Last Tuesday, Simulmedia hosted our final Salon of 2017. Featuring an A-list panel of Radha Subramanyam, Chief Research and Analytics Officer at CBS Television, Brian Wieser, Senior Analyst at Pivotal Research Group, and Simulmedia CEO Dave Morgan, the hour-long discussion was lively, wide-ranging, informative, and insightful. You can watch the video here to see portions of the conversation, but below are just a few highlights—quotes and exchanges that both capture the tone of the discussion and showcase its breadth.
On Bringing A Digital Mindset to TV:
Radha Subramanyam: Television today isn’t fundamentally data-driven or data-centric. Most people haven’t really figured out what the next generation of TV advertising should look like, what targeting should look like, what attribution should look like, or even really have a sense of what their own ROIs should be. In digital most of us of know those things. We know exactly how many clicks we can drive, what kind of search volume we can generate, and ultimately what kind of ROI we can generate. And so when you bring the digital-like thinking, and apply it to a business like CBS, across its multiple channels, then the sky’s the limit.
On the Potential for Growth in TV Advertising:
Brian Wieser: I would argue that the slice of the total pie that goes to TV advertising more or less has its limits. There are 200 advertisers that make up 90% of network TV advertising and 60% of all TV—and ultimately, they are more alike than they are different in terms of their goals and objectives.
When your goal is to build awareness of brand attributes and differentiate on the basis of those attributes, and when you define your marketing goals in terms of reach and in frequency, and when you exist in an oligopolistic category that is internally self-referential, when you meet those criteria, television is definitely the place to go. The problem is, those characteristics are taking a diminishing share of the overall economy. What has to change for that to not be true, is that the economy has to produce more of these macro brands. But I don’t see that happening any time soon.
Subramanyam: Brian is right in that the world is oriented this way, and if we all sit around and let the world go the way it is, that’s exactly how the story is going to end. I can’t speak for the sector, of course, but our position is that we should be looking to broaden the definition of advertising, broaden where the marketing dollars are coming from, change the relationship with the advertisers, enhance those relationships, and talk to non-endemics about a clear strategy for advertising on TV.
Wieser: That’s a fair point. And as we saw at the NBC event last week, there is clearly some interest for the industry to reinvent, re-engineer, and make what I said not to be true. So I do think it’s possible that an individual can change the world. I think it’s possible that sectors can get reinvented, but looking at it through the lens which I do, as an equity research analyst, would I bet on that? No.
On the Value of Content:
Subramanyam: American consumers not only have a tremendous capacity to spend money on content, they also have a tremendous capacity for watching a lot of good content. Just look at the number of people who managed to watch all nine episodes of Stranger Things on that very first day.
Wieser: I think there is so much good content now that the expectations people have are going to be a negative for some companies. Why would I just sit on my sofa and see what’s on anymore?
Dave Morgan: So does this mean that, except for a very specific subset of the population, these deep libraries of sitcoms and other things that were created in the ‘70s, ‘80s, and ‘90s may not have the value that a lot of us thought it would have?
Subramanyam: I don’t think so. I think there’s unbelievable opportunity and value in these systems. The content libraries you mention make up most of what is offered in SVOD. And most advertising doesn’t have to be delivered within a three day or a seven day window to be effective, especially if you’re in the brand building business.
I was looking at some SVOD playback numbers. On average in the sector last year, when you count playback there was a ratings lift of approximately 45%. Today it’s in the 55-60% range. For 18-49s, the audience essentially doubles, and when you look at 18-49s who watch the top 20 shows, the audience triples when you include playback. So this whole TV declining thing is hogwash, because people are consuming all of this content. They’re just consuming it slightly differently. Now we just need to figure out how to monetize it.
On the Quest to Understand Customer Behavior:
Morgan: In the near future, one of the biggest defining advantages for companies in the video space will be who can best understand consumer behavior. I’m only talking in terms of video now. There will be so many ways to snack—consume this bundle or that bundle—wouldn’t the most successful companies be able to understand what consumers will pay for, what will they give their time for, and what they’ll be willing to buy at a given moment? Media companies are going to have to become experts at consumption, rather than just making content available for that consumption.
Subramanyam: Yes, absolutely. And I would add to that that we need to understand tolerance for advertising, we need to understand tolerance for different kinds of advertising, targeting, how much people are willing to pay, etc. It’s shifting rapidly right now and it’s extremely muddy. We have to learn how to navigate it, so there’s going to be a lot of “let’s throw stuff on the wall and see what sticks” kind of research in the near future.
Morgan: When I talk to my former digital colleagues who are still in digital, the one thing that probably blows them away the most about TV is the price. If you want to buy a six second pre-roll on cnn.com, run of network, anytime of the day, it’s premium digital video and your CPM is $50.
But if you’re willing to not buy prime or morning show on CNN and go run of network, and certainly if you go DR, you’re at a $3-5 CPM. Same content, same brand, 30 seconds guaranteed against millions of reach in a day. TV has kept itself underappreciated on price such that it has held itself in a really extraordinary position.
On Optimizing for the Wrong Reasons:
Wieser: Procurement drives almost everything. And, procurement as a function is really good at optimizing trees rather than forests. If you want to be efficient in your overall advertising and marketing, media, and creatives shouldn’t be separate at all. Maybe you’ll spend more on media at a CPM basis, but your overall spend could be way more efficient. Today, and historically, it seems that marketers and agencies are trying to optimize costs independent of their outcome.
On Measurement & Reporting:
Subramanyam: Measurement in its broadest sense needs to get faster, smarter, and quicker. As consumers, we operate in real time, but somehow when we get into the office, or get into our measurement provider mindset, we don’t operate the same way. I don’t have time to wait six months for an answer. If you can give me near-term measurement that’s directional, that’s fine. If they are sort of 90% there, it’s fine. My old boss always used to say, “get me the best information, it doesn’t have to be perfect, and I’ll make the call after that.” That also leaves room for talent and gut feelings, and I think that’s important, too.
On Predictions for 2018:
Morgan: So, we’re all now looking for predictions for next year. There’s talk of consolidation. There’s talk of deregulation. There’s a lot of craziness. What’s one prediction you can make that is either incredibly intuitive or incredibly non-intuitive?
Subramanyam: Here’s an intuitive one. It’s going to be a slightly different upfront. It’s kind of obvious, right? It’s going to be broader, it’s going to be more interesting, there will be more data at play. I mean, how can there not be?
Wieser: This may be the counterintuitive part. It’s almost easier to see it over five years. The world will look more alike than not alike. The world is more Charles Darwin and less Che Guevara.
As 2018 approaches, what kind of New Year’s resolutions is your company making for its TV advertising? Do you know how well it’s doing? Is making it produce better outcomes important to you? Do you know how to go about achieving better TV targeting, planning, execution and measurement? What will you do to counter the issues of low reach/high frequency that have developed as a result of audience fragmentation?
At Simulmedia, these are things we think about year-round. If you’re interested in learning how you can get more for your advertising dollars, reach more of your target audience, and ultimately drive better results for your company, we’d love to hear from you.
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