TORONTO – Everyone, and I mean everyone, agrees that if the Canadian TV industry is ever going to both boost revenues and build greater efficiency in the television advertising business, the companies here must work together.
More specifically, the four large vertically integrated companies must work in harmony for the greater good. It has not yet happened. This was an important focus of the discussions that happened at last week’s very informative Future TV Advertising conference in Toronto.
In theory, it should be easy. There are just four seats at the main table (Bell, Rogers, Telus and Quebecor), so the quartet should be able to meet and figure out the promise of many millions more TV ad dollars to create a programmatic, addressable, targeted TV ad market in Canada.
In practice, it is the exact opposite. While jurisdictions all around the world are making hundreds of millions of dollars with addressable ads (any talk of the technology still being in question is a canard. It works and is being broadly deployed everywhere else but here, except in small trials), the broadcasting divisions of the companies here are generally waiting for the capital dollars it will take to build a new system to be approved.
However, because they are big, vertically integrated companies, they have many other more pressing priorities (think wireless and wireline network upgrades) with the potential to earn many multiples more revenue for the companies than – by comparison – the smaller dollars to be earned with targeted ads. However, with linear TV ad revenues sliding year by year and with the cultural implications of that worrying many, the TV industry can no longer afford inaction on this front. Successes are out there.
Take Modi, a division of agency GroupM. All this 30-person division does is addressable ads. It can offer addressable TV (the ability to send a specific commercial to one household and not another), and hyper-local TV (the ability to insert a television commercial directly to a specific zip code through set-top boxes), among other services. Its CEO, Michael Bologna, shared a couple of cases where there were multi-million-dollar direct benefits to carriers, broadcasters and clients.
So far this year more than $60 million has been spent with Modi, he said, through 147 campaigns with 77 advertisers. There have been significant wins, some of which he detailed. Modi takes aggregate subscriber data from participating TV carriers, mixes it with other datasets and comes up with just the right homes to deliver a client’s ad. In one of his examples, he was able to pitch directly to households which the data told them were in the market for a certain style of vehicle (he didn’t identify the client).
"Without it, this medium is going to atrophy and it’s too damn good to let it go.” – Bob Reaume, ACA
The $2.1 million targeted ad spend generated sales or leases of 248 incremental additional cars (or $10.5 million in sales) than if the addressable ads had not been used, according to Modi’s impressive data. Bologna also demonstrated similar successes with a soup campaign, as well.
“This stuff does make advertisers happy. This stuff does work,” said Bologna, who added Modi has a 93% return rate of advertisers once they try targeted ads. “At the end of the day, if you do this right, the advertisers will pay the premium” for the work and data-crunching required.
But these successes come with co-operation. Modi’s addressable ads have a 42 million household potential reach (with 12 million DirecTV subscribers, 9 million from Dish Network, 3 million from Cablevision and 18 million from Comcast) and show that without at least two of the four VI companies in Canada getting together to build this, a viable market will not emerge.
That said, there is resistance. “It’s a great concept, but every time we start to do the math, it doesn’t make sense for us,” Catherine Malo, Quebecor Media’s director of monetization strategy during a panel session at the conference.
While this may be true for Quebecor trying to go it alone in the French market, Arise Communications’ Andrew Rosenman said the problem in Canada just seems that we know “everybody has to jump into the pool… but nobody feels they have the business case or the rationale to jump first.”
However, the worry about the Canadian market not being big enough – or of companies needing more scale is viewed by some as a red herring. Cogeco and CHCH are having success doing it and Bruce Anderson, CTO of leading addressable technology company Invidi noted addressable is working in Belgium – where Invidi technology is driving targeted ads to 900,000 households and 1.4 million in-home set-top boxes.
It can work here. It needs to work here. Advertisers like TV and want to buy addressable ads. “We need TV, but we also need it to change,” Association of Canadian Advertisers vice-president Bob Reaume told attendees. “Addressable TV and programmatic TV have large roles to play in the fix.”
Plus, his members are willing to pay the premium. How much? “The market will set that price as it always has… I know it’s expensive to put this into place and I know some portion of it will be passed along, but without it, this medium is going to atrophy and it’s too damn good to let it go.”
