EDITOR’S NOTE: We’re going to break from the typical format today and focus exclusively on Television. The traditional broadcast TV model faces both challenges and opportunities as it transitions into a digital age. Here are a few aspects to think about . . .
DIGITAL SINKING IT’S “FANG”s INTO BROADCAST TV: Despite the recent brand safety controversies with OLV, video advertising continues its steady transformation from broadcast to digital. Now a top media consultant has put forth the theory that “FANG” (cute abbreviation for Facebook/Amazon/Netflix/Google) will eventually displace ABC/CBS/NBC/Fox as the “Big Four” video networks. The author argues this transition is not an if but a when, based on the one important differentiator the digital publishers have over the broadcasters – the ability to overlay data on TV ad buys. While the simple idea of data and smart targeting aren’t original here, the different ways data itself is segmented (attention/consumption/passion/intention) is an original way to look at this issue. Provocative read!
ADDRESSABLE TV A PATH TO DATA INTEGRATION?: One of the ways TV is trying to fill the data void is by matching 3rd party data sources to viewers of linear TV in order to create custom audience segs and prove attribution. Companies like Oracle are moving aggressively into this space by connecting CRM data to TV viewership. The key to enabling this match is the concept of Addressable TV, which requires broadcasters and cable operators to have household level data on who’s actually in the living room watching their set top TV. Right now in the US there is Addressable TV data on about 50 million households, so still only about a quarter of the population. The devil’s advocate would say the relatively low penetration rate of Addressable TV matched to niche segments (like luxury SUV intenders in this article’s example) will yield very small scale, which will require Oracle to create look-alike models instead deterministic targeting. So it’s not the perfect solution for broadcasters today, but it’s least it’s a way for TV to dip a toe into the data pool.
THE DE-BUNDLING OF TELEVISION: Finally today, as the TV landscape becomes more fragmented and the line between broadcast and digital TV starts to blur, the networks are looking for ways to stay relevant. One tactic is to de-bundle or sub-bundle networks from the traditional all-channels-for-one-price cable model. Right now, with the exception of premium movie channels, viewers are forced to pay a base fee for about 100 standard networks. But each of those networks charge a “carriage fee” to the cable networks, which shows up in viewers’ bills. EPSN had the largest carriage fee in 2016 at $6.10/mo. So what if networks broke from the bundled model and sold themselves a la carte directly to viewers through a streaming subscription, or created sub-bundles like the sports-less example described in the attached Business Insider article for just $15-20/mo? Strategic pivots like this could help individual networks and also have the potential to upend the entire TV packaging/pricing model.
Hope you enjoyed this deep dive. Have a great Tuesday guys!
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