These Tech Firms Are Vying to Shake Up TV Advertising in 2018
WSJ, Dec 20, 17
TV networks have been selling, serving and measuring ads with the same systems and processes for decades. But times are changing. More people are buying smart TVs that are connected to the internet, and independent tech firms are finding new ways to gather data about the viewing of shows and ads on individual TV sets. Here are a few of those firms poised to shake up the antiquated TV ad business, while still trying to be mindful of your privacy.
TRADING PLACES
Sorenson’s technology overlays existing ads on smart TVs with new, more targeted ads
Sorenson Media made its name in video compression and coding technology, but the Utah-based company is now quietly making waves in media measurement and addressable advertising. The company, which is majority owned by Utah businessman Jim Sorenson and run by digital media veteran Marcus Liassides, has technology that can detect and analyze what’s on a smart TV screen, and then replace an ad with one supposedly better targeted for a specific household.
Sorenson has access to viewing data through relationships with smart TV manufactures that implement its technology. The media company — whether a national network or a local TV station — also plays a role. They must install a Sorenson server, which creates a so-called “fingerprint” of the content recognized by the technology in the TV screens. Sorenson can then analyze that data to help an advertiser serve a targeted TV ad to an individual household’s smart TV, whether it’s during cable or broadcast programming. (Separately, Sorenson also can license viewing data from third parties.)
Sorenson’s technology makes it possible for a TV network or TV station to replace the ad certain households see. For example, if a network had sold an ad in a show reaching one million viewers, Sorenson could overlay a different ad for a subset of those households.
The advertiser whose commercial was replaced wouldn’t get charged. And the new ad only gets placed when it’s sold for more than the original. When Sorenson helps the station sell that inventory, it takes a share of the revenue.
Some advertisers might be happy that they’re not sending an ad to someone outside their target audience — sending a diaper ad to a childless couple in their 60s, for example. Some, however, might want to reach a broader audience, versus a hyper-targeted group of people. Advertisers can choose to make their commercial non-preemptable, said Mr. Liassides. If they allow for their ad to be replaced, they may get a discount, he said.
For TV manufacturers, companies like Sorenson offer another revenue stream. TV manufacturers implement the software for free, in exchange for a share of the revenue that Sorenson gets from the TV stations. Sorenson has a deal with Samsung, among other TV manufacturers.
Media companies can also license Sorenson technology for access to viewing data, which can inform their own programming lineup and help their salesforces sell ads. Sinclair Broadcast Group is a strategic investor in Sorenson. Hearst also has a stake. Sorenson, whose analytics solution is currently deployed across over 100 broadcast stations in the U.S., has just under 300 employees.
OPEN MIC
Alphonso’s technology uses microphone-enabled mobile apps to listen to what’s on a smart TV
Alphonso is a good listener.
The Mountain View, Ca.-based startup generates and analyzes TV viewing data that it collects through microphone-enabled apps on people’s phones. Advertisers can use that data to measure the effectiveness of their commercials and retarget consumers on other devices such as mobile phones. Alphonso has inked deals with around 1000 developers of mobile apps, which can listen to what’s on a TV set.
The technology is only triggered if a consumer “opts in” after seeing a privacy disclosure and enables their device’s microphone. The apps then match a “fingerprint” or sample of the audio to one of the many shows that’s automatically recognized by the company’s servers. Alphonso said it’s also licensing data from companies like Shazaam and TiVo. The company receives an immediate report on what people are watching, as well as information on when and where they’re surfing on their mobile phones. A separate “retargeting” product can then alert an ad buyer to the fact that a viewer is playing a Zynga game on their phone, for example, and allow them to serve the same ad that it detects on the TV screen to the Zynga page. Alphonso partners with third-party data and tech firms to serve online ads, as well as provide advertisers with information on the viewers and the actions they took after watching an ad, such as purchasing a product in a store. Similar to Sorenson, Alphonso must partner with TV manufacturers for access to viewing data. Alphonso provides TV and chip manufacturers with free viewing data and analytics, in addition to paying them a fee, in exchange for the ability to insert its technology into the TV sets or chips. The firm, which raised $5.6 million from its series A funding round earlier this year, has around 100 employees. The ad targeting product accounts for about 80% of the company’s revenue, and the remaining is from its data and analytics product, the company said.
UNCHARTED WATERS
Verance’s watermark technology will enable addressable advertising in “next gen TV”
Verance’s watermark technology has been protecting the music industry and Hollywood studios from piracy since the 1990s. Now, the 60-person, San Diego-based company is entering the TV ad business. The firm was tapped by a coalition of TV associations to support a national broadcast update, dubbed ATSC 3.0, which eventually will make it possible for advertisers to serve targeted ads over broadcast airwaves to individual TV sets and mobile phones around the country. The update, which requires station infrastructure overhauls and consumer adoption of updated smart TVs that are not yet available in the U.S., could take a number of years. Verance’s watermark technology, called Aspect, can generate data on which ads actually were presented on certains TVs or for certain households, as well as trigger the ads that are sent to viewers. Stations, TV manufacturers, advertisers and other technology companies can license the watermark technology from Verance. Here’s how it works: A “watermark,” an inaudible sound effect that transmits a URL, is added into an ad or program. After the watermark is detected by the smart TV, Verance’s technology creates a report of where and when the ad ran. When TVs are built with technology to receive a 3.0 broadcast signal, media companies and advertisers will be able to use Verance’s system to serve targeted ads. The technology will activate code that triggers and transmits an ad onto the screen. The “watermark” approach is different from “fingerprint” technology, which examines the audio or video signature of an ad or program and compares it to a database to determine what it is. Verance also offers data on specific households that it licenses from third parties. That data is used to help the advertiser figure out which homes and viewing devices to target. For example, if the people in the home have made greek yogurt purchases through online grocery shopping, a greek yogurt advertiser can then use that information to buy ads targeting certain households.
The company is currently working with a number of media companies, including one major broadcaster that’s using the watermark technology to collect viewership data and use it to inform its ad sales strategy. The company said it is also in talks with various TV manufacturers to include its watermark reader on their TVs. Write to Alexandra Bruell at alexandra.bruell@wsj.com
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