Snug and comfortable with how things have always operated, the TV industry will soon face an inflection point where it will need to turn to programmatic to ensure its viability.
Chris Dobson executive chairman of The Exchange Lab, believes this impetus for change is driven by the lack of rich datasets and an erosion of ad revenue as the digital evolution continues to sweep across all media forms.
Despite the apparent resistance to change, TV and digital, in fact, shared several similarities, Dobson said, during his presentation at this week’s Festival of Media Asia in Singapore, where he also spoke with ExchangeWire on the sidelines. For instance, both platforms categorised inventory as long-tail or premium and shared similar views on brands and the value of inventory. As such, how each perceived trading should not differ greatly, he added.
TV also understands auction, changing price bids day by day to reflect the current performance of a programme–albeit, this typically would be done manually compared to the highly automated realm of programmatic, he said.
So, what is stopping this industry segment from going programmatic? The conviction that bigger yields can be generated from doing so.
“Does TV believe it can get more money from [selling] Super Bowl ads in an auction than pre-sold?” he posed. The community also has an established trading model that has been functioning well, giving little incentive for change and posing questions about whether RTB can help drive up yield. Furthermore, it perceives the programmatic debate has a ‘us versus them’ discussion when, in reality, it is just another way of trading and does not necessarily replace current practices, Dobson said.
There has been little pressure to move to programmatic because TV has sat untouched while every other media, including newspapers, have been impacted by digital, he noted.
The TV community, however, will need to snap out of its inertia as the digital evolution continues to “overhaul” all media forms, he said.
Describing TV as the “last bastion” to resist the world of programmatic, Dobson said the industry had faced challenges over the years as satellite players, and more recently online streaming providers such as Netflix, entered the market.
“The multi-channel pressure has been [bearing down] on TV for a long time and now with new digital players, armed with a lot more data [about their audience], the challenge has become more serious,” he noted. TV does not have the data richness that digital can offer because the former is based on meter systems, which does not provide individual audience data, he added.
In comparison, new market players are creating interesting information about consumers and encouraging them to identify themselves. Netflix, for instance, has the ability to collate more data about the person in front of the screen by getting consumers to log in to access their content. “The data they have is vastly superior to linear TV, which has just an extrapolation of that,” he said.
Dobson believes the move toward programmatic will happen and this change will be driven by an urgency to remain sustainable. He noted that the TV community continues to see its current yield decreasing, with ad revenue increasingly shifting toward digital and tipped to overtake TV in a couple of years, and face growing pressure to meet marketers’ demand for ROI and data integration.
“Ultimately, we’ll get to a point where…everything will be about content, tradable in a digital and automated way that allows it to scale,” he said. That’s the change you’re going to see in the Asia-Pacific region, as fast as anywhere else.”
Eyes on China
Apart from programmatic, much of the discussion at the conference revolved around the Chinese market and how market players can find success.
During his presentation on stage where he spoke through an interpreter, Huawei CMO Jeffrey Yang underscored the importance of finding a differentiator, especially in a market as crowded and diverse as China.
He noted that there were 313 smartphone brands in the country, offering 5,455 different models. Between January and November 2014, 1,463 new models were launched with the most expensive priced at US$3,352.4 and the lowest at US$14.7.
Yang called for changes in China’s marketing landscape, which he described as crude and lacking a clear, concise strategy. Many brands, for instance, resort to using women to promote products and appeal to consumers.
“There’s a lot of focus on KPIs, and immediate and fast returns, and this impacts what we do in the long term,” he said, adding that marketers in the county too often ‘over-analysed’ the minute details and neglect to see the bigger picture.
He urged brands to alter this trend by returning to the roots and studying the DNA of the company and its products to identify their market differentiator. Noting that the genome of a chimpanzee and human differentiated by just 4%, he stressed that even the smallest of difference could be significant just like it had proven for the two species.
Hannelore Grams, Nestle’s head of digital marketing and social media for Greater China, also noted the need to be agile in a market that is fast changing. While this can prove difficult for large organisations such as Nestle, it meant being prepared with the necessary resources, including legal and creative staff, to react swiftly to current trends, said Grams, during a panel discussion.
The F&B brand also runs a dedicated digital marketing strategy for the Chinese market, where the audience tools and platforms are different, she said.