Since the dawn of TV advertising, every advertiser has wanted to be able to gauge the effectiveness of the ads they buy. This has been an ongoing challenge. Traditional broadcast TV advertising is most often used as a broad-based brand awareness strategy that relies on panel-based measurement.
Contrast this with the internet advertising world, where ad targeting and tracking are both possible at a granular, individualized level.
The connected TV (CTV) world exists in a bit of a gray area between these two worlds. On the one hand, the high-performance measurement capability of internet advertising has given rise to performance-led metrics and the retail media model in CTV, where retailers leverage their first-party customer data to help target their CTV ads to the greatest degree possible and track the buying habits of those known customers. On the other hand, CTV is a cookieless environment; the main unique identifier — the IP address — is not individualized beyond the household level, often refreshes and TVs tend to be used by more than one person. In short, tracking the performance of CTV ads is a hard thing to do.
The retail media models have begun to incorporate third-party data, but even that brings challenges because most retailers prefer a walled-garden approach and don’t want to share their customer data directly with their competitors. To address this concern, the data clean room has come to center stage, which attempts to make this data useful for advertisers.
Here’s how it works:
Running through a CTV advertising scenario
Let’s say you’re a running shoe company and you want to do a CTV advertising campaign to target households with people who enjoy running. Many data segments and retail media platforms can help you target households that have bought running shoes in the past few years. You could use that data to establish a retail media campaign and extend this reach to a lookalike, digital-based audience.
You could run your media tracking models against those specific households to track ad exposure to a specific purchase using those retail media connection points. Most retailers are reluctant to share data with competitors, so you’d need a one-to-one advertising relationship with each retailer and your overall CTV advertising strategy would become siloed and fraught with challenges.
Now put yourself in the retailer’s shoes, so to speak. You likely have a veritable treasure trove of data on the buying habits of your customers, but how do you connect that to how advertisers are buying CTV media? Are you integrating your data specifically with a publisher? Are you integrating it with ad-tech platforms? How is your data getting matched up with the ways that people take action and make purchases?
Retail data: Big problem, bigger opportunity
In the linear TV days, ads were bought and sold based on demographic modeling. TV providers knew, based on sample data from agencies like Nielsen in the U.S. and BARB in the U.K., which general profiles of people were most likely to watch certain shows at certain times of day, and advertisers could buy a specific airtime based on demographics. But this approach was always part art and part science, because the advertiser had no real way to connect an actual sale to a given TV spot. Historically, TV ad strategies were primarily about generating broad brand awareness.
Given that most advertisers are well acquainted with the micro-targeting capabilities of internet advertising, it’s easy to see why CTV advertisers — especially retailers — would be eager to leverage customer data for a more targeted experience. However, while specifics vary from country to country, a lot of CTV advertising is still bought and sold in a more traditionally managed and regulated way.
Because TV is a mass market medium, and granular targeting doesn’t allow for all advertisers to invest heavily in the same way that they had in the linear era, it’s fair to ask the question: is granular targeting really the best use case for TV?
Why even advertise on TV?
To answer this question, we need to take a broader view of the purpose of television advertising and understand what each party is trying to gain. Like most questions, the answer probably depends on who you ask.
Let’s revisit our hypothetical running shoe company. In the linear TV era, they might have been targeting their ads quite broadly, at a group as widely defined as “adults aged 18 to 54 in the U.K. who watch sports.” A high-performance digital advertising model would be much more specifically targeted. In that case, they could be targeting “runners between 5 feet 4 and 6 feet tall who live in these affluent postal codes and who run at least three to four times per week.” While the latter example might reach the highly targeted customer who knows what they want, the former example may do a better job of helping you sell shoes to new customers who had never bought running shoes before and may not even know they could enjoy them.
At this point, the retail data conversation becomes more nuanced. Retailers start to examine the data they have access to, looking for opportunities to make it more impactful to their TV ad campaigns.
Enter: The data clean room
A data clean room is an independent third party that provides a clearinghouse for data sets that can be matched up based on common factors, a function that is becoming increasingly important to the industry at large. Retailers aren’t interested in openly sharing customer data with their competitors, but if this data is matched with CTV inventory, it allows publishers to achieve higher CPMs and gives advertisers confidence that their ads are reaching the ideal target audience. The relationship between these two creates a situation whereby the clean room can help facilitate ad buying transactions in such a way that the retailer does not have to open their data set to anyone but the clean room.
Clean rooms enable an advertiser to target ads to much more specific consumer sets without giving their entire database away. This allows CTV customer data to be at least somewhat anonymized, so a CTV provider can sell a targeted advertising opportunity to a retailer without violating their customers’ privacy. In both conceptual and practical ways, the clean room offers the best of both worlds: ad targeting that respects customer and retailer privacy, with the ability to do broader brand-building.
The future of CTV advertising
Connecting data between advertisers and CTV will start to make targeting more individualized, making individual ads more relevant to more people. This will help increase the impact of CTV advertising and help to grow the sector, but this alone will not be enough to make CTV advertising realize its full capability. If retail media is ever going to truly flourish in the CTV environment, it has to become easier for consumers to make transactions directly in the environment, as they can with internet ads. If the ad industry can start to become more innovative about making shoppable ads (which is a topic I may tackle in a separate article), we will start to see the real synergy between CTV and retail media, which will unlock a lot of potential and make a lot of consumers and ultimately advertisers very happy.
For more information about TiVo’s CTV solutions, click here.
