In 2011, Canadian spending on online advertising reached $2.593 billiion, a 16% increase over 2010, according to IAB Canada. At the same time, ad spending on all forms of television, including public and private traditional, pay TV and specialty channels, totalled $ 3,578 billion – a much more modest increase of 4.5% (source: Statistics Canada). The gap in spending between the two media continues to narrow, and is now at a point where experts predict that internet ad spending in Canada will overtake television by 2016.
It’s no surprise, then, that advertisers have started thinking about a new medium that may make it possible to combine the formidable power of television as a mass medium with the pinpoint accuracy delivered by recommendation engines and the instantaneous, all-points delivery capability of advertising online.
What’s in store is a television experience that transcends all screens – one that’s customized for each TV viewer and is based on shows specially selected and recommended for them using methods like those used by Amazon and Netflix, and financed by commercials that are tailored to viewers’ personal interests and broadcast to them through real-time bidding that can deliver instant advertising space on any individual screen.
To capitalize on these prospects, for example, electronics giant Samsung recently introduced its new Smart TV at the 2013 Consumer Electronics Show. Smart TV shows 5 different screen menus at the same time. The first of the screens recommends shows, films and series based on the actual viewer’s consumption history and the most popular current shows.
The key to these innovations is Big Data, a concept that’s become increasingly important in the past few years. The name refers to the processing of huge volumes of data generated by internet users’ social media interactions, transfers and downloads of videos and photo images online, GPS signals from their mobile phones and shopping transactions on the web – plus data generated by the millions of wireless receivers installed in everyday objects. Big Data is already being called the new black gold, and is well on its way to becoming a crucial competitive edge for 21st-century businesses.
What Big Data promises for television
With the digitization of television, as more and more viewers connect through the internet directly or over devices such as game consoles and DVD players, as the habit of watching videos online grows exponentially and the television viewing experience is extended to include two or even three screens, consumers are producing vast quantities of data on their viewing and consumption habits – data that’s just waiting to be extracted.
We’re now seeing analyses of conversations on Twitter about TV shows – an activity that’s rapidly becoming an industry in itself. But Twitter is only a small fraction of everyday life online. Despite the glib explanations often seen in the media, not “everybody” is a “Twitter subscriber” and those who do use Twitter are not necessarily representative of the general population.
What really is representative of audiences, however, is the data that can be gleaned from their total interactions with television and their online transactions – a new form of raw material that can be processed into saleable information. Numerous companies are positioned to make huge profits from this. Ooyala for instance, a Silicon Valley startup that specializes in IT services and products for online videos, is sure to use the latest analysis technologies and a “Big Data architecture” to help broadcasters deliver the right content to the right screen at the right time in order to involve the viewer in an immersive experience that advertisers will want to be part of.
Another player in that field is Simulmedia, an agency in the New York area, financed by Time Warner (among others). Their slogan is “People ads want,” and they’re selling ads for television using the data and methods of online advertising, by applying a recipe for success garnered from web and search advertising, which involves analysis of high volumes of real-time data. According to their studies, 90% of the total TV audience comes from 60% of the viewers. Analysis of the available data makes it possible to capture the remaining 40%, reshuffle the entire possible audience for any given ad content and expand its reach. There’s also this pilot project that Time Warner is running in Texas, where its advertising clients are allowed to target consumers via the same campaign on all platforms, from cable television to social media, including the web and mobile devices. The platform that’s being tested allows them to measure an individual’s involvement with a campaign on each platform, and present an offer tailored specifically for them.
Netflix, the champion of online video, has bet over $100 million on its capacity to identify subscriber needs by analysing the mass of data they generate. This is the price the company paid to capture first-run broadcast rights of the first two years of the House of Cards series on the HBO and AMC networks. By building up data on the number of subscribers who enjoyed films by series director David Fincher, plus data on fans of its star, Kevin Spacey, and fans of political thrillers, Netflix claimed to be sure the series would be a huge success.
The future is in the data…not the hardware
Big Data’s possibilities are extremely impressive. It’s said that it was practically responsible for the re-election of Barack Obama, whose campaign team exploited its power to his advantage. Big Data allowed them to rebuild the coalition of 69 million supporters who voted for Obama in 2008, to identify other voters who could be induced to change sides and find the right arguments to convince each voter individually.
In our new interconnected world, the future belongs to Big Data in politics as well as economics, and television won’t escape the trend. In a world where the internet leads people to form virtual tribes around special interests, segmentation by demographic profiles ceases to make any relevant sense. Data is becoming a new currency of exchange that will let those who know how to exploit it gain commercial advantages and provide a custom-made experience for advertisers and audiences alike: personalized television.