January 14, 2020
Impression-Based Selling: The Common Currency Required for Digital-Linear Convergence
With all the buzz about linear TV moving toward impression-based ad sales, many local broadcasters are wondering what that shift will mean for them. The core criteria for media spend has always been, and will always remain, reach. Traditionally, linear TV has measured reach in terms of Gross Ratings Points (GRPs), which are based on the number of households an ad will reach.
Digital advertising, on the other hand, measures reach in terms of impressions – how many times each ad is shown on a viewer’s screen. But more than how many times an ad is shown, buying based on impressions allows advertisers to target who the ad will be served to, whether that’s people within a geographic location, a specific demographic, or more advanced targeting such as by device type or user-behavior.
The advantages for digital advertisers are clear: more precise targeting to their desired audiences with reduced waste. By reduced waste, we’re referring to the waste that is inevitable when an advertiser tries to target a specific demographic based on household-level information, which, by its very nature, is far less granular.
As a result, local broadcasters have seen their ad revenues decline as advertisers turn more and more toward digital platforms. Estimates from eMarketer show that digital ad spend in the US will reach $129 billion in 2019, compared to just $109 billion for traditional media, which includes print, radio, and TV combined. Television ad revenues alone will see a drop this year of 2.2%.
And that brings us back to impression-based selling for linear TV. By selling based on impressions rather than GRPs, broadcasters can offer their advertisers the same level of precise targeting, and all the associated advantages, that they’ve become used to with digital.
What may be less obvious, though, is how impression-based selling will also benefit broadcasters. And those benefits are significant.
A broadcaster selling advertising based on impressions can provide a negotiated, blended Cost Per Thousand (CPM) for the number of impressions that can be served on both digital and linear. Rather than separate transaction processes for each, they’ll have the ability to sell multi-platform campaigns based on a single, common currency: impressions. That common currency is a crucial pre-requisite for the digital-linear convergence the entire industry is moving towards.
Making ‘Make-Goods’ Obsolete
Impression-based selling allows broadcasters to restructure – and possibly even eliminate – the traditional make-good process, a process that is both labor-intensive and expensive. A typical make-good costs a broadcaster 1.4 times as much as the cost would have been if the spot had not been pre-empted. But with an impression-based transaction, the broadcaster and advertiser can negotiate one of two alternatives to the traditional make-good, both of which are far more cost-effective.
- The advertiser pays solely for the number of impressions delivered. For example, if the advertiser agrees to a CPM for 2m impressions but only 1.2m are reached, they’ll only pay for 1.2m.
- The liability created by the shortfall in delivered impressions is measured in audience deficiency units, units that can then be used to continue delivery until the negotiated number of impressions is reached.
Content and Context
Broadcast TV is extremely good at engaging an audience, capturing attention through the end of a commercial break. The reason for that is the combination of quality content and the context within which the ad is presented – a combination very difficult to achieve on digital platforms. With impression-based selling, broadcasters can provide their advertisers with precise, contextual targeting so they can get the message to the right audience, at the right time.
“Moving towards impressions sets a better playing field for local broadcasters. At WideOrbit, we’re doing everything we can to step towards the future where digital and linear are blended together.” – Will Offeman, Chief Product Officer, WideOrbit
WideOrbit is building toolsets into our core WO Traffic product line that allows our customers to make use of their broadcast reach in tandem with their digital offerings, such as OTT, ATSC3, and more. And the key to that is using impressions as the common currency for both linear and digital media. We provide both the monetization platform and the order entry mechanism for broadcasters selling addressable and targeted ads.
Contact us to learn more about how local broadcast TV can realize the benefits of impression-based selling.
Check out what Will Offeman, WideOrbit CPO, recently had to say about the future of impression-based selling for Local TV.[youtube https://www.youtube.com/watch?v=FXTXduEG8fU&w=560&h=315]