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Despite low ratings, inventory is valuable in light of audience fragmentation.

Audience Fragmentation Sheds New Light on Audience Value despite Low Ratings

February 25th, 2016   ||    by Callie Wheeler

With an increasing number of TV viewing options available to viewers, audience fragmentation is changing the television advertising landscape. As AdAge reported in summer 2014, Nielsen data showed that 65 percent of US TV viewing took place on shows with a rating under 0.5. This new data highlights the challenges audience fragmentation presents to traditional measurements like Nielsen ratings.

Rather than viewing low ratings as a deterrent, data on real audience trends provides advertisers and broadcasters with a new perspective on inventory that would otherwise be discounted.

Traditional Inventory Segmentation

Media buyers have traditionally been able to purchase inventory that fell into one of a few categories. Spotxchange identifies four common “buckets” of inventory: premium, high-demand dayparts, packaged, and remnant inventory. The two higher tiers of inventory correlate to commonly valued dayparts, like prime time TV, and special events or finales.

Since viewers traditionally tuned in to programming that was airing in real time, rather than recording TV to view later or watching “on demand,” programming was relatively easy to categorize. It was then also easy to identify the most valuable advertising inventory based on program categorization.

Newly Fragmented Audiences

Video on demand, Smart TV, and other choices viewers have today are changing the way advertisers and broadcasters measure inventory value. The living room television set provides a variety of options for viewers, and that’s not even counting digital viewing, second screen interactions or other developments.

Because of these changes in TV viewing, advertisers need a new way to aggregate audiences and can no longer depend fully on traditional inventory segmentation.

A Solution for Non-Traditional TV habits

Programmatic TV provides the advantage of quality inventory outside of popular premium dayparts. MediaPost reported in 2015 that the average cost for prime time inventory decreased for the first time in years, partly due to audience fragmenting.

The article pointed out that programmatic buying was enabling buyers to use cost-efficient inventory to target their audiences. This new way of purchasing gave buyers more control over targeting, often for less money. Programmatic TV is a win for both broadcasters and buyers, as it highlights the value of inventory that might otherwise be overlooked. By using data and deeper audience understanding, programmatic TV addresses the new challenges of audience fragmentation and brings advertising up to speed with 21st century television viewers’ options.

To learn how programmatic TV tools can help highlight the value of inventory, contact Videa today.

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