Is Connected TV advertising going through its difficult teenage years?

If you’ve got children, you’ll know all about the challenges of raising teenagers, and even if you don’t, you’ll probably remember your own teenage years – the confusion, the mood swings, the challenge to authority and wanting to do things your way. And then the realisation that there are still a few things that you can learn.

The analogy may be stretched a little, but addressable advertising in the premium video space is certainly experiencing growing pains as it develops and matures. Fragmented audiences, increasing content costs, new business models, a raft of services and devices, and the battle for viewer attention are bringing increasing complexity for the consumer, the advertiser and everyone in between.

This is the backdrop to the CTV Ad Days Europe event organized by Dataxis in London. Comprising of multiple panels with speakers from broadcast and streaming services, content owners, analysts, industry experts and vendors, the event set out to highlight how quickly the addressable ad market is moving, where the opportunities are and what needs to happen next.

Setting the Tone

With speakers from Warner Bros, Paramount, NBCU, Group M and TF1, the tone was set at the initial, keynote panel, raising many of the themes that would be discussed throughout the day.

Fragmentation of Streaming and OTT services is a significant issue, with over 1,000 Free Ad-Supported TV (FAST) channels being available on 22 different platforms just in Europe, and that’s after there has already been some consolidation in the market. This is a complex and difficult environment for agencies and brands to navigate, although the intent is clearly there, especially to provide the brands with the audiences they want. Targeted addressable advertising in premium content services is seen as the Holy Grail for many, delivering high engagement within identified, specific audiences. Yes, the CPMs may be high, but with such focus wastage is significantly reduced, leading to an overall lower cost.

It’s a great theory, but that fragmentation leads to inconsistent measurement, and unlike traditional broadcast TV there is no common currency for trading, and little aggregation outside of walled gardens. If you’re a brand or an agency this means an exponential increase in your media buy and relationships, and that’s before the need to create substantial amounts of new creative and coordinating multiple campaigns. Theres an opportunity for AI here, but that’s at least 3-5 years away, and possibly much longer.

Wanted

The rewards are high for getting it right. Fragmentation provides an opportunity to engage with very specific audiences, especially younger demographics – 46% of Gen Z are watching some form of streaming service every day in Europe. Combine those numbers with creative that talks to the audience directly and engagement improves as well, with some seeing increases of 9-14% for ads with partial addressability, such as a nearby location, through to a whopping 29% for ads that are specific to the audience they target. Of course, your mileage may vary depending on a range of other factors, but there is now clear proof that addressable advertising not only works, it works well.

Unstoppable FAST

The increasing confidence in advertising of all kinds in streaming services is a major driver in the growth of FAST channels, and the ‘Unstoppable FAST’ panel explored the growth of FAST channels in more detail. Moderated by Victoria Davies of Davies, Stoychev & Partners, the twin themes of fragmentation and measurement dominated again, but with contributions from content and agencies, new models for rights holders are starting to emerge around partnerships and sponsoring.

Speaking with Davies afterwards she said ‘FAST is constantly iterating and will launch in new markets, which represent the opportunity to monetise content across more windows and develop new revenue streams. Advertising scale is critical, so markets like Poland will likely be a focus. In the established FAST markets increasingly premium content is emerging, which fits with the desire to deliver a more premium inventory to the advertisers and increase yield potential.’

What about the Dinosaurs?

With all the disruption that FAST channels and Connected TV services are bringing, we shouldn’t overlook the traditional and established Service Providers, some of whom have driven innovation in targeted ads. Sky AdSmart has led the way in the UK for over 10 years in delivering multichannel addressability, including over broadcast, which is frequently overlooked as an addressable option. The Service Providers understood the dynamics and value of traditional multicast distribution, and led with the business proposition, forcing the tech vendors to develop around commercial requirements. A comparison to the dinosaurs fighting back against the meteor caused some sharp intakes of breath in the room, but a more favourable view is that there’s is still very much a place for broadcast TV in this new dynamic. Time and again we’ve seen the death of a media announced far too prematurely, all the way back to radio replacing newspapers and beyond. Consumers are very good at adapting to a mixed media world, and the incumbent players in TV advertising shouldn’t be ignored. FAST and CTV may be more of a meteor shower, lighting up the sky, than an extinction level event.

How how much?

This is not a typo, the question in the future may well be how do we say ‘How much?’ and what for? On this topic Jeff Eales, Director of System Strategy for Adsmart, and one of the driving forces behind the creation of the multi-channel platform led a discussion on multi-currency measurement. Right now, there is no commonly accepted currency or measurement for Connected TV advertising and this may be one of the key problems that needs addressing – is it now time to separate the two? At the moment measurement *is* currency, the number of people watching an ad is effectively the metric used for trading, and in an addressable, connected world that may no longer be the key metric. In fact, there may be many such metrics around areas such as engagement as well as simply viewing. It will take collaboration between brands, platforms, content and Service Providers, and likely a whole lot more, but ultimately it will have to happen as the market demands a new way of trading.

Next Please

With other sessions on brand safety, campaign co-ordination, retail partnerships and market consolidation, the CTV Ad Days Conference shone a light on the complexities of the changing advertising landscape. By bringing together all the key players in the advertising value chain we were able to explore where the opportunities can, should, and will be, and the importance of being able to experiment, to be agile with the new technologies and business models. Right at the end of the day we got a teaser into where the next potential wave will be coming from with a look into advertising and gaming. At any given time, there can be up to 500 brands advertising in Roblox at a fraction of the price of TV advertising, and in-game advertising presents opportunities similar to linear sports, although right now it feels very much like the early, wild west days of digital and social media advertising.

The message from this event is clear – premium video advertising is going through a huge change. Nobody knows where the industry will be in 5 years’ time, but it’s going to look, and feel, like a different space, and wherever in the value chain you sit, you need to be informed, and ready.

About the author:

Adam Davies has worked both client and vendor side in media businesses from print, to digital and video.

He’s held senior positions at News International, Thomson Reuters and Cisco, developing in-house monetisation solutions for content vendors, as well as providing streaming solutions for major premium video Service Providers.

Adam has spoken at multiple international events across Europe and North America, including NAB. ANGA and IBC, and is a contributing editor for Broadcast Projects News.