Invision: Advanced Television Advertising Business Models: No Consistent Precedence from the Web - Michael Stoeckel - MediaBizBloggers

As I try to make sense out of addressable, interactive and other emerging advanced television advertising models, I often seek parallels to similar evolutionary points in Web advertising. This does not imply that we always got things right with Internet advertising. In fact, I often draw on these analogous stages in order to avoid many of the faulty steps and assumptions that were made on the long road to successful Web business models.

In an earlier blog (August 10, 2009), I claimed that advanced television advertising was being held back by, amongst other issues, the following:

· Ad seller anxiety
· Lack of front-end tools to sell and manage deals of such complexity
· Unresolved business model issues

In that piece, I did attempt to provide solutions to ad seller anxiety and promised some direction in the future regarding the other two points. As I contemplate the relationships between advanced television ad delivery providers (i.e., technology vendor specialists and multi-channel distributors) and the sellers of national television advertisements, though, my “Internet parallel” model severely breaks down.

In order to offer advanced ad products, almost all national television ad sellers have to rely on third party partners who specialize in addressable or interactive ad serving. In exchange for building these advanced ad delivery capabilities and incorporating them into the television ecosystem, these third parties require and deserve compensation. There are several potential sources of that recompense, including:

· Paid by the ad seller
· Paid by the ad buyer/agency
· Paid by both the ad seller and buyer

Over the years, Web advertising developed several similar models in which third party providers were required to enhance publishers’ ad product capabilities, including:

· Ad targeting specialists (geographic, behavioral, semantic, etc.)
· Agency/advertiser third party ad servers (dynamic copy splits, centralized campaign reporting, etc.)
· Rich media ad servers (enhanced ad creative such as animation, video, etc.)

However, sometimes for logical reasons but often dictated by the economic environment that existed while the business models were being forged, there is no compensation consistency among these three. With few exceptions, you’ll find the following:

· Ad targeting specialists: ad seller pays
· Agency/advertiser third party ad servers: ad buyer/agency pays
· Rich media ad servers: both the ad seller and buyer pay

Without an established win-win Internet model to use for comparison, I am faced with quite a conundrum. My suggestion here is to simply stick with “logical” reasoning. From an ad seller perspective, be willing to pay for services that you choose to incorporate into your technology suite in order to upgrade your ad offerings. From my Web examples, I believe that ad targeting specialists properly fit this model. In other cases though, ad sellers may integrate with new technologies simply as a customer service to agencies and advertisers. In these instances, the effort put forth to improve customer relations should suffice without the need of paying the provider. Again from my Internet ad examples and based on my experiences, agency/advertiser third party ad servers seem properly aligned. As for the rich media vendors, who provide tools typicallychosen by the agency to optimize ad creative, I’ve always felt that Web publishers caved during their darkest days after the Internet ad bubble collapsed allowing for this dual payment model. I am sure that those in the rich media vendor market dispute my claims, but I’ll leave that debate for a future blog.

It will be very interesting to see how this plays out for advanced television advertising. Whether I agree with the final comp settlements or not, I expect that these business models will get ironed out. Otherwise, advanced television advertising on a national level will never reach its full potential. That would be a real shame!

Michael Stoeckel is Vice President, Digital Products for INVISION Inc.

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