By Darren Lepke, Marketing Director
Back when he was CEO of NBCUniversal, Jeff Zucker famously said that the TV business couldn’t afford to trade "analog dollars for digital pennies." Today's online ads are starting to earn a bit more than Zucker's initial penny estimate. Even with a long way to go, digital ads are earning ad revenues closer to their traditional TV counterparts. Now the president of CNN Worldwide, Zucker has revised his estimate upward – from "digital pennies" to "…probably beyond quarters."
The days of earning digital dollars are not far off. New advertising technology is bringing the worlds of broadcast and online video streaming closer together than ever before. At the forefront of this paradigm shift is the most precise method of digital advertising to date: one-to-one session management. By serving content to individual users, one-to-one session management gives broadcasters precision insight into exactly who is watching and why. The result is targeted advertising that boosts relevancy, engagement, and revenue that traditional TV advertisers can only dream of achieving.
Traditional media companies are slow in warming up to digital. Their reluctance exists because the web's great ability to target niche audiences also means advertisers get smaller audiences. That's the opposite of the traditional TV advertising approach, where an advertiser can capture huge audiences – and larger almost always gets associated with being better.
But brands spending exorbitant amounts to reach those larger audiences may not be using the most efficient approach. In a traditional TV advertising model, the majority of primetime ad slots are sold upfront, months in advance of airing. Advertisers then estimate audience sizes and demographics, but their numbers are just that: estimates. Even if television ratings suggest that a given show is popular with suburban housewives aged 25-40, plenty of people outside of that box will also watch the show. Those untargeted viewers will see zero ads that are relevant to them. The right digital ad technology can convert niche audiences into profitable viewers.
Broadcasters advertising online don't need to resort to guessing viewership. When broadcasters use one-to-one session management and users opt to participate, a channel of communication is created. With the Verizon Digital Media Services' Smartplay technology – our 1 to 1 session management technology – when the user presses play, it opens a channel for ads to be dynamically chosen and inserted based on the viewer’s attributes, including who is watching, where they're watching, what they're watching, and on what device they're watching. Verizon Digital Media Services' Smartplay technology turns each advertising session into a potential purchase and it happens simultaneously for every viewer. Broadcasters must acquire the consent of the user and abide by all applicable data security and privacy laws.
What's more, digital advertising is trackable. While traditional broadcasting tools can only estimate an ad's overall audience, digital ads can deliver and display results including conversions and engagement, and much more. In the future, brands will refuse to sell ads to channels that can't demonstrate that the brand's target audience will be watching. Brands will want metrics, including ad views, click-through-rates, and purchases.
One-to-one session management has another less-talked-about benefit. It solves a problem with the transition to online streaming that broadcasters have been grappling with for years.
Each TV show has a set number of minutes set aside for ads. Some slots are for large national ad buys, but others are earmarked for local ads dependent on where the show is being broadcast.
Most viewers don't realize there's a signaling system inside each over-the-air (OTA) broadcast: inaudible tones called SCTE triggers that show local affiliate stations where to insert either national or local ads. This works on a broadcasting level, but translating similarly localized ads to a digital format was a challenge for broadcasters – until now.
With a traditional digital ad system, a broadcaster has to encode a separate stream for each affiliate station. Factoring in labor, equipment, and content delivery costs, each stream can cost enough to make positive ROI difficult to achieve. Given that a large broadcaster may have hundreds of affiliate stations, this adds up to an enormous expense.
One-to-one session management drastically reduces this cost by leveraging the same SCTE triggers from the broadcast playout system and uses them to enable dynamically targeted local ads. Broadcasters only have to encode one version of the stream, and ad servers will deliver the right ads at the right times. Additionally, it is a lot easier to troubleshoot one national feed than it is to manage 250 versions of it, reducing errors and saving additional time and money. The combination of one-to-one session management and dynamic ad insertion lets broadcasters and affiliates make online streaming more cost-effective and efficient.
By showing an ad that's not relevant to a potential viewer, broadcasters waste their ad dollars. It results in less brand recognition, less brand affinity, and ultimately fewer sales. It's a situation that doesn’t need to happen, considering that there is accessible technology to ensure that each ad they buy is ultimately delivered to a relevant viewer.
Ultimately, one-on-one session management isn't simply an opportunity for individual companies to make more money. It's an important transition to ensure the health of the entire media ecosystem as channels prove to brands its ads are reaching whom they want to reach in order to drive sales. Without it, media companies may never see those "digital quarters" turn into lucrative dollars.