TVN FOCUS ON SALES
Sinclair Pitching Programmatic Ad Co-Op
By Wayne Friedman
TVNewsCheck,
Sinclair Broadcast Group is looking to establish an advertising co-op of TV station groups, aggregating inventory and selling it using programmatic ad technology developed by Visible World.
Called OxMyx, the spot TV ad consortium will be independent, says Robert Malandra, Sinclair's VP of advanced revenue development and analytics. Each participating station group would have equity and a vote on the operating board.
“There is not going to be any single broadcaster controlling it,” he says.
The group would be similar to cable's NCC Media, Malandra says. Co-owned by Comcast, Cox Media and Time Warner Cable, NCC sells local cable advertising inventory for those companies and 30 other cable operators.
“It’s akin to Ocean Spray or Florida’s Orange growers co-op — structured to help an entire industry grow by reaching new markets,” he says.
Sinclair has been meeting with TV station groups over the last several months about joining the effort. Malandra: “We are talking with six to seven of the largest broadcast groups.”
He declined to say how much progress he has made in the recruiting.
Other groups are aware of the effort, but none is rushing to sign on.
“It’s an interesting project, and we are working through an evaluation of the opportunity," says Raycom CEO Pat LaPlatney.
One hurdle is the traditional competitiveness among stations and stations groups.
“I’ve always admired Sinclair’s ingenuity, entrepreneurship and innovativeness,” says Rick Ducey, managing director of BIA/Kelsey, a local media/advertising consultancy. “That said, it’s hard to get broadcasters aligned. We have competitive stations in-market, and different cultures and buying/selling habits that create challenges.”
Malandra admits this can be difficult. “Broadcasters are not used to collaborating,” he says. “It’s not something in their DNA.”
And media analysts say TV stations can be wary of violating antitrust laws.
The idea is to create a new programmatic TV operation with coverage of at least 70% to 80% of TV homes, making it a national TV buy in the view of marketers and thus competitive with national networks, broadcast and cable.
“The more scale these groups can bring to market, the more likely this will happen,” says Marianne Gambelli, chief investment officer of Horizon Media. “Also, they can spread the technology costs across multiple groups. I believe this could work.”
The idea springs from Sinclair's own experience in aggregating inventory from across its own station group that comprises 175 stations in 81 markets and covers 40% of U.S. TV homes.
Early last year, it leveraged that reach by partnering with Visible World and implementing its AudNet programmatic platform. Malandra says the business has been growing at more than a double-digit annual percentage rate and attracting an increasingly number of major national advertisers, including some consumer products advertisers.
Seth Haberman, founder and CEO of Visible World, said at last September's TVB Forward conference that Sinclair's programmatic initiative was operating at an “eight-digit” run rate, implying annual sales of at least $10 million a year. Malandra declined to comment.
Concerning OxMyx — the programmatic platform that will work collectively for a number of TV stations groups — Malandra says “it’s like a scalable unwired network. You could run a spot, say, during 6 to 6:30 p.m. on different shows on [different] TV stations. This offers up flexibility. Marketers [for example] can heavy up one particular market.”
Not only that but it could target audiences more specifically, adds BIA/Kelsey’s Ducey. “Whatever the local media can do to make discovery of audience segments across stations at the market level — and can tie more than just gender/age targeting data — well so much the better. It beats doing activations one station at a time in a market.”
Some broadcasters are still leery about programmatic selling, believing it could drive down the price of commercials. Many now restrict programmatic sales to low-value overnight or remnant inventory.
But Malandra says the co-op would discourage that practice, offering best inventory. The push will be to offer good spots and good value, he says.
At the TVB event, Haberman said TV stations need to counteract fragmentation of the TV audience caused by cable and digital media. "[A]ll these things serve to take large audiences and turn them into small audiences.
“In the TV business, reach is the greatest driver of CPMs. The higher the reach, the higher the CPM. Fragmentation is the enemy.”
In this regard, TV shouldn’t want to emulate digital, he said. “That’s the danger.”
Haberman is not alone in recognizing how Sinclair's co-op could raise the profile of TV stations among national advertisers. "OxMyx has the potential to provide national TV advertisers with new access to local broadcast TV,” says Steve Lanzano, president of TVB. “It is an intriguing venture and we look forward to seeing how broadcasters participate and advertisers engage.”
Called OxMyx, the spot TV ad consortium will be independent, says Robert Malandra, Sinclair's VP of advanced revenue development and analytics. Each participating station group would have equity and a vote on the operating board.
The group would be similar to cable's NCC Media, Malandra says. Co-owned by Comcast, Cox Media and Time Warner Cable, NCC sells local cable advertising inventory for those companies and 30 other cable operators.
“It’s akin to Ocean Spray or Florida’s Orange growers co-op — structured to help an entire industry grow by reaching new markets,” he says.
Sinclair has been meeting with TV station groups over the last several months about joining the effort. Malandra: “We are talking with six to seven of the largest broadcast groups.”
Other groups are aware of the effort, but none is rushing to sign on.
“It’s an interesting project, and we are working through an evaluation of the opportunity," says Raycom CEO Pat LaPlatney.
One hurdle is the traditional competitiveness among stations and stations groups.
“I’ve always admired Sinclair’s ingenuity, entrepreneurship and innovativeness,” says Rick Ducey, managing director of BIA/Kelsey, a local media/advertising consultancy. “That said, it’s hard to get broadcasters aligned. We have competitive stations in-market, and different cultures and buying/selling habits that create challenges.”
Malandra admits this can be difficult. “Broadcasters are not used to collaborating,” he says. “It’s not something in their DNA.”
And media analysts say TV stations can be wary of violating antitrust laws.
The idea is to create a new programmatic TV operation with coverage of at least 70% to 80% of TV homes, making it a national TV buy in the view of marketers and thus competitive with national networks, broadcast and cable.
“The more scale these groups can bring to market, the more likely this will happen,” says Marianne Gambelli, chief investment officer of Horizon Media. “Also, they can spread the technology costs across multiple groups. I believe this could work.”
The idea springs from Sinclair's own experience in aggregating inventory from across its own station group that comprises 175 stations in 81 markets and covers 40% of U.S. TV homes.
Early last year, it leveraged that reach by partnering with Visible World and implementing its AudNet programmatic platform. Malandra says the business has been growing at more than a double-digit annual percentage rate and attracting an increasingly number of major national advertisers, including some consumer products advertisers.
Seth Haberman, founder and CEO of Visible World, said at last September's TVB Forward conference that Sinclair's programmatic initiative was operating at an “eight-digit” run rate, implying annual sales of at least $10 million a year. Malandra declined to comment.
Concerning OxMyx — the programmatic platform that will work collectively for a number of TV stations groups — Malandra says “it’s like a scalable unwired network. You could run a spot, say, during 6 to 6:30 p.m. on different shows on [different] TV stations. This offers up flexibility. Marketers [for example] can heavy up one particular market.”
Not only that but it could target audiences more specifically, adds BIA/Kelsey’s Ducey. “Whatever the local media can do to make discovery of audience segments across stations at the market level — and can tie more than just gender/age targeting data — well so much the better. It beats doing activations one station at a time in a market.”
Some broadcasters are still leery about programmatic selling, believing it could drive down the price of commercials. Many now restrict programmatic sales to low-value overnight or remnant inventory.
But Malandra says the co-op would discourage that practice, offering best inventory. The push will be to offer good spots and good value, he says.
At the TVB event, Haberman said TV stations need to counteract fragmentation of the TV audience caused by cable and digital media. "[A]ll these things serve to take large audiences and turn them into small audiences.
“In the TV business, reach is the greatest driver of CPMs. The higher the reach, the higher the CPM. Fragmentation is the enemy.”
In this regard, TV shouldn’t want to emulate digital, he said. “That’s the danger.”
Haberman is not alone in recognizing how Sinclair's co-op could raise the profile of TV stations among national advertisers. "OxMyx has the potential to provide national TV advertisers with new access to local broadcast TV,” says Steve Lanzano, president of TVB. “It is an intriguing venture and we look forward to seeing how broadcasters participate and advertisers engage.”
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