overhead of owning and operating parallel ad systems.
Ultimately, a fruitful transition will rely not just on technology capabilities but on utilisation as well. The shift to automated IP architectures can unlock vast new opportunities for broadcasters’ sales and traffic organisations – as well as for the advertising community – but it’s not without upheaval. Broadcasters adopting automated IP platforms and audience-based trading are finding that dialogue with customers through the process is key.
How will the customer react to being charged for inventory that’s historically been undervalued? What is a price point that will work for both the broadcaster and the advertiser? How ready are agencies to make the change from buying rating points in a few programmes to the more fine-tuned approach of targeting specific audience demographics across a wider variety of content? How does that ability to zero in on more receptive audiences impact the price-benefit ratio? The answers to these questions – and more – will influence the speed and success of the evolution.
No matter what, broadcasters are facing migration of audiences to new platforms and erosion of revenue from traditional services. That trend has been amplified this year and could generate new interest in automated ad platforms that increase efficiency of their advertising businesses while reducing operational expenses.
When we ultimately emerge from this “temporary normal”, we may see agencies and brands more empowered and determined than ever to experiment in a bid to get revenues flowing and do more with less. This will put more eyes than ever on the role of automation.