By Tim Ware, vice president of advanced television at Telaria
Connected TV is here – the ubiquitous nature of internet-enabled TVs has encouraged Americans to rapidly adopt this ‘best of the web meets best of television’ viewer experience. Netflix was the most notable subscription video on demand (SVOD) programmer to drive early consumption by seamlessly converting its DVD rental business into a slick streaming video dynasty. Yet, commercially-supported television has the opportunity to reinvent itself, and work is already underway among the early movers. In fact, Hulu, Roku, the big 4 networks, affiliated cable channels, MVPD’s, and TV station groups are furiously developing their internet protocol television (IPTV) capabilities to usher in more advanced capabilities.
The primary goal: to capitalize on the disruption while increasing their share of TV ad spend, that $70 billion pot-of-gold that emerging media businesses have set their sights on for the past two decades. The good news is that the tail winds are blowing in the right direction for those prepared for CTV.
Ad-Supported CTV Content is Increasing
We believe the future success of CTV is predicated on the fact that it will be largely ad-supported video on demand (AVOD) as opposed to SVOD. With consumers facing subscription fatigue and premium video content providers needing an effective way to monetize their content, advertising will be an integral part of CTV’s growth. With an ad-based model, there will be an optimal value exchange between viewers, advertisers and brands who will be able to use data for increased ad effectiveness.
That said, advertising formats and commercial pods on CTV can and will be different than the legacy ad formats of traditional TV. For one thing, there will be less time allotted to ads. Reducing ad loads is already happening for legacy linear formats, fueled by competitive CTV programming alternatives that boast commercial free SVOD or ‘ad-light’ programming alternatives. Turner and NBC have already made public statements and adjustments in this regard; it is only a matter of time until others follow. For those in traditional broadcasting, a tech stack overhaul and upgrade is a necessary exercise.
As we look to over-the-top alternatives, this is a much simpler undertaking as dynamic commercial breaks are already possible, provided programmers already have dynamic ad insertion capabilities within their distribution platforms and TV Everywhere applications. Going forward, programmers and distributors will need these capabilities.
Content is King…Still!
The better news for programmers is that ‘content is still king’. For publishers, the goal is to monetize content and not disrupt the viewing experience, in spite of the fact that the TV commercial experience is disruptive by nature. That stated, the value exchange for internet video promises to be greater for consumers and brands, as brands learn how to achieve better performance from fewer ads and consumers consume more through AVOD TV services. Data from automatic content recognition (ACR) technology that measures when viewers tune out and change channels supports the hypothesis that less ads can result in a more positive viewer experience and better ad performance. Internet video ad technology allows us to modulate the optimal balance between ad load, quality of viewers and the value they offer an advertiser.
Over time viewers will rely less on VOD through their set-top-box as they become more comfortable and aware of CTV’s ease of use. Meanwhile, slim bundles enable convergence, with leaders such as SlingTV, Hulu Live, PS Vue and YouTube TV among the more notable entrants. This all points to consumers being able to access the best of the best that TV has to offer, albeit in an increasingly on-demand format.
Sports and live events are still able to capture their share of appointment viewing, though monetization of this type of programming will take place in a new paradigm. Real-time monetization of live events is becoming more commonplace. In Australia, Olympics broadcaster Seven teamed up with Telaria to enable programmatic ad opportunities for Australian brand marketers. FOX will have programmatic video availability in the upcoming World Cup Football (soccer) tournament. Services like SlingTV are also enabling local avails in top events like the NCAA tournament, the NHL and NBA Playoffs, as well as prestigious golf and tennis grand slam events, which allow the TV ad industry to capitalize on ‘big event consumption spikes’ for live high quality events. All kinds of programming will be available on CTV in the near future, making it all the more important for programmers to effectively use this medium.
Maturing Industry Standards Will Invite Scale
It’s worth noting that CTV thus far has not had a universal standard for a device ID, better known as IFA (ID for Advertiser). The lack of an identifier was a hurdle for the mobile advertising industry, but was eventually solved for with an anonymized solution for advertisers to better know device IDs. A similar effort is underway for video as the IAB Tech Lab recently unveiled an IFA standard for OTT environments that will simplify targeting, measurement and the ability to transact at scale. Provided this ‘standardized way’ for CTV publishers to better target, track and measure ad delivery across devices and apps is widely adopted, CTV advertising will be further legitimized and enticing to advertisers who weren’t already on board.
By year’s end, CTV will be much more evolved and streamlined. The ad tech stack conundrums that are confusing today will be standard operating procedures tomorrow. The future is bright and the renaissance of TV will flourish.