
A deep dive into the revenue potential unlocked by shifting from spot-based to audience-based ad sales
TV advertising is at a crossroads. As broadcasters grapple with the inefficiencies of spot-based trading and explore synergies with Connected TV (CTV) advertising, the industry is turning to a solution that promises transformative results: audience-based trading. This innovative approach doesn’t mean abandoning the strengths of spot-based trading for premium inventory—it’s about unlocking the full revenue potential of the vast, non-premium inventory that dominates schedules. Let’s explore how audience-based trading is reshaping the landscape, delivering value for broadcasters, advertisers, and viewers alike.
The inefficiencies of spot-based trading
For broadcasters, the spot-based trading model creates a host of operational and financial challenges. This model is effective for premium inventory but fails to maximize the value of the non-premium slots that dominate the schedule.
- Operational overload
Hundreds, sometimes thousands, of staff may be involved in managing spot sales across large media companies. - Missed revenue opportunities
Pricing too low leads to undersold inventory, while pricing too high results in unsold spots and wasted potential. - Time-consuming processes
Sales teams spend excessive time negotiating bespoke deals instead of focusing on strategic partnerships or client satisfaction.
Unlocking revenue with audience-based trading
Audience-based trading flips the traditional model on its head. Instead of selling specific time slots, broadcasters deliver audience guarantees—committed impressions for targeted demographics. This approach allows broadcasters to adopt a hybrid model, preserving the premium CPMs associated with high-value inventory while unlocking the revenue potential of the remaining majority of inventory. And it offers both broadcasters and advertisers a host of advantages:
1. Dynamic pricing for optimized revenue
Aligning prices with real-time demand allows broadcasters to increase rates for high-demand audiences while offering discounts for low-demand ones. This ensures inventory is fully monetized.
2. Better return on non-premium inventory
Non-premium slots gain value by being bundled into audience-targeted packages. Advertisers can efficiently reach their desired demographics without cherry-picking specific time slots, turning what was previously undervalued inventory into a meaningful revenue driver.
3. Simplified sales processes
A single annual agreement with agencies replaces multiple, bespoke client negotiations. This reduces administrative burdens and accelerates campaign execution.
Audience-based trading does not require broadcasters to abandon the spot-based trading model for premium inventory, where its value remains high and practical. Instead, it provides a complementary strategy to monetize the vast non-premium inventory, creating a win-win for broadcasters and advertisers.
The role of automation
Automation is the backbone of audience-based trading. Advanced systems manage inventory optimization, pricing adjustments, and campaign delivery, dramatically reducing operational overhead. By automating up to 80% of the trading process, media companies can significantly cut staffing needs and reallocate resources to innovation and strategy.
For example, a broadcaster currently employing hundreds of staff to manage spot trading could achieve similar outcomes with a fraction of the workforce, thanks to automation. This not only reduces costs but also enables teams to focus on enhancing advertiser relationships and exploring new revenue streams.
Building a win-win model
Audience-based trading benefits more than just broadcasters. It’s a win-win model for advertisers and agencies as well:
Greater flexibility
Advertisers can target audiences across inventory, creating campaigns that meet specific objectives without the constraints of traditional spot-buying.
Transparency and predictability
Audience trading ensures campaigns are delivered to precise audience metrics, fostering trust and satisfaction.
Competitive pricing
Market-driven rates provide a fair and transparent approach, maximizing advertisers’ ROI.
Addressing the challenges
Transitioning to audience-based trading isn’t without hurdles. Broadcasters need robust systems for audience measurement, inventory management, and pricing calibration. Additionally, internal teams and agency partners must adapt to the new trading paradigm through comprehensive training and collaboration.
However, the long-term benefits far outweigh these initial challenges. Early adopters of audience trading are already positioning themselves as market leaders in an evolving industry.
A future-proof solution
As TV advertising continues to converge with digital, audience-based trading bridges the gap. It empowers broadcasters to package linear TV, video-on-demand (VOD), and addressable advertising into unified campaigns. By integrating audience-based trading with Connected TV (CTV) advertising, broadcasters can leverage the strengths of both traditional and digital platforms. This holistic approach aligns with modern viewing habits, ensuring broadcasters remain competitive in a fragmented media landscape and fully prepared for the future of converged ad trading.
Conclusion
The shift from spot-based to audience-based trading marks a revolution in TV ad sales. By unlocking the full potential of non-premium inventory, optimizing pricing, and streamlining operations through automation, audience-based trading empowers broadcasters to maximize revenue while delivering superior value to advertisers.
Now is the time to embrace this transformation. By adopting audience-based trading, you can stay ahead of the curve and redefine your approach to TV advertising in an increasingly competitive landscape.
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