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How Sellers Can Adapt as Linear TV Becomes More Like Digital

Posted by Ashley J. Swartz on Mar 31, 2020 1:00:00 PM

How Sellers Can Adapt as Linear TV Becomes More Like Digital

TV ad spending in the U.S. is projected to drop 4% from $63.4 billion in 2020 to $60.6 billion in 2021—largely as a result of marketers increasing their investment in digital video. Meanwhile, as sellers ramp up their addressable and CTV ad businesses, an ever-increasing number of data and technology providers are in the mix, causing the ecosystem of TV advertising to look more and more like the digital LUMAscape.

We examine increasing complexity in measurement, data and targeting and offer advice on how sellers can stay ahead of the curve in our Decoding the Micro TV Landscape” video.

At the end of the day, portfolio management and optimization are critical, and sellers must continuously evaluate the impact of every ad unit, spot and impression sold on their yield. Here are three other takeaways:

1. Work toward the ideal of unified measurement in the long-term.

Convergence of linear and digital video is only possible if we have common currencies with which to sell, measure, package and productize, and unified measurement is essential. (We’re getting there as an industry, but in slow motion.)

Though far from perfect, the CPM may be our best horse in the race. So consider tooling your business to package, sell and fulfill audience reach using CPMs and impressions across all platforms, remembering that reach and frequency still matter to buyers.

2. Understand which currencies maximize your yield.

Meanwhile, enable your planning teams to productize and package across multiple currencies with ease, since our industry will likely be in a place of transition for years to come and you’ll need to be flexible.

Make a business decision to understand which currencies maximize the yield and value of your portfolio and double-down on those. Analyze various packaging options, and experiment with reach and performance-based currencies. Do all of this in the context of what true demand is for each of your ad products to ensure you make packaging, sales and measurement decisions that improve the financial performance of your entire portfolio, from traditional linear to CTV inventory.

3. Offer segmentation models but think twice about building them yourself.

Segmentation models are expensive to build and very hard to sell and operationalize, and if you don’t have the appetite to invest in developing your own, there are partners with a deep understanding of television who can help. Working with an intermediary inevitably increases your “ad tax” as we’ve previously explained, but you can make an informed decision about whether it’s more cost-effective to outsource the work or bring it in-house.

Whichever method you choose, segmentation models are a key investment in knowing your audience better than anyone else, and your ROI from them can be significant. But just be aware that once you productize audiences, an increased cost of doing business will be introduced into your sales operations. This is a result of additional time needed to price, package and monitor delivery of audiences, as well as the ongoing cost to maintain segmentation models as your programming mix and viewership change over time.

To learn more about how buyers and sellers alike can adapt to the changing realities of TV’s transaction layer, watch our “Decoding the Micro TV Landscape” video.

Decoding the Micro TV Landscape