• Why Audience Aggregation Will Alter the Video Landscape Forever

    In the hierarchy of important metrics for video publishers, GRPs reign supreme, followed by impressions. From an advertiser perspective, using these two metrics makes it hard to compare performance across these two similar channels. Many large media companies are also grappling with how to reconcile GRPs and impressions, particularly when they try to build cross-channel media plans for their advertiser partners.  

    The biggest problem with GRPs and impressions is that they encourage spending on volume instead of value. While everyone knows that a brand wants to reach a desired audience with a particular frequency, when translated into GRPs or impressions, there are perverse monetary incentives to ignore those guidelines and go for volume instead.

    Digital video advertising issues with fraud, viewability and frequency have caused advertisers to reassess their volume oriented media buying and many are focusing instead on buying audiences. Companies like TruSignal and AudienceScience create technical guiderails that empower brands to enforce media buying by audience and frequency. This trend could grow across screens fast – buying by audience and frequency eliminates the barriers caused by impressions and GRPs.

    Beware the Publisher Who Doesn’t Have Audience At Scale

    Many mid-sized and premium video publishers don’t treat audience-based buying as they should, relegating it largely to programmatic inventory or as a tacked-on metric for an additional fee. In a recent study by Forbes Insights for Quantcast, it was found that 90% of advertisers spend at least a quarter of their digital advertising budget on targeted placements and that 84% of them plan to increase that spend next year.

    For digital video publishers, the problem with audience targeting is that audiences are not infinitely scalable like impressions, particularly when paired with a frequency cap. Publishers with great content have priced audience targeted media to compete with the RTB long tail, where marketers can theoretically find the same audience for pennies on the dollar.

    As advertisers ask more of audience buying and pull it out from the depths of the RTB long tail, there is a huge opportunity for premium publishers to reexamine their audience strategy and prepare themselves for what’s to come. In this future, there will be some winners (TV giants, Digital giants and mavericks) and if they aren’t savvy, some potential losers (traditional premium content publishers.)

    Aggregated Audiences Are the Future of Video

    However a media company examines their audience strategy, they have to do so in the context of start-up hype and serious M&A activity and consolidation. While many publishers have not caught up to the audience-targeted future, others have been building audience powerhouses and they aren’t slowing down any time soon.

    The most formidable players in the future of the aggregated audience are the cable companies and other TV giants. As Verizon, Comcast and others are consolidating media and ad tech companies, they’re also building powerful audience hubs. They have online, offline and cross-channel covered.

    At the same time, Google, Facebook and a few other digital giants have become data juggernauts, pulling in data from consumers, brands and competitors.  While they lack a TV presence, they make up for it with a depth of search, engagement, mobile and social data that the cable companies lack.

    Finally, companies like Vox and BuzzFeed represent digital video mavericks that play by their own rules – preferring native and sponsored video advertising and acquiring (or creating) alternative content that moves quickly and appeals to younger generations that are less wedded to traditional TV.

    More traditional TV companies have to examine their five-year strategy to determine how they will survive in an audience-powered future. Some companies can expect to be acquired or to hold steady if they fit into the “must have” cable bundle (think ESPN.) But for companies who teeter on the edge, (perhaps Viacom,) the best-case scenario is to strike a deal for one of the big winners to represent their audience and sell for them. They can start by making their audience as clearly defined and valuable as possible.

    Publishers at risk in this consolidated future must force a price adjustment on audience targeting or risk becoming a commodity all over again. Publishers must examine their revenue model through an audience-targeted lens. If advertisers want a particular audience at a particular frequency on a relatively high quality website, they should be paying the right price for it. If all publishers got their audience pricing out of the gutter and up on their rate card, it would be a big first step towards a needed market correction ahead of the coming consolidation creating a more favorable environment for the video companies that are most threatened today.