Could targeted ads work on TV?

I’ve been exploring the concept of targeted advertising on television. Loosely defined, it is the ability to purchase advertising space against a diverse array of groups that go beyond the traditional trading audiences.

This post accumulates the background information I’ve collected on the topic and speculation (mostly mine) on how theory may become reality.

Because it is such early days, I’d love to hear the thoughts of people (media side, client side, planners, buyers, researchers, interested parties) on the subject. Do you think it will work? What would you like to see and what would you like to avoid?

(Disclaimer: I have no involvement in targeted advertising – this is purely background research. This is preliminary work and any errors are fully attributable to myself).

1. Background

Traditionally, trading television advertising is a complicated beast, but Thinkbox have a gentle overview of the topic here. Essentially, there are several criteria that advertising can be bought against – channel, time of day, region (for analogue channels) and so on. Specific trading audiences can also be bought but unlike other criteria they can only be estimated.

To use a simple example, I may want to purchase 300 ratings against Women on ITV1. My advertising would be placed in shows that would be expected to deliver the required number of female viewers. However, only when BARB viewing figures become available do I know how many ratings were delivered. If ITV1 delivered more than 300 ratings that I am in debit; if they undelivered then I am in credit. The difference is carried over to the next advertising campaign I run.

However, as we all know, TV is changing. On-demand and IPTV, to give two examples, are changing the concept of what TV means.

The concept of targeted advertising emanates from this seachange. As it is still (largely) a concept, definitions are loose and the vague. Targets could theoretically be grouped according to demographics, lifestyle, behaviour, attitudes or a combination thereof. While an internet connection is the likeliest means of delivery, it is not the only option.

Whoever delivers effectively targeted advertising first will have a tremendous competitive advantage. The future is up for grabs.

2. The Players

In the UK, the platform providers are best positioned to introduce targeted advertising

In the US, Project Canoe is looking to develop consistent metrics which in theory could then lead onto targeted advertising

It is also theoretically possible for non-platform providers to offer targeted advertising. These could include

3. Strengths and weaknesses of targeted advertising

With the concept still fluid, it is difficult to come up with specific answers but broadly speaking: (NB: Several of these came from a Mediaweek piece by Barry Llewellyn of Packet Vision)

Strengths may include

  • Ability to target a more tightly defined audience – less wastage
  • Greater relevance for viewers
  • If ads are interactive, there will be greater accountability for direct response
  • Frequency of exposure can be capped
  • Advertising watersheds could be removed in adult-only homes (e.g. alcohol advertising in the afternoons)
  • May be more affordable for niche advertisers with small target audiences
  • Greater flexibility in pricing options – pay by impressions or acquisitions?

Weaknesses may include

  • The whole concept will succeed or fail on the quality of the information captured
  • Different platforms offering different options could hugely overcomplicate matters; can a consensus model emerge?
  • The current pricing model will be completely destroyed; with a near infinite number of targets a new system, such as Google style keyword auction bids, will need to be introduced and accepted
  • Similarly, how will total advertising audiences be audited? Everyone could be seeing different adverts around the same programmes. BARB would also need to be overhauled
  • No-compete clauses can severely inhibit the ability to target e.g. a beer brand may pay a premium to ensure it is the only beer brand in the spots they have identified as being key
  • Unpopular targets may get the same few ads on continual rotation e.g. will 65+ C2DE spinsters only get ads from the COI?
  • Serendipity of appealing to people outside of the perceived core audience is lost – do targeted ads have the same attraction to brand-based advertisers as direct response?

4. Potential methodologies

Largely speculation on my part, but potential ways to target ads include

  • Geographic/geodemographic information – the most basic targeting option. Homes can be targeted geographically through IP address or MOSAIC/ACORN postcode information. Geo targeting may only be attractive to local advertisers, but these could make up a long tail of demand. Alas, these methods are far from flawless. I’m a male 16-34 ABC1 (highly desirable, if I do say so myself) yet live on a council estate – would I ever see Leffe, Audi or Playstation 3 adverts?
  • Registration data – when homes purchase a new TV or set top box, they could be asked to register not only demographic information but also lifestyle/behavioural information (additional information would need to be opt-in). This gives a richer understanding of viewers beyond demographic profile, but there will be ambiguities over individual and household information and usage, and the data needs to be regularly refreshed in order to be useable (for instance, my cat may die and I may get a dog instead)
  • Return path behaviour – Interests can be inferred from the types of programmes that are watched, or the types of website that are visited. For instance, if I watch a lot of DIY shows, an ad for Ikea may be suitable. This is achievable but it is an art rather than a science. What if it is my girlfriend watching the DIY shows, not me. I could get all the DIY ads during football, and she wouldn’t get any during Hollyoaks. This type of targeting can be quite transparent and with an uncanny valley, is the method most likely to irritate.
  • Panel information – whether a panel like Skyview or an extension of BARB, a sample of viewers can be recruited, with advertising targeted around their behaviour. This could be extrapolated to all viewers through programme audience profiles or registration information. However, this would only effectively be targeting a small proportion of viewers, with the majority guesstimated. With around 35,000 Skyview homes representing over 4m households with Sky+, the level of accuracy may not be high enough.
  • Opt in system – give people the choice to submit information – either through an in-depth registration or regular surveys. By communicating the benefits, people may actively choose to receive targeted ads, creating value for everyone. This could be achievable, though the proportion of those opting in may be too small to be useful. With an opt-in, several additional steps could be taken to ensure accuracy e.g. a BARB style remote control (each viewer needs to “sign in” by pressing a button) could be introduced so advertisers know exactly which members of the household are watching.
  • Social profiles – Bringing social networking to TV – such as this BBC/Microsoft prototype – offer a lot of information that could be harvested. People like to communicate their favourites, and this could be utilised. And with users logged in to their profiles, advertisers will be sure of at least one viewer in the room. This could work – Joost is currently the number one contributor to Facebook Connect – but again, it would only be a limited dataset and a lack of take-up may prohibit effectiveness

5. Implementation

We should be seeing several prototypes and trials following in the wake of the Inuk experiment. Due to the difficulties of implementing targeted advertising within live broadcast, I believe targeted ads will initially concentrate on on-demand and interactive content (whether red button or the electronic programming guide).

There appears to be a first-mover advantage, and so the stakes are high. Virgin would seem the best placed to lead the way – the internet is already connected to the box and with subscription fees they are partially shielded from any effects to advertising revenues – but I wouldn’t rule out any of the other players leading the charge.

Indeed, the first implementation may not even be within advertising. What if I could let Sky know which sports I like and dislike, and then get a customised news ticker on Sky Sports News? I’d certainly opt into that.

6. Further thoughts

This is an early stage outline of how targeted ads appear from my perspective. I’m really keen to hear other people’s views on the subject. Do you think targeted ads will take off? What would you like to see? What problems do you envisage?

Any feedback would be greatly appreciated

sk

Image credits: http://www.flickr.com/photos/pbo31/ and http://www.flickr.com/photos/melilab/

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7 Responses

  1. good work fella
    E

  2. Simon, you probably saw them mentioned in CES coverage, but in case you didn’t Sezmi sounds like their offering might also make them a contender for decent personalise TV ads. One article below, with an excerpt:

    http://telephonyonline.com/video/commentary/over-the-top-video-0109/

    “The Sezmi experience is extremely compelling, right down to the remote control, which features a button for each household member. Selecting a particular button pulls up content tailored to that individual’s profile and past viewing history. Content is then brought in from sources ranging from YouTube to live TV to upcoming shows or downloads, and it is prioritized in a way that’s personal to the individual consumer. It gets even more interesting when advertising comes into play. Talk about targeting — Sezmi lets advertisers differentiate between a 40-year-old mother and her 10-year-old son. Consumers will like this personal attention and intuitive user interface, while service providers should appreciate the cost and network capacity savings.”

  3. Thanks Eaon, and thanks for that link Andrew – I hadn’t seen that. That remote looks like it could be a winner – no reason why the major players couldn’t follow suit if it proves popular

  4. Fantastic overview of some of the prevailing ideas of how targeted advertising might work, but you’ve missed one of the newer technologies being developed (or in our case, already developed), today.

    The personalization methodologies you mention are flawed in one of two ways. Either they depend on the viewer to take an action (click a button, participate in a panel) or they make guesses based on incomplete information (content of a show, zip code). It turns out there is a more accurate way.

    People have habits and those habits can be analyzed. That is, it is possible to identify the viewing habits of individuals within a household, and identify who watches particular shows based on behavior. By analyzing the STB click data on the return path, using mathematical modeling, it is possible to get a highly accurate and granular picture of who is watching, such that you will get the DIY ads and your partner will get the ladies apparel ads.

    The statistical analysis behind this is quite complex, but the systems have been tested and are quite accurate. No user intervention. No assumption based on content or zip code. Purely based on behavior, it is possible to identify you within your demographic or psychographic group and target ads to you. Kind of spooky, when you think about it, but if properly implemented can ensure user privacy while enhancing your viewing experience.

  5. Thanks for the information Rebecca

  6. I agree with Rebeca on the existing posibilities for TV targeting without user perception.
    I have the perception that article makes a good exercise about the user data agregation and targeting, but in the short term, when inventories are not that big, won’t be the key factor.
    When refering to video download or live tv, it’s clear pre-roll and post-roll are easy to do and even carried today… but it’s on live TV where the audiences (and money!!!) are.

    IMHO, the key question is how do I get involved Broadcasters and Networks so the first allow ads replacements and signal the beginning of ad blocks, and the seconds provide their infraestructure and customer information to allow a decent targeting.

    I take the opportunity to invite readers to http://www.zentym.com, a start-up with a existing solution for live TV targeted advertising.

    At my company we have a solution for targeted ads on live TV (Cable, IPTV and Mobile TV) and

  7. Hello webmaster
    I would like to share with you a link to your site
    write me here preonrelt@mail.ru

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