Targeting Makes TV Ads Underpriced

December 2, 2010 § Leave a comment

Venturebeat runs a story on NYT titled “Why an Online-Ad Guru Thinks TV Ads Are Too Cheap”. Online advertising pioneer Dave Morgan, whose last venture is Simulmedia launched last year, “drew an investment from cable-TV giant Time Warner in April, aims to bring techniques of Web targeting to television to boost prices from their current levels.”

I am a little skeptical about the notion that targeting will actually help the already-saturated TV ads market to generate more revenue. Here is why.

What distinguishes TV ads from online ads is its economy of scale. A TV advertisement is like a presidential primary. You want hardcore Democrats/Republicans to vote for you in particular. In the mean time, you also want to gather more support for your party. In this case, targeting seems too trivial to matter, especially when a huge amount of money is spent.

Some companies launch TV ads just for the sake of publicity and image building. The viewers who are shown a Nike ad may not be a Nike consumer at all. But it doesn’t mean they don’t care or talk about Nike. And this makes targeting less meaningful.

Simulmedia alleges to unlock the value of set-top box data. Convinced as I am that there is value, I find it hard to believe that information on TV box is as resourceful as data from PCs and mobile phones. What worth noting is that smartphones and computers are, more often than not, personal property, making the data obtained from say users browsing history individual-specific. TV is not. If a family shares on TV and the daughters like cartoons and teen dramas, the mother likes movies and shopping channels, the father enjoys sports, business news, the data from that particular TV box will tell you the story of almost the whole demographic.

Moreover, data generated from set-top boxes are somewhat limited. There is a fine number of program types, news, talk shows, TV series, movies etc. Maybe I cannot make an informed judgement so far since I don’t know what kind of data can be obtained merely from your viewing history. It’s fair to say that it is hard for me to regard it as valuable.

Now that I have stared at my TV for a little while, I am wondering if he is staring back at me as well — does he know what I like? Hardly.

From an audience’s point of view, even though he knows what I like and what I am likely to purchase, it is going to upset me if I am overwhelmed with ads for a particular type of products or services. Diversity is what makes ads bearable.

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