A decade ago, if you wanted to watch TV at home, your options for getting it onto your screen were limited. Annoyingly, you had to rely on your local cable or satellite provider to come to your home and install a set-top box. Streaming options were starting to come onto the scene, but most of the programming people cared about wasn’t available there.
When you examine how television advertising is bought and sold, it’s striking how many of the systems — and players — first became relevant when TV emerged as a dominant medium in the 1950s yet persist today.
Take the Gross Rating Point (GRP), which is still the prevailing metric for traditional TV advertising impact even though advertisers gripe about its limitations — specifically, the fact that it’s a calculation of reach, not performance. Or Nielsen, which has been the dominant provider of TV measurement for more than six decades and is now competing against Comscore, a company rooted in digital, to establish viable metrics for cross-platform viewing.
As more premium streaming services hit the market, potentially cannibalizing each other’s audiences, it’s important that companies making this sizable investment design their offerings in a way that supports their overall business.
The Business of TV & Video Advertising, Explained
TV advertising once represented a world unto itself, distinct from other media channels. Audiences sat in front of their TV sets and watched programming at scheduled times. Commercials were sold by national broadcasters, local affiliates, cable networks, and distributors, usually on a GRP basis. Advertisers were content to leverage TV for reach — without drilling down into who exactly they were reaching. The vocabulary of TV advertising was insular and consistent.
As you know, that train has left the station.
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Between 1950 and 1970, the Big Three networks (namely CBS, NBC and ABC) accounted for 95% of primetime viewing, and the transaction layer of TV advertising was relatively simple. For the most part, you had only networks, agencies and brand marketers in the mix, not layer upon layer of intermediaries as we have now.
It might surprise you to hear that most linear TV sellers are still driving 80% to 90% of their topline revenue from traditional, Nielsen-measured TV. While the future of TV is surely audience-driven, data-heavy and technology-enabled, it’s coming at us in slow motion. Rome is falling but only one brick at a time.
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Transformed by changing audience behaviors and the proliferation of data on both sides of the value chain, the TV advertising industry is in flux. As a result of increasing complexity, television has gotten harder to buy and harder to sell.
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Anyone who lived through the boom of digital video is sure to have opinions, memories, and potentially some nightmares of the creation, growth and eventual adoption of viewability. It was a necessary step but one that was wrought with loosely defined and adopted standards, competing “definitions” and, ultimately, heavy lift for operators and publishers.
And still, to this day, as Open Measurement comes to fruition with an ever-expanding set of delivery standards, there will be challenges ahead.
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As any media planner will tell you, forecasting views for TV can be overwhelming—and the consequences for mistakes can be huge. Underestimating the number of views means lost opportunity to sell inventory; overestimating results in a failure to deliver advertisers the guaranteed impressions promised and exposes a seller to liability risk.
We need to predict viewership days, weeks, sometimes months in advance, to carry out sales deals. Since views for linear TV can change drastically—even within the same series from week to week—what is a planner to do?
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News of Nielsen being on the block has been swirling as of late. Couple that with the threat from major broadcasters to walk away from the measurement giant, and the growth of Addressable TV offerings leads us all to the very real potential of a completely reimagined measurement paradigm for TV; but what would that look like?