The rise of Connected TV is a great opportunity for all parts of the media industry, but there are also challenges that need to be met. In our opinion, measurement documenting the quality and composition of the audience reached is the key to ensuring a stable long-term growth for Connected TV – and a bonus would be for the buyers and sellers to also see how they index against the competitor set.
For publishers and broadcasters, Connected TV (CTV) offers an essential new engagement and reach opportunity outside of linear distribution. Our latest study on the usage of traditional TV, online video and streaming shows that 13% of the audience in the UK is streaming but not watching traditional TV, documenting the huge potential for incremental reach CTV brings. Other numbers are also showing that it’s already making pretty serious money – with the AA/WARC Expenditure Report showing £391 million of UK CTV ad spend in 2018 and forecasting almost 30% year-on-year growth for 2019.
Agencies have a new trading opportunity, around which they can flex their data and planning muscles. Meanwhile, advertisers are likely to benefit from increased reach of light TV viewing audiences, in a highly dynamic environment, which holds the promise of more highly targetable inventory than linear can ever reasonably offer.
And, inevitably, (often US) tech firms also see a lucrative opportunity with CTV to ingrain themselves in the infrastructure of this rapidly growing medium – the numbers from the US are not to be ignored, with programmatic TV ad spend estimated at $4.73 billion in 2020!
Last, but definitely not least, consumers have the benefit of incredible choice and convenience as their every programming whim can be met by a bevvy of platforms and broadcasters offering what they want, where and when they want it – and on almost every device they own.
So surely, it’s trebles all round? We have hit TV Utopia!
Well, sorry to be a party pooper, but we are not quite relaxing at the bar just yet. There are challenges that need to be met to truly realise the opportunity.
The programmatic dilemma is the first challenge we see. While CTV isn’t exactly programmatic yet (although recent announcements from ITV and C4/The Trade Desk push in that direction), it’s worth noting learnings from the rise of digital display ads (which became programmatic). Display went somewhat down a rabbit hole, as the market quickly (over)developed into a shouting contest about who had built the best one-to-one targeting machine. The digital ad market ran headlong towards direct response at the expense of consumer attention, long-term publisher revenues and, arguably, offered little or no benefit to brand marketing.
While some publishers and tech players may well have excellent data sets to enable micro-targeting on CTV, it is essential that CTV respects the empirically proven value of linear TV i.e. linear TV remains the number one platform to build brands and attain cost-effective reach in a high-quality environment.
As CTV grows, so too does consumer choice – the latest newcomers being the ad-free subscription services from Disney+ and Britbox. There is potential for consumer overload. And of course, some of the most popular CTV services don’t carry commercial ads, although there are plenty of rumours that they might do in the future. Consumers will only have a finite amount of money in their wallet for subscriptions – and this could benefit AVOD. It is perceivable that they may turn to the ad-funded platforms as they reach subscription saturation. However, second only to the content on the platforms, the ad experience will be a key driver of this consumer choice. Shouty and endlessly repeated ‘BUY NOW’ ads are not going to encourage users to spend more time with ad-funded CTV platforms.
Finally, we believe that measurement is the key that will open the door to the exceptional opportunities offered to everyone by CTV. Currently, CTV is not supported by a market standard or currency, which makes it challenging for buyers and sellers to agree on the amount and quality of the audience that is reached. This, in turn, makes the efficient planning of campaigns difficult. Ultimately, it leaves value on the table for publishers and clips the wings of media planners and buyers. While the medium is currently in growth, it needs to ensure stable long-term growth through accountability and tradability. And audiences will benefit as the ads will be relevant, with a frequency that is acceptable.
In conclusion, our view is that it is the consumer who is making the most of the current opportunity – which isn’t a bad thing. The consumer should certainly be everyone’s first concern as the industry develops strategies to build long-term businesses around CTV.
Find the full IAB UK CTV guide here.