- About half of US TV viewing still comes from linear TV, while more than 80% of TV ad viewing remains linear.
- CTV ad growth is increasingly concentrated among walled gardens such as Amazon and Google/YouTube.
- Digital ad platforms have limited access to the roughly $50bn US premium video ad market still captured by linear TV companies.
- The Trade Desk and other independent platforms face growing competition from Amazon, Google, Walmart and social video.
- Digital ad platforms may need to develop linear TV buying, targeting and measurement capabilities to sustain growth. *
According to Nielsen’s Gauge, just about one-half of all viewing on TV in the US is still delivered by cable, broadcast, or satellite. And more than 80% of all TV ad viewing time is also linear, since so much streaming viewing is on ad-free or ad-light services.
Most analysts don’t expect to see even 75% of ad viewing time on streaming until well into the 2030s. So, if you are an independent digital ad buying platform hoping to capture revenue growth from the burgeoning CTV ad market, you have a problem. You are stuck between the proverbial rock and a hard place.
The ‘rock’ is the fast-growing video ad businesses of walled gardens Amazon Prime and Google/YouTube sucking up much of the true CTV ad growth, neither of which need your platform.
And the ‘hard place’ is the fact that the better part of $50 billion of US premium video ad spend is still captured by linear TV companies, and digital ad platforms are totally shut out of that spend. None have any linear TV ad buying capabilities, possessing neither data-driven linear targeting and measurement tools, nor automated capabilities for planning, buying and reconciliation.
Rock and hard place
Sure, streaming ads will grow and linear TV ads will decline, but not nearly as fast as the space between the rock and the hard place will compress for the digital ad platforms.
Just read any of the top Wall Street analysts covering The Trade Desk. Price competition from Amazon and Google is growing by the day (and don’t forget Walmart is moving fast into TV video, let alone the growing competition from social video).
Consequently, platforms like The Trade Desk no longer have large “green fields” of unimpeded growth in front of them.
Programmatic banner ad volume and margins are collapsing. The vast majority of premium CTV ad inventory is controlled by a limited number of players, and most buyers want guaranteed deals in advance, frequently based on content, not audience, and don’t need overbuilt bidding, billing and data exchange platforms to manage these deals.
Fighting over streaming ad growth
All the major digital players are fighting over streaming ad growth, and there just isn’t enough to go around.
Of course, if linear TV distribution suddenly fell off a cliff, it would be a different story.
Net, net: Anyone not a walled garden is going to have to find a way to capture and manage linear TV ad inventory and transactions directly — and now, because most won’t find enough growth in competition with walled gardens to make it for another seven to 10 years, when linear TV ad channels finally become irrelevant.
For sure, digital ad platforms are frustrated by linear TV’s resilience. They can’t grow at the speed public investors demand without that video audience and ad revenue. What do you think?
* Summary created by AI
This story was first published by MediaPost and is republished with the permission of the author.
Dave Morgan, a lawyer by training, is the CEO and founder of Simulmedia. 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. Follow him on Twitter @davemorgannyc
