Truly integrating connected TV and TV ads are critical for a converging and fragmenting video world.
There is no question that we are witnessing a changing of the guard in video advertising. For decades, linear TV has dominated. Whether viewers watched their shows on broadcast, cable or satellite feeds, it mattered little. It was just ‘TV’ to them and the ad industry globally generated more than $150 billion a year buying and selling their attention, taking share from print, radio and other media for decades with little true competition.
In most cases, broadcasters provided proprietary programming and advertising to those distributors on a ‘wholesale’ basis – and those distributors, in turn, resold ‘programming’ bundles directly to viewers. Since most of those distributors had little or no direct competition in their markets, the audience scale that was delivered was massive and predictable, and everyone was happy. Until streaming showed up, of course.
In online streaming world, distributors – Netflix, Hulu or Tubi, for example – can enter markets opportunistically, selling directly to consumers and picking off the highest value viewers first. They can personalise packages.
They can enter into terms of service (including privacy protection agreements) directly with those customers that broadcasters can’t even imagine. And, critically, they can take the best of TV advertising’s ‘sight, sound and motion’ consumer impact on a big screen with a lean-back audience and combine it with the digital-born capabilities of precision targeting, automated buying and closed-loop measurement and optimisation to deliver an ad product that is dramatically better and more valuable than what linear TV can do alone.
A question of cost
For sure, the entire world’s population isn’t going to shift all of its TV viewing to streaming overnight. According to Nielsen, streaming accounts for just over 30% of TV content viewed in the US today. This is a lot, but nowhere near the linear delivery. Advertising viewed on TV is even lower; less than 10% of advertising on TV is streamed today.
How is that possible? More than 20% of US homes still lack quality fixed broadband, much of the streaming programming still carries few or no ads (Netflix’s new ad tier is changing that), and streaming video packages and broadband are expensive. Many lower income and cost-conscious consumers accept free or lower cost legacy options to receive TV programming and ads.
Of course, most industry analysts see a future where streaming continues to grow as a percentage of TV viewing, eventually overtaking it and then dominating all viewing. Broadcast, cable and satellite delivery are expected to shrink considerably, but few expect those channels to disappear entirely over the next decade or two, in most countries.
What most of us think of as ‘TV’ has already expanded dramatically, into a much broader definition of video viewed on high-engagement, primary screens by audiences intertidal engaged with ‘premium’ content on those screens – where what is ‘premium’ may, or may not, equate with legacy TV programmers’ sense of what is premium.
Two new platforms warrant call out here: one, console and PC gaming screens, where user numbers are already enormous and game publishers and platforms are beginning to test out TV-like ad integrations; and two, ‘mobility TV,’ where high-impact screens are now being deployed into autonomous cars, ride-share vehicles and public transit buses and vans, opening up hours of new viewing opportunities for the world’s many millions of daily commuters.
The transition from linear TV to over-the-top (OTT) streaming services and on multiple platforms and channels is certain to grow – disparately, depending on national market norms and infrastructure, audience demographics, etc. But it is happening now, and will certainly bring both good and bad news for publishers, advertisers and agencies in the video ad ecosystem.
The good news: more video ad reach, anytime, everywhere
More people will watch more video programming in more places for more hours each and every day. The capabilities to slice and dice those audiences for particular advertisers will go up. The measurability of those campaigns will go up a lot. The accessibility of those audiences and channels to advertisers and agencies of all sizes will dramatically improve as we see more automation and increased self-service offerings. This should be good for viewers too, as this improved ad targeting precision should increase ad relevance.
Of course, as consumers of digital content in the US know well, our industry continues to deliver horrific ad experiences with redundant, irrelevant, flashy, annoying ads despite having the technical capabilities to do better.
The bad news: more fragmentation
The audiences, programming, viewing devices and delivery channels will become even more fragmented, as almost everyone consumes their video on several different platforms depending on where they are, when they are watching, what they are watching and who they are watching it with. This will add enormous complexity to video ad planning, buying, activation and measurement.
CTV v. linear TV split
Making it worse will be the continued efforts of companies that dominate within one of the channels to keep their ad inventory siloed off from the greater video ad market. As we all know, linear TV and CTV ad budgets are still managed in an incredibly siloed way no matter the claims of ‘holistic’ video ad buying by agencies and marketers. In most cases, there isn’t even cross-fluency among the buyers and sellers in the ‘languages’ of linear TV and streaming.
Not only do the digital and linear folks not understand each other, business misalignment issues frequently allow situations where they compete with each other. Finally, there is really poor fit between their respective systems. Most of the CTV ad systems are still based on banner-based technology, where real-time auction bidding and expectations of supply exceeding demand rule. Linear TV is the opposite, working largely on an order or deal basis with little true automation or real-time speed.
Not fit for purpose
The digital banner-born adtech that handles most of CTV ad buys today is a misfit for a cross-channel world of premium inventory constrained by total viewership and exclusive access to their attention, rather than a digital world where ads, multiple on a page, below the fold, or buried tabs, many viewed for less than a second during scrolling.
Fundamentally, most legacy adtech now used on CTV was optimised for a world of 40 000 web publishers, not the CTV ad world where a dozen walled-garden streaming services in each market represent 95+% of viewing and the top 30 services reach 99.9% of viewing. The ‘long tail’ of CTV isn’t very long.
The list of techniques from the banner-born adtech that don’t fit the premium CTV ad world is numerous: too much focus on real-time auctions rather than reserve bids/buying and deal management;
- Little transparency to actual units purchased at the publisher, programme and platform level
- Too much inventory masquerading as something that it is not (six-second ad in a one-minute TV promo clip presented like it is 30-second spot in high profile, 30-minute TV show)
- Buying system optimised for intermediaries, not principals (with poorly disclosed float and toll-taking); data leakage to thousands of intermediaries ‘sniffing’ bid-stream and harvesting private and proprietary data
- Attribution systems optimised for ‘last-click’ rather than audience reach, ad frequency and high funnel metrics
- Reach and frequency controls optimised for daily, not weekly, management
- No comprehensive, integrated cross-channel, cross-publisher, cross-platform campaign management
- And, critically, co-mingled economics shared (not transparently) among DSPs, SSPs, data providers, data clouds, verification and measurement suppliers that pervert the intent of the parties and take margin out of the transactions without adding value.
How do we fix this?
It’s starts with caring and deciding that it is a problem worth solving. With a streaming and linear TV video ad world that will only get more complex, we need to move fast to solve the basic problems outlined above as the worlds converge.
We can’t solve it all it once, but we can get started and focus on the most critical issue first the dissonance between the way our industry handles CTV and linear ads.
We should focus on truly integrating linear and CTV ad buys at the audience level, de-duplicated across channels and companies, and not just try to make CTV ad look like their linear brethren or linear TV ads looks like their CTV counterparts.
We need to ‘re-aggregate’ as much of the fragmenting audiences as possible across companies and channels, and make buying and measuring them together as simple and easy as possible for advertisers and agencies.
And, finally, we must dramatically improve the fluency of our teams. We need to cross-train linear teams to better understand the digital and CTV ad world and the CTV teams to better understand how the linear TV ad world works. Elements from both will drive our future.
What can hold us back? Too many people believe that linear TV is going away and that solving for the intersection of CTV and linear TV isn’t needed.
I disagree. Not only will linear TV be around well into the 2040s in most parts of the world, but working through the steps to truly integrate linear and streaming ad buys today are critical if we are ever to make the premium video ad market that can scale with the massive, attendant breadth and depth of video in people’s lives, which will only become bigger, more ubiquitous and more impactful.
The future of video advertising is amazing. Let’s help it achieve its potential.
Dave Morgan is the CEO and founder of Simulmedia, a New York City-based technology company and developer of TV+, the leading premium video ad-buying platform for top brand marketers and their agencies. He previously founded and ran both TACODA, Inc., an online advertising company that pioneered behavioural online marketing and was acquired by AOL in 2007 for $275 million, and Real Media, Inc., one of the world’s first ad-serving and online ad network companies and a predecessor to 24/7 Real Media (TFSM), which was later sold to WPP for $649 million. After the sale of TACODA, Dave served as Executive Vice President, Global Advertising Strategy, at AOL, a Time Warner Company (TWX).
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