Nobody doubts the power of television. It retains huge audiences, commands enormous ad spends, and influences discourse at all levels of society. Those strengths largely remain despite the ongoing issues of the retirement of linear TV, the great unbundling, and new entrants into the space cutting into existing revenue strategies among incumbents. What advertisers and brands doubt is the stability of the modern TV landscape — particularly given the rise of television sets connected to the internet.
The advent of connected TVs (CTVs) was supposed to herald a new era of better measurements, more accurate audience demographics, and better return on investment for advertisers. Some of that has come to pass. Other developments have meant that the CTV landscape is not yet delivering upon its full potential, and that it could destabilize TV advertising more generally.
According to industry organization Thinkbox 80% of households in the UK have at least one television that is connected to the internet, either directly or through a third-party device like a gaming console. In the U.S., research from The Diffusion Group has found that the share of U.S. broadband households with CTVs has grown by just a single percentage point from last year, and currently stands at 86%.
That plateauing of growth coincides with a growing number of players within the space. Streaming services and digital video platforms jostle for position on CTVs with channels and broadcasters that are more associated with the medium. The number of CTV apps available on the Roku channel store, Apple TV, and Amazon Fire TV increased by over 38% year-over-year in 2020 according to research from 42matters.
It is a collision of different forms of video that mean advertisers have more choice — but also that there is a lot of confusion when it comes to measuring the success of advertising across CTV.
YouTube, for instance, is betting upon that plurality of choice to grow its own advertising business. Philip Miles, country sales director for YouTube and Display, UK & Ireland, told me after the latest YouTube Festival, “Historically, there tended to be a versus conversation — so YouTube versus television… pitted against each other. [But] our key thing that we were trying to land with Festival is YouTube is effectively part of the UK TV industry now, and increasingly advertisers are recognizing that it’s not an either/or conversation.”
But that entrant of new players, combined with resurgent spend after the pandemic, has led to inflation in TV ad prices. It is a volatile market — and exacerbated by issues around measurements. Nielsen is widely seen as not having adapted quickly enough to audience consumption habits, and its UK equivalent, BARB, only announced an upgrade to measure across subscription video on-demand (SVOD) in late 2021. At the time BARB’s chief executive Justin Sampson said, “It’s great news for the television and advertising industry that we’re upgrading our always-on measurement service to include SVOD and video-sharing platforms. For the first time there is audience measurement for these services that bears all the hallmarks of a joint-industry currency: independence, objectivity and transparency.”
Doomed to repeat digital history
Yet media buyer reticence around CTV suggests that the market is unsure about the extent to which it can reliably deliver upon its promise. And the reasons for that reticence will be uncomfortably familiar to anyone who has kept abreast of issues surrounding digital advertising more widely.
For starters, creating that joint-industry approach to marketing is easier said than done. There isn’t yet true consensus on what metrics should be captured, by whom, and which bodies should oversee the data. In the meantime, the lack of any one default measurement body is leading to non accredited bodies offering services that claim to offer a true yardstick for pricing of ads across CTV.
The European Connected TV Initiative says that, just as with digital advertising, opacity of the supply chains is paramount to making the most of the CTV opportunity. Its second most-important priority is the development of a more transparent and integrated CTV advertising supply chain. The goal, it says, is “to give advertisers and agencies the confidence to know what they are buying and where their ads will run – be it premium TV inventory, secondary TV content or social video.”
It all speaks to confusion around the different forms of video available on CTVs. With linear TV, satellite or cable, there was at least the perception of uniformity in form and quality. With the vast number of services available across CTV, that is no longer the case. Although YouTube might like to claim the quality of its content is on par with that across other CTV apps, is it really?
The problem is extremely similar to that of digital advertising, which also has the unfortunate issue of being undifferentiated. Just as projects like overtone.ai seek to provide a quality score for digital advertising — based on a number of criteria that demonstrate the veracity and safety of sites — there is a need among CTV advertisers to separate the wheat from the chaff.
Data and other dilemmas
Some marketers and buyers believe that, as with first-party data provided by digital publishers, there is an opportunity individual apps and CTV services can provide. Tal Chalozin, chief tech officer and co-founder at Innovid, told The Drum: “More data can be generated and a lot more endpoints can be connected together. Marketers would like to see other forms of measurement, more than just panels, more like a census into website traffic or app downloads.”
And probably most similarly to digital advertising, the potential for bad actors to enter the space is a growing concern. Omnicom has cited a lack of linear TV-level transparency as a major flaw in any attempt to sell CTV advertising, even among the bigger players. The company says “an inability to understand audiences at the household level across partners; and a measurability gap that translates to an open invitation to cyber criminals who are generating millions in ad fraud” is the big problem to be solved.
CTV is an enormous opportunity for advertisers. As different forms of video content collide on connected devices, the line between what is and is not TV content is eroding. With that erosion, however, comes the potential for context collapse around TV advertising and a revision of TV advertising’s effectiveness. And despite many of the challenges being familiar, there is no clear path to ensuring the industry doesn’t replicate the mistakes it made in creating digital advertising.