Set-Top Data Could Be Boost For Stations

Dave Morgan, CEO of the television marketing firm Simulmedia, believes 2010 could be the year that advertisers begin to reap the benefits of the industry's set-top viewing data. While that may seem more advantageous to the cable and satellite industry's ad sales programs, a rising tide of viewership data will lift broadcaster boats as well.

Stations not only reach the lion's share of television households via multichannel programming distributors that use those set tops, they continue to attract the digital video audiences that advertisers most want to reach. As Morgan noted in an article appearing in the January-February issue of MFM's The Financial Manager magazine, there are at least six ways that TV set-top viewing research could reshape the industry.

1. Better Measurement -- Wide availability of set-top-box viewing data gives traditional television the ability to provide marketers with the audience measurement that they can obtain from online media and other interactive platforms. Morgan foresees a blending of panel data and massive, census data feeds.

This enhanced research will bring more accurate and more transparent program and network ratings. As a result, it will be possible to see the measurement of "long tail" networks that are too small for today's panel measurement systems, including digital networks multicast by the station.

The ability to provide greater transparency in audience resonates within the industry's financial management community. For years, cable networks that collect license fees have appreciated the opportunity to replace market estimates for the number of households that receive their programming with the more actual measurement provided by the cable system operator's subscriber data. Nielsen's C3 ratings represent an opportunity to also account for time-shifted viewing in these households, which continues to grow with the increasing use of DVRs and video on demand services.

2. Better Programming -- Set-top data may also be used to tell programmers, including the station's programming directors, exactly "what viewers like, when they like it, how much they like it and what they don't like," Morgan points out. While this capability could significantly alter the entire production ecosystem, it will also help to ensure higher levels of viewer satisfaction..

3. More Relevant Advertising -- Today, most television advertising is "spray and pray," Morgan notes. While the industry does a good job targeting most ads and promotions to relevant programming genres and target demographics, a large portion of the spots are wasted on the wrong people.

In contrast, set-top box data would allow local stations to provide a more detailed profile of their viewers by program. Local advertisers already use this data to deliver more relevant advertising to digital cable households using the local avails offered by ad-supported cable channels.

When you think about it, there is nothing to preclude the same type of collaboration between a local broadcaster and multichannel programming providers that national networks enjoy today, when local avails are used for targeting ads to a particular neighborhood. 

In addition, the ability to more closely align marketing messages with the viewers who are the most likely to purchase a particular product eliminates waste and increases spot value, as Morgan notes. Consider the greater value a broadcast-cable partnership could offer to the local Ford dealer through the opportunity to direct ads during the widely viewed local news to the viewers who are more likely to purchase a Focus hybrid or an F150 pickup using the same ad avail.

4. More Ad Revenue -- Viewing data will not only bring targeted ads, and better rates for those ads, but it will bring better yield management in the allocation of ad inventory. Networks and stations have always been good at packaging spots and programs with an eye to maximize their pricing yield, and also at maintaining scarcity to drive competition. Now, Morgan notes, they will be able to use real data to drive those decisions.

5. Better Control Over Costs -- Most of the cost structures in the television industry are built on history and tradition, as opposed to optimization and opportunity, according to Simulmedia's Morgan. Morgan envisions viewing data, and the attendant operational changes that it will fuel, changing that paradigm. He believes that not only will the value created for viewers, advertisers, programmers and others become more apparent, but so will the costs of providing that value. As a result, cost-allocation formulas will be much more fully aligned with revenue streams and value creation.

6. Better Program Discovery for Viewers -- When you add up the hundreds of linear channels and thousands of on-demand programs available to digital cable households at any given time, it is practically impossible for viewers to truly know everything that is on that they might enjoy. Morgan expects future generations of interactive program guides, as well as digital video recorders and on-air program promotions, to benefit from actual viewing data and simplify that process of connecting customers with the shows they won't want to miss. While data alone won't divine what everyone wants to watch and when they want to watch it, Morgan says it will help a lot.