How Outcome-based Selling is Accelerating Converged Media Companies’ Success in a New Tech Landscape

Blog   |   Kelley Michanczyk   |   October 25, 2018

Consumers today are over the top. An average American now reportedly spends nearly 11 hours a day across devices, with digital, linear and “cord-cut” content, according to a Nielsen study released earlier this year. To maximize reach, advertisers have to create campaigns across all these streams. In addition, we’ve seen industry conglomerates like AT&T and Disney create converged marketplaces in order to make it to the level that audiences are advancing to. But where are they supposed to go from here? How are advertisers keeping up with the converged conglomerates?

On Thursday, October 18, Operative CEO Lorne Brown joined Cheddar to talk about Advanced TV’s position as the new mainstream media and how companies can use the outcomes of convergence (quality, multi-device measurement and scale) to create the next path to success. 

Advertisers crave outcomes

Traditionally, TV companies rely on ratings provided by Nielsen to measure audience consumption that attracts advertisers to their stations or networks. This is the primary metric advertisers receive about their ad’s performance and targeting. But it’s not enough.

The problem is that the “FAANG” digital giants (Facebook, Amazon, Apple, Netflix, and Google) can provide advertisers the premium data that they yearn for  – automated media buying, audience targeting at scale, and real-time insights that go much deeper than typical Nielsen data. Advertisers want more specific and granular information about TV ad performance:

  • Did we reach our precise targets?
  • What is the known ROI on our buy?
  • How do you make this as easy as online buying?

Advertisers also want to know if consumers took any actions, and what attribution it took to make this action. For example, did the Walmart holiday spot generate foot traffic in my store? Out of that traffic, how much was made up of my targeted audience? They crave these outcomes. 

Today, $100 billion dollars is spent in outcome-based buying. Companies who shift to this outcome-first revenue model – delivering any audience, any outcome to your buyers while maximizing yield – will see significant revenue growth. 

Digital is easy, TV is hard

We already see outcome-based selling happening in the digital space. FAANG have the digital backgrounds, can provide simple technology and currency, and can make the rules with all the third-party data they own. What about TV? Can technology enable attribution from the past?

In this interview, Lorne provides a picture of what a digital vs a TV outcome-based process looks like. The pictures tell it all: digital is easy and TV is hard. 

There are less steps to take in digital advertising. Companies provide a portal to the advertiser, the advertiser buys ads from the company, and then the company supplies them with audience data, real-time insights, performance, etc. With linear TV advertising, it’s a completely different story. There are multiple steps across several swim lanes: linear, addressable, and digital operations. At the same time, different teams are processing those technologies and aggregating across several audiences, causing more complexity. This causes intricacy for buyers. 

When does the shift happen?

Well, we’re starting to see it now. The problem is that traditional TV is purchased as a standalone platform and not as an open framework architecture. Today, with Nielsen, no one buys NBC, CBS, or CNN alone, they buy TV as a whole and optimize it as a whole, just like they would buy it on Facebook and Google. 

So, in order for TV to sell outcomes, companies need to adapt to new demands and shift their current infrastructure. Rather than adding another IT solution or throwing more people at the problem, companies are merging and creating marketplaces to standardize and not push complexity onto buyers. Take a look at AT&T who recently launched Xandr, a new advertising company to harness data, technology, premium content and distribution, and forged agreements with Frontier and Altice to create the foundation of a national TV marketplace. This allows AT&T to aggregate and sell its national addressable inventory in a one-stop shop for advertisers and premium content publishers. It also furthers strengthen its leadership in advanced TV advertising. The company is saying “If you join our marketplace, we’ll sell the outcomes for you because we’ve got the data, direct to consumer, technology, network, and open API to standardize data buys.”

It’s a smart move, and we’re going to see more companies shift this way. Lorne predicts that there will be eight companies left disrupting the space: “On the digital side, Facebook, Amazon, Google, Netflix, and on the TV side, Comcast, AT&T/Xandr, Disney and maybe a combination of Verizon, Scripps and Discovery.”

Operative solves the technology issue

Yes, companies are merging, creating marketplaces and acquiring more of the crucial data that advertisers want – but no one has solved the technology issue. Media companies are still held back by the constraints of their technology infrastructure. With the multiplicity of demand from buyers, sales and delivery data overload, and aggregating inventory across linear, addressable, and digital, it’s a prime case for IT integration nightmares and chaos. 

Operative is solving this technology issue, according to Lorne. “We formed a community council with top TV networks, so we can listen and take action on what really matters to most of them as they accelerate outcome-based revenue growth in a cross-media-converged world. Operative’s open framework architecture allows networks to unify and simplify their existing IT investments so they’re not pushing complexity onto their buyers and they’re getting the most ROI on their media investments.” 

You can watch the full segment on Cheddar here