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A Virtuous Circle

08 July 2014 | Blog

Feedback loops are found everywhere. Biology, programming, climate science, electrical engineering. Nature has always used self-regulating mechanisms, and we’ve copied the technique into our own technology.

The idea is simple. If you couple the output of a system back to the input, you can regulate the system as a whole. There are two kinds of feedback, positive and negative. Positive feedback increases the gain of the system; that is, the more something happens, the more that action is accelerated. An example is the albedo effect. Snow reflects sunlight. As snow melts, darker ground is exposed, which absorbs more heat from the sun. This accelerates the melting, which exposes more ground, which in turn absorbs heat and causes even more snow to melt. Negative feedback is the opposite—it decreases the gain. Your toilet tank uses negative feedback. As the tank fills, the floater rises, slowly cutting off the valve. The increase in water causes a decrease in water flow. When the tank is full, the floater sits at the top, holding the valve closed so no more water can enter. Feedback provides an elegant way for systems to regulate themselves.

In economics, the positive feedback loop is often referred to as a “virtuous circle”. A recent article on AdExchanger by Mike Driscoll compared the programmatic process to a feedback loop. While Driscoll’s proposals for instant feedback for digital programmatic buying may be a little premature for TV, advanced TV advertising already has some virtuous cycles built in.

It all comes back to data. It used to be that it took weeks to get as-run data back for TV ads. But now, TV data can be available for the next day. Likewise, TV used to be planned well in advance. But today’s technology makes it possible to customize creative, target it to a specific audience, buy just that audience, and have it on the air the next day. The combination makes a real feedback loop possible. TV ads can be tailored to be more relevant, targeted to a relevant audience, and then tracked. Whether through set-top box playout data or Smart TV data, this data then can be married back to conversion rates to measure the effectiveness. The insights gained can be immediately applied, enabling more effective creative and media buys with each cycle. The feedback loop amplifies success. It also allows underperforming campaigns to be swiftly identified and corrected, dampening mistakes.

There are a lot of tools available these days. Audience buying, creative versioning, targeted delivery, household addressability, multiple ways of tracking and analyzing performance—each of these techniques helps improve performance on its own. But layered together into one system, the virtuous circle truly accelerates the power of the TV campaign.