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Stone bridge over a beach to an island: bridging the gap to local advertising

Multiple System Operators Bridge the Gap to Local Ads

May 11th, 2017   ||    by Charlene Weisler

Marketers adjusting to changes in consumer behavior must get closer to the consumers themselves. A recent Forrester report said as much, and Caroline Horner, co-founder of advertising agency Spicy Tequila, points out how this shift is driving a new advertising framework: “Local is the new national.” And when it comes to local marketing, multiple system operators (MSOs) can help.

MSOs include cable operators like Comcast and Cox, and are a type of multichannel video-programming distributor (MVPD), like large telecommunication companies. MSOs are provided local advertising minutes by their broadcast and cable affiliates as part of their operator agreements. This time is parceled out to local and regional sales teams, as well as to third parties like programmatic exchanges and advanced television reps. The advertising time offered by the MSOs is comparatively short—often only two minutes per hour—so maximizing value is vital to accelerating this business.

The Growth in Data

The ability to measure local data has improved greatly as STB data has merged with other data sets—such as Nielsen and first-party—and segmentations. “Programmatic TV is about data first,” says Rick Ducey, managing director at BIA/Kelsey, and it tends to lead to the local. He predicts the greatest growth in ad sales will occur in local markets, and estimates total programmatic ad spend will grow from approximately one to two percent of current local TV sales to as much as three to six percent over the next several years.

Managing this rapid growth requires careful inventory management and pricing commensurate with inventory quality—and that’s where automation comes in. The media funnel is still human-driven, from planning and negotiation to contract stewardship. But as Alex Lundry, co-founder of media analytics firm Deep Root Analytics, notes, “Automation allows for greater complexity, localization, and personalization.” With the help of ever-improving technology, advanced advertising companies can offer the complete range of sales services while also targeting more sophisticated consumer segments.

The Value in Automation

As this market grows and intensifies, automated platforms that can efficiently manage the sales and delivery process of local minutes are especially valuable to MSOs seeking to maximize the value of their inventory. “The more MSOs automate, the better they can manage their inventory and ensure a better yield based on pricing on age, gender, and behavioral characteristics,” explains Mitch Oscar, advanced TV strategist at USIM, “But because this is more complicated, you need automation to not only ingest the third-party data, but also CRM data.”

Inventory management will also become more effective and value enhanced—not to mention more time efficient, Oscar explains, “because sellers and buyers will predetermine what inventory can be used as makegoods.” “For buyers, if something gets bumped, they already know where to move the spot because the agency already signed off on it,” says Oscar, “For sellers, there is a better chance of managing their inventory [to] provide wonderful customer service as well as maximiz[e] yields.”

“Automation enables the inventory to compete in the regional and national spot markets, and enables broadcast to better present the value to digital [automated] buyers,” Horner says. She explains that MSOs can also use technology to optimize their inventory by allowing geotargeting—which is always crucial—to take on a fundamental role.

The Future in Local

Technology continues apace, with great implications for local MSO advertising. Looking ahead, Horner sees automation as a local must-have. According to her, future improvements—such as ATSC 3.0 and 5G—will aid MSOs and content providers in better managing inventory with “efficiency-seeking buying algorithms that balance cost, exposures, and conversion.” The message is clear: advertisers looking to buy local—and capitalize on efficiency and value along the way—will want to keep multiple system operators in mind.

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