Jan 20, 2022 Thomas Bremond
TV is home to a rich ensemble of advertising opportunities, but of late, connected TV (CTV) has taken the spotlight. Due to its TV-like experience and digitally inspired technical elements, CTV can offer the quality of linear alongside automated transactional capabilities.
However, approaching CTV media buying in exactly the same way you would with digital formats such as display, could have some detrimental impact affecting access to premium video inventory.
Critical conversations are now happening backstage about the best ways to deal with the convergence of the digital and TV landscapes. In our recent panel session at the Future of TV Advertising Global event we posed the question: CTV is Great, But Can TV (Really) Re-Invent Itself? By exploring the growth of CTV to date and the expectations broadcasters now face, we focused on what needs to happen in the next season of TV’s evolution.
The rising star
There’s no doubt CTV has made a name for itself. US ad spend for CTV grew by almost 60% in 2021 to total $14.4bn, making it something of a blockbuster. Meanwhile in Europe, 84% of marketers who participated in a FreeWheel survey* expected advanced TV spend to rise in 2022, with CTV in particular growing in double-digits in the UK, France, Italy, Spain, and Germany.
Now, the industry needs to prepare for what this growth means, as the rise of CTV will have significant ramifications for all stakeholders. In fact, for the value of premium video inventory to truly shine, some points must be carefully considered:
- The promise of “unique” demand: Many think that simply connecting platforms, selling premium video programmatically, and enabling header bidding will attract new buyers who are keen to purchase TV inventory similarly to digital display. In practice it’s more complicated and requires a collaborative approach between the buy and sell sides. For example, broadcasters that can make additional first-party data available to inform marketing decision-making will boost their appeal to media buyers.
- The call for supply path optimisation (SPO): There has been much discussion around SPO which attempts to minimise the many intermediaries and ensure the most direct access to publisher inventory. This has been a key TV strength, and while SPO might be needed in a complex and nebulous display environment, it hardly does in a premium context. Broadcasters such as Channel 4, ITV, or Sky have built their own advertising platforms and operating their private exchange prevents the dilution of value and ensures that buyers have an almost direct, transparent and optimal access to their inventory. In a sense, the TV industry invented Supply Path Optimization.
- The pot of gold at the rainbow’s end: There is often a view that, if display-like buying (ease of auctioning and high competition) can also be brought to linear TV, then broadcasters, through premium scarcity, stand to profit with CPMs remaining high. While this may look appealing, it goes against basic economic principle, as the fundamental behind programmatic trading need to change to be embraced by the TV industry and one must talk more about standardization than competition.
How will the narrative progress?
Central to harnessing digital-like capabilities is data. In an industry that may soon be lacking identifiers (IDs), first-party data holds renewed importance. As Katie Coteman, Vice President, Advertising and Partnerships at Discovery says, “we need to have much more of a direct relationship with our consumers”, following not only the need for privacy-compliant data, but also how audiences are engaging with premium video content across platforms such as CTV, broadcaster video-on-demand, and subscription video-on-demand.
To navigate a fragmented market, broadcasters require technology that enables data connections while protecting both consumer privacy and the value of first-party data. In the words of Paola Colombo, General Manager at Publitalia ‘80, “defining the rules of the game, the standards for addressable TV” are vital steps for market growth. Alongside standardisation, the ad industry needs a sustainable approach to identity resolution, data sharing, and data usage rights in the TV landscape.
Against a backdrop of consistently developing user privacy regulations, it will be necessary to create tools and frameworks specifically designed for the future of TV. Broadcasters must ensure they continue to lead the way in building new and effective techniques, as well as trusted relationships. Veriça Djurdjevic, Chief Revenue Officer at Channel 4, shared how the broadcaster’s business strategy encapsulates this approach, through “shifting how we think about ourselves in terms of ‘pivoting to digital’, to ‘[prioritising] digital growth ahead of linear ratings’.”
Although CTV has accelerated the evolution of the TV landscape, it is so much more than just a digital screen. It shares the premium quality, high engagement levels, and immersive content of TV, making it a standout performer when combined with its strong potential for data-driven capabilities. By building solutions that enable the use of data at scale, retaining ownership of their assets, and generating value for both buyers and sellers, the ad industry stakeholders can transform the premium video ecosystem and ensure that TV and CTV work in symbiosis.
* The study was conducted between 23 July and 2 August 2021 with 577 marketers surveyed (comprising primarily of advertisers and agencies) in key European markets: Italy, France, Germany, Spain and the UK, in collaboration with independent research company CoLab Media. Details available here.