As Google and Others Struggle in TV, Simulmedia Sees Some Traction

Data-driven television catching on with some agencies, networks...but slowly

After five years of trying to crack the mythical-feeling smart TV market, Google recently bowed out, ditching its TV ads division.

The search giant's dropout came just a few months after Microsoft shelved its own division, which had been angling to leverage set-top data for better ad targeting. Throw in Canoe’s demise, and one might wonder whether addressable TV is dead. But the lesser-known Simulmedia is starting to gain some real traction. 

According to CEO Dave Morgan, the company pulled in more dollars in Q1 than in all of 2011, while revenue in Q2 was three times larger than Q1. It's likely that such growth is partially the result of Simulmedia having a relatively small revenue base (the company, which boasts of backers such as Avalon Ventures, Union Square Ventures and Time Warner Investments, has only been around for about three years and doesn't release financial data just yet), but Morgan said the second half of 2012 is looking strong as well.

That growth, along with the fact that major broadcaseters like CBS have started incorporating some supplemental data into their upfront ad deals, could indicate that advance TV buying is becoming something real, if not the revolution the industry’s been hoping for.

“Without a doubt, we’re using way more data for TV investment,” said Greg Kahn, evp and business development director, Optimedia. Just maybe not the way that everybody expected. “For a long time, the question has been ‘when will set-top data become currency?’ That question still exists. But we’re using more data with more networks and we’re testing with Simulmedia on behalf of clients."

Kahn was vague on what clients are testing Simulmedia's services, revealing only that while the networks involved are big, the dollars are small at this point. The main tactic being tested is reach extension.

To explain: Simulmedia's prevailing theory is that given the fragmentation in the TV viewing market, buying TV the old-fashioned way (using sex and age demographics) leaves a lot of holes. When pitching clients, Morgan comes armed with tons of PowerPoint slides aimed at showing big TV spenders how much of their targets they’re missing. Simulmedia use data from Nielsen, Kantar, FourthWall Media and others, along with its own proprietary audience platform technology.

According to Morgan's numbers, a national retail chain misses a quarter of women ages 25-to-54, despite spending more than $20 million on TV. An insurance company misses out on over 20 million viewers within its adults 18-to-49 target, despite spending north of $23 million. A major cosmetic company strikes out on half of its female target.

“People get upset at us with these charts,” said Morgan. “But we’re starting to work with a number of agencies.” Added Kahn: “Our reaction is sometimes, ‘wow, you think you’re getting reach, but you could do a lot better."

In a nutshell, the way Simulmedia works is that it helps a retailer or insurance brand identify undervalued networks and shows to find its target, theoretically helping the brand reach a larger percentage of its target audience. “Niche passion cable often wins,” said Morgan.

That sort of complementary cherry-picking isn’t likely to result in brands shifing huge chunks of their TV budgets, at least initially. Morgan expects dollars to move gradually, as TV adopts more of a Web-like buying mentality. In five years however, Morgan expects 20 percent of TV buying to have some kind of data attached.

That might be bullish. The TV marketplace has a long list of clever-sounding targeting advancements that have seemingly gone nowhere. But agencies are likely to continue to push for more intelligent TV buying once they get a taste of better data. “The industry does need to evolve,” said Kahn.