In Greek mythology, Odysseus faced many harrowing close calls, traveling to Hades and back just to find his way home. For many involved in the evolution of ConnectedTV, it has felt very much like a 10-year journey to get to the juncture where the promise of the platform finally meets the commercial needs of the market.
Much like Homer’s Odyssey, there always seems to be one last challenge to face before reaching friendly shores. As video investment continues to surge into CTV, the competing challenges between programmers and CTV platforms are coming into sharp relief. The solution may lie in mutually shared data so that platform and programmer can harness the rising tide of OTT viewership on CTV devices and the revenues that come with it.
Big picture problems
For digital publishers, CTV will mean presenting their content on the big screen for the first time. This represents a big leap into the living room on platforms they don’t really control. Even an owned-and-operated OTT app must adhere to the specific requirements of the CTV platform where it resides. And that often means building multiple variations of the app just to conform to the needs of the platform. Even with native video players for environments like AndroidTV, the specific advertising parameters a publisher must comply with to succeed on a CTV platform vary wildly.
Traditional broadcast and cable networks approach ConnectedTV with a set of assumptions from the legacy world of television. Unfortunately, these do not always translate well into CTV. First, they have windowing restrictions around licensed content that can produce an uneven experience between their linear broadcast, cable VOD, and CTV offerings. Second, without an accepted currency equivalent to Nielsen ratings for CTV viewership, they are missing out on the opportunity to bind all TV viewing of their content into a single, sellable, audience. (Nielsen One – a potential solution – is slated to debut in Q4 2022.)
Add into this the fact that ConnectedTV device platforms are becoming owners of advertising inventory across all of the programmers on their platform, and the situation becomes even more complex for everyone. In the past, a TV network would surrender two minutes per programming hour to their MVPD distribution partner, or roughly 12.5% of total inventory. This was mitigated by the terms of a carriage agreement that permitted the distributor to only sell local ads for insertion into their physical distribution footprint. Today, a CTV platform has rights to 40% of a programmers’ inventory and no restrictions around to whom it can sell.
Transition and targeting
Web publishers had to master new techniques and methods to benefit from the consumer transition to mobile screens. Now these same web publishers that have built strong advertising supported video businesses will need to recalibrate their workflows to ensure that CTV publishing is worthwhile. Ultimately, their ability to represent the full scale and dimension of their audience, across owned and third-party platforms, will have a profound impact on their success.
The value of a programmer’s CTV advertising inventory, despite residing within the same content network and delivery platform, is influenced dramatically by the audience targeting data that each party, owner, and distributor, is able to provide. When a network sells this CTV inventory directly or even programmatically, they can apply a limited amount of first party data to the placement given the lack of unique identifiers provided by the CTV platform. The network falls back on presenting its CTV audience as an extension of its broadcast audience. That is, unfortunately, an imprecise and potentially loss-making approach.
The CTV platform is not so constrained. While publishers may not have the option to sell these networks by name, their aggregation of so many CTV impressions allows them to compete directly with the programmers for the same advertising budgets. And because of the additional first party data they have about the consumer: viewing habits, zip code, and even TV size, they can very often out compete the networks for the same campaign commitments.
So here we have the Scylla and Charybdis of CTV advertising. On the one hand a national brand advertiser can approach multiple networks for their CTV campaigns and craft a schedule that will guarantee distribution and spot delivery. They can be very specific around selected programming and category exclusivity if they so desire.
On the other hand, going to one or several CTV platforms for the same campaign will allow a buyer to define a desired target audience profile to reach. However, they will have limited control around the content adjacency and context of their placements. And the reporting and reconciliation of campaigns is also different in degree and detail, forcing the advertiser to now undertake an analytical effort to assess ROAS from each source.
The route to revenue
Scylla, the six-headed monster in Homer’s The Odyssey ate sailors that passed close enough to be claimed. She sat on one side of the Straits of Messina. Charybdis, a violent whirlpool that would devour entire ships, was at the far shore. Sailing too close to one or the other ensured an unenviable end. Buying impressions from only programmers or only from CTV platforms will leave advertising brands at a disadvantage precisely at the time when CTV can command the enormous share shift of video investment coming from a declining traditional TV audience.
The stakes aren’t quite life and death for CTV advertising. However, it’s worth recognizing that this state of affairs will continue to constrict the growth of the business unless additional progress can be made to harmonize network-sold and platform-sold CTV impressions.
It is incumbent on the industry to coalesce around a shared data set that both platforms and programmers can provide to advertisers programmatically such that they can evaluate and purchase these avails with the same confidence that they used to purchase television. The rising tide of OTT viewership on CTV platforms, on both linear FAST channels and AVOD, suggests that rallying around a common baseline for CTV inventory stands to benefit both the content rights owners and distribution platforms equally, when each will finally have a stake in one another’s success.