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Upfront and Personal: Data's role continues to grow in shaping market negotiations

Withthe upfront selling season rapidly approaching, it appears that data will once againbe integral to steering the market.

That'sgood news for Simulmedia. The New York-headquarteredmarketing technology company relies on its VAMOS platform to target specificallydefined audiences on TV by matching consumer purchase data to viewing metrics. Workingwith 80 national cable networks and nine of the top 10 distributors across the U.S.,Simulmedia said it can reach 95% of U.S. TV households.

Withoutnew shows of its own to pitch, the targeting company recently held its third annualPeopleFront, emphasizing people, outcomes and return on investment. At an eventat Manhattan's Paley Center, Simulmedia brought together executives on four separatepanels — a Wall Street perspective of media and marketing, an update on research,a data-driven conversation, and one assessing transactional possibilities — to discussthe changing TV ecosystem and how data may inform the 2016-17 upfront market.

SteveHasker, global president and COO of NielsenHoldings played the role of Mark Twain, noting that the reports of TV'sdeath are greatly exaggerated. Hasker said the total video pie is growing, and contraryto misperceptions, the number of people who watch TV during any given week hasn'tchanged.

"It'sa myth that there are a vast amount of people who never watch TV. The numbers suggestthat even teenagers still watch TV," he said, before offering this caveat:"The problem is there are entire days where households and families, particularlyteenagers, don't switch on broadcast or cable. Those are huge opportunities lostto marketers." Presumably, he was talking about Fridays and Saturdays.

Haskeralso noted that with time shifting and alternative platforms, the way people watchtelevision has shifted significantly. He pointed out that in 2005, live sports representedonly 14 of the top 100 live-viewed TV programs, whereas in 2015, live sports accountedfor 93 of the top 100. As such, sports and other live events like awards shows andmusicals hold increasingappeal to advertisers.

That'snot to say entertainment programming isn't being monetized. Peter Naylor, seniorvice president of advertising sales at HuluLLC, said the streaming, subscription video on demand company is ina good spot with ad dollars coming out of both TV and digital budgets. He said thatthe long-held practices of selling against people, demos and ages are being supplementedby the use of behavioral data, which is becoming more of a determinant in guidingupfront transactions. Like broadcast and cable, Naylor said, Hulu participates inthe scatter market, where rates are different.

SNL Image
AMC's Better Call Saul
Source: AMC Networks

ArleneManos, president of national ad sales at AMCNetworks Inc., said the programming group is using data primarily toinform its own marketing and media decisions on how to best promote shows rangingfrom AMC (US)'s "TheWalking Dead" and "Better Call Saul" to "Dr. Who" and "OrphanBlack" on BBC America (US)."Theshows are all different, and we want to use the intelligence to make sure viewersget acquainted with them," she said.

The companyhas thus far taken a more cautious approach to utilizing data to garner ad revenue."We're just beginning to apply [data] to advertising sales," she said."We can't be everything to all people."

Askedto handicap the upfront, Naylor predicted that the "value of VOD will increasehandsomely."

"Therewill be a mix of sizzle and steak. Everyone will talk about virtual reality. Therewill be a lot of discussion about original programming. All of the guys at the Newfronts willtalk about talent in front of and behind the cameras, and all of the broadcast andcable guys will talk about data, so everyone is switching places," he said."But the steak absolutely will be data and how to make more efficient and effectiveuses of media spend."

Manossaid if she had "to guess, it will be a strong market. I think the idea thatit will go quickly is not necessarily wise or the way it's going [to] unfold. Thereare always so many different factors. Last year, there were all the agency reviews.This year, there will be a certain amount of elasticity in the duration of C3 [asa market currency]. C7 is happening and you might see it go beyond that for certainaccounts."

WallStreet executives were asked to look beyond the current state of the pay TV industry.

BrianWieser, a senior analyst at Pivotal Research Group, said he was among the skepticswhen Apple Inc.'s iPhonecame out in 2007 that it could have such a major impact on consumer behavior. Now,he said, a tech company could drop $10 billion into the market and trigger a change.But minus such a big move, Wieser believes the pay TV landscape will reflect evolution,not revolution.

AnthonyDiClemente, managing director at Nomura Securities, also thinks the market willevolve relatively slowly, unless there is "a blockbuster acquisition"involving a big technology and media company. DiClemente said he's interested intracking the impact skinny bundlescould have on the market, noting that the consumer is "frustrated by havingto spend so much for cable, but there are no really compelling alternatives. Themarket is waiting for that," he said,

DiClementesaid a widespread move toward smaller packages could impact the ad market, resultingin further fragmentation of the video universe. The loss of reach, though, couldbe offset by greater targeting, he said.

TerryKawaja, founder and CEO of Luma Partners,said what could catalyze a change in the pay TV landscape is if 's Google Fiber builds outto a sufficient number of DMAs, which he put at 20 or more, and acquires exclusiverights to the NFL, not the "co-watching deal" that the league just with Twitter Inc. Under that pact, Twitter will simulcast streamsof "Thursday Night Football" televised by CBS (US) and NBC (US).

"Ifthey buy exclusive rights to the NFL," said Kawaja, "then you can seesomething [change.]"

Nielsen'sHasker agreed. "Marquee sports moving away from cable and broadcast is somethingwe're watching carefully," he said, pointing to growth of out-of-market packages.

Haskeralso said there could be changes in content providers' attitudes toward SVOD playersand that they would look to higher-priced deals, dependent on the number of subscribers.In a sense, he said the networks had "inadvertently taken $4 billion from in 2015 and put atrisk the $100 billion national television ecosystem. I think you'll see some changesin the pricing dynamics and rights negotiations."