The Five-Step Transformation to Cross-Platform Monetization

At Imagine Communications, we are proud of our heritage in broadcast advertising technology.  Broadcasters and operators around the global rely on our products and innovations, with almost $50 billion a year in advertising spend managed through Imagine systems.

While the shift towards streaming delivery is having an undeniable impact on linear broadcast ad revenue, our view is that the decline is much less dramatic than headlines suggest. Imagine research predicts that by 2030, linear broadcast will still command between 40-50% share of ad revenue. Some analysts are even more bullish, projecting that linear advertising will still take more than half the ad dollars at the end of the decade in some economies.

Linear television will continue to have powerful drivers to retain audiences. Most obviously, news and sport are best served by linear broadcasting. But there are other attractions in the linear offering, not least that a strong brand gives audiences reassurance that it will deliver the quality and nature of content they seek, helping them with discovery of new programming. That same promise of quality content attracts top-tier advertisers; they know they can rely on linear television to deliver the most valuable audiences and the broadest reach to power their brands.

Linear advertising has traditionally been sold on a spot basis: audience volume and demographics are predicted by individual programs, and spots within breaks in and around those programs are the basis for trading. In addition, these spots are sold along with a ratings guarantee, which means the broadcaster has no flexibility on how to fulfill the order when ratings are not achieved other than providing a “make good” or giving away free ratings when ratings are overachieved.  While this creates a strong bond between the sales house and the agency/advertiser, the model is unlikely to deliver the most effective use of the advertising inventory because it depends upon predicted ratings and may be inefficient because of the need for extended manual planning.

OTT advertising, on the other hand, tends to be sold at arm’s length by demand-side platforms (DSP) that manage multiple inventories without ever really matching advertisers and content. This disconnect is a key reason why broadcast is still seen as the gold standard for television advertising. That said, the one advantage that OTT advertising has is how efficient the trading becomes due to end-to-end automation with minimal manual intervention required.

Regardless of its potential longevity, linear TV is not where ad revenue growth will come from over the next five years. Today, cross-platform content distribution is the goal for most broadcasters and global media companies, who know that they must meet viewers where they are. However, without an efficient cross-platform monetization model, mass campaigns will not be able to achieve reach and frequency targets.

Our solution is to bring all your advertising inventory, linear and nonlinear, together in a single point of sale, treating it as a single audience for unified campaign planning. If this sounds radical, then be assured that there are high-profile broadcasters around the world already doing this.  In fact, our experience is that those markets that have successfully transitioned from spot-based to audience-based monetization have done so by focusing on the notion that the audience is the inventory, rather than the spots.

Getting to true cross-platform monetization won’t happen overnight – it will be a journey. There are five critical steps to making the transformation:

• Step 1 – start selling your linear inventory by audience. Decouple program, spot and audience. Track the commercials finding the audience, rather than make decisions in advance.
• Step 2 – start optimizing linear inventory to find audience. This is the logical next step. Use all the research and tracking tools – at least once a day and ultimately in real time – to refine placement, making it more fluid. Know exactly how close you are to your audience commitments in volume, demographics and frequency, rather than rely on pure ratings-based audience predictions.
• Step 3 – start selling linear and VoD inventory together. It is your brand, your audience, your market. Why should you have different sales methods, platforms, billing and delivery commitments? Adopt the idea of cohorts to demonstrate how you can reach a highly targeted audience, in the right frequency, without resorting to unpopular (and often illegal) direct individual targeting. So that VoD and linear become one audience buy.
• Step 4 – start filling your VoD/OTT inventory with campaigns you have sold. Take control. Move away from DSPs. You now have the tools for accurate reach and frequency calculations. Consistently deliver ads that are relevant and engaging to your audience across all platforms.
• Step 5 – Start optimizing across inventories to guarantee reach, volume and frequency goals. The audience is fragmenting. Maybe linear is skewing older, OTT skewing younger. For a single campaign, you can optimize across those different platforms to find your audience, maximize your operational efficiencies and achieve your revenue goals.

This is not an order of battle. Steps can be concurrent. It is your transformation: go at your pace. We can point to success stories at a number of our customers, like Sky in the UK and Nine in Australia, who are already putting at least the first four steps into practice in the real world.

And if you do implement the plan above, I can offer you a bonus step 6. Your transformed sales and fulfilment operation will be so efficient, you could consolidate operations for other broadcasters and media companies ― offering advertising management as a service.

New technologies are having a massive impact on everything Imagine does, not just in ad tech. But do not confuse technology with business change. Transformation can only succeed if you change HOW you do things, not simply replace existing systems with new ones.

In our view that is a mistake. The key to long-term success is transforming how you think about your inventory. So instead of thinking about inventory as spots and breaks as you would in linear, start to think about it as an audience that you are trying to monetize. If you think about your business in that way, you will massively increase your chances of having a successful transformation.

The five-step program is as much cultural change as technical transformation ― and that is always challenging. But without it, you will be in no position to build a strong business in the new, dynamic, multiplatform media environment.  This journey of transformation is critical for the survival of our entire industry.