Ad Technology Lessons for TV

The coming dynamic advertising revolution May 3, 2017

TV advertising has shown a surprising resilience to the massive paradigm shift driven by digital ubiquity, with annual ad spending predicted to hit $195B in 2017. But this financial boon is tenuous at best, as services like YouTube’s recently-announced streaming TV service position themselves as attractive and ad-less, if not ad-free, alternatives.

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While streaming services can be credited with increasing cord-cutting, the TV advertising model can also be seen as a contributor to the format’s eventual decline, based on the reality that the commercial production process has stubbornly resisted change. The business operates the same as it always has: brands hire creative agencies who conceive of campaigns based on 30-second spots that are specifically designed for viewing on a television set. As the viewing public changes their consumption habits and OTT platforms have evolved, several clear problems with the current model have become apparent.

1. Television targeting misses the mark

As a mass medium, TV requires advertisers buy against content and broad standard audiences, not granular audiences. While an ad may hit the core target, it will also reach a large number of unintended viewers, which is wasted spend.

2. Channel-based ad placement is too broad

Whereas ad planners routinely customize the creative of their campaigns for different media such as TV, out-of-home and radio, they produce a limited number of creatives for each regardless of how many different audiences within each there may be. For example, Syfy and MSNBC may both be TV networks, but they have distinctly different audiences as well as distinctly different channel effects that change the message received by viewers.

3. The 30-second spot wastes resources

The advertising industry is still configured with TV as the apex channel and the 30-second spot as favored format. So brands will spend millions on ad production and more millions on air time, and that 30 seconds is totally unnecessary in an environment with short attention spans and DVR fast forward buttons.

On the plus side, emerging technologies place TV advertising on the brink of revolution. We now have the ability to make dynamic advertising that can be delivered via online and connected TV platforms (and soon with over the air broadcasting via ATSC 3.0, aka “Next Gen TV”), and the promise of personalization can be a reality. And consumers are far more likely to respond to a call to action that speaks to them. In fact, ads with dynamically customized creative can result in up to 70 percent greater viewing completion online.

So why don’t we have more personalized TV ads? Well, it’s that stubborn process of production that has put up a strident defense to what could drive increased efficiency and effectiveness.

1. Creative agencies and technology vendors need to work together

Currently, the push to dynamic video advertising is being driven by technology vendors, not ad creatives. If the two don’t begin working as partners, then creative agencies will likely struggle to justify their ongoing role beyond concept creation, else brand clients simply brush them out of the way.

2. CMOs need to understand that variation can happen without additional complexity

One of the biggest misconceptions driving concerns about dynamic video ads is the belief that producing multiple creative components for multiple ad variants of ads will multiply the production’s complexity. As long as you factor a multi-variant ad into a shoot from the storyboard stage, then a dynamic ad needn’t cost more than a single linear 30-second ad unit.

While a TV ad may require sign-off, all of the individual dynamic components don’t necessarily. Today, ads can be created incorporating snippets of premium content that have been rights-cleared well ahead of time.

3. Brands should learn that upgraded results don’t mean exponential costs

One of the most common fears of dynamic ad creation is: “If I have to produce 10 variants of an ad instead of just one, will my costs increase ten-fold?”

The answer is a firm “no.”  Producing creative for the new era of delivery is a much simpler equation.

Brands shouldn’t have to cut costs in production to make dynamic add up; some of the best ads look and feel like the money spent on them. But it is typical for a dynamic creative production to cost roughly 10 percent more than a standard creative.

While any additional cost may not be music to the ears of the brand, in the end the benefits of increased ad efficiency and enhanced results must be weighed. Outcomes include longer watch times, higher interactive engagement, stronger brand resonance, and a greater likelihood of click-throughs from clickable videos—all of which can offset fears of added costs.

With ATSC 3.0 on the fast track to roll out, the future of tech-enabled television advertising is bright. The technology has been tested successfully in several markets, and a number of broadcasters and hardware companies showcased its diverse capabilities in the “NextGen TV Hub” at the NAB Show.

While it may take years for the full impact of ATSC 3.0 to be realized, every stakeholder in the game is expected to benefit. Over-the-air viewers will have OTT-style on-demand options. Advertisers can explore new realms of possibility for targeting and personalization along with a level of interactivity that only the web has supported to date. For broadcasters, the standard opens the door to the ever-growing amount of mobile-device based viewing along with higher revenues from this advertising that is more targeted, relevant and effective.

Ultimately, dynamic video advertising has the potential to revolutionize the video industry, as a whole, not just digital video. We just need everyone in the value chain to work together to ensure that the   transformative tools and emerging technologies now at our disposal are implemented at scale and in a way we all benefit from the next era ahead.

Gil Becker is an accomplished advertising technology executive with nearly 20 years of experience leading operations and product development for high-tech companies. He is currently CEO of AnyClip. He can be reached at gil@anyclip.com.

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