Where the Money is – Targeted Advertising

This year the highlight of IBC for me was a session called ‘Targeted Ads: Harnessing the Power of Interactivity’ which took place very early on Saturday morning and was attended by just a handful of initially sleepy delegates.

Targeted ads (also known as dynamic advertising) have long been talked about as the holy grail of IP/satellite/cable content delivery. However, many initial efforts at targeted ad systems have been very clunky and, frankly, only a small improvement on adverts on linear broadcasts, which deliver ads relevant to the dominant demographics of each show being watched but leave a small or even large minority of the viewing audience who don’t fit in with this main programme demographic largely uninterested in the ads shows.

This IBC session, however, gave some actual data from trials of targeted advertising carried out in certain European markets. It was fascinating stuff, with data out of Italy for example showing that targeted/dynamic advertising increased accuracy of advertising (defined as adverts that correctly targeted each specific viewer) from 53% for linear broadcasting to between 57% and 60% in digitally delivered content (where data on individual viewing behaviour is easily available). That increase doesn’t seem large in percentage terms but it really is a massive improvement on what linear broadcast advertising can do – and the overwhelming evidence is that advertisers will pay big bucks for this increased accuracy.

Of course getting that targeting right is incredibly difficult, with data on historical viewing trends of each consumer needing to be mixed with external data profiles on individuals in order to evolve the optimal business rules that will serve the right ad to this viewer within any specific piece of content they are watching. It’s a mixture of art and algorithmic science, and the subtleties of working out which ads viewers really want to see with any specific piece of content are not easy to figure out.

For example, is it right to assume that an 18 year old male watching a harrowing war documentary will want to see typical young male adverts (such as for cars or technology hardware)? Maybe – or maybe not. Past viewing behaviour might indicate that an individual viewer subsequently switches from such “gritty” content to a comedy or light entertainment programme – and hence that specific viewer might (counter-intuitively) be better served with anything other than typical adverts for his demographic during the war documentary – i.e. by an advert for ice cream. That’s the point of targeted advertising – it is micro targeted at each viewer in each specific viewing situation, and every situation is different.

Does any of this matter? Yes it does – in the UK, TV advertising accounts for roughly a third of the entire broadcasting industry’s revenues, and digital delivery of content with the associated potential for targeted advertising presents massive opportunities and threats to the broadcast industry. I think we can expect to hear an awful lot more about targeted/dynamic advertising in the future. Do you agree?

Nick Moreno, Head of Market Intelligence