Commentary
CTV Will Bring Back Sell-Side Ad Servers, Transparent Ad Networks
- by Dave Morgan , Featured Contributor, May 19, 2022
On top of that, ad-free Netflix and Disney+ have announced that they’re going to get in the CTV ad games, and Microsoft's head of sales just told us that they’re going to help bring ads to video gaming on CTV.
As you would expect with this kind of momentum, every digital ad platform or business ever built or imagined now wants a piece of the CTV gravy train, particularly all the programmatic acronym-laden entities: the DSPs (demand-side platforms), SSPs (sell-side platforms), DMPs (data management platforms), CDs (customer data platforms) and PMPs (private marketplaces).
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These platforms were built over the past decade or so to enable the real-time-bidded, programmatic world that now rules ad banners, digital video and much of social media. And each and every day now, we awaken to ad trades chock-full of stories about how the next hottest one is tailor-made to solve all of CTV advertising’s emerging challenges and and create opportunities.
But I don’t think programmatic, banner-built ad tech is going to win the CTV market.
No, I suspect the winning solutions will operate much more like the ad-tech platforms that built our industry in the mid and late 1990s: sell-side ad servers and transparent ad networks. Here are my reasons why:
Banners and CTV are different. In CTV, the ad unit is an audience member’s attention over time -- not space on a page. Space on a page on the open web is infinite, and at scale its value trends to zero. Conversely, peoples’ attention on a primary entertainment screen is quite scarce, and its value is quite precious to relevant advertisers.
Brand-driven buying models trump direct response when it comes to attention. Banner systems were built to maximize last-second bid capacity to capture a penny-higher bid from the next direct marketer. When buying attention, brands care most about predictable exposure to target audiences -- ideally, right before they have a purchase opportunity -- to maximize memorability. Thus, CTV systems will need to optimize for future market audience guarantees, relevance, frequency control and publisher yield.
What’s old is new again. Optimizing for future market guarantees, relevance, frequency control (who isn't tired of seeing the same ad over and over on streaming channels?) and publisher yield read like one-pagers for NetGravitry, OpenAdstream and Accipiter, sell-side ad servers of the early days. Doing it across companies and publishers reads like the transparent ad networks of the same era.
Wall-Street-like trading gives rise to smart media platforms. Yep, just when you thought Wall Street traders were going to dominate the future of advertising, the power is going to shift back to smart business systems working for principals in the market -- the media owners and the marketers. And the tech that drives it will look more like enterprise resource planning (ERP) and sales force automation (SFA) systems, and less like high velocity trading platforms.
What do you think?
I agree, Dave. Far more likely ---if CTV is going to grow significantly in ad revenue---- will be a combination of what we have long seen in traditional TV---upfront,, low CPM, futures buying plus individual brand buys with specific targeting and other considerations being the prime drivers---not, necessarily CPMs.
As to how these will split the national TV CTV pie that's not quite clear as yet, but it will be stupid for branding advertisers not to allow their brands more flexibility in their usage of CTV. Another variable whose impact has yet to develop will be the push by traditional TV ad sellers for major CPM increases---the reduction in available GRPs being their main selling point. If this happens, more and more brands may be freed from the shackles of corporate time buying and allowed to go their own way. But will CTV time sellers understand this and stop trying to make CTV a digital media buy---instead of a "TV" buy?
Hey Ed I am not sure I agree. The upfront model and selling low CPM's for big investment committments in a market where both national and local buyers are all willing to compete for the impression and we have scarcity and finally measureability at scale does not seem to be what is in the best interest of the publisher.
Other than for live events, I think the upfront's need to change is now. Offering a buyer getting bargain basement rates for early committments - which a large portion they cancel anyway is no longer in the best interest of the greater ad community, but most importantly not for the publisher at all.
We do not represent pubs/broadcasters in anyway, so this is not a self-serving comment. I just think that there are many more buyers than there is inventory and therefore the upfront model does not work as well as it once did. While I recognize the similar scarcity existed before with linear, measurement and other elements that make new TV more attractive change the dynamics.
Gabe, I'm all for reforming the upfront, however we have to look at it realistically. It's a futures market bought on a corporate ---not a brand by brand--- basis---and until the CMOs of this world understand that there's more to advertising success than how well their brands are positioned and how well their commercials are executed, it will remain so. This precludes any serious attempt at improved brand by brand targeting as there is no way to come up with a single meaningful metric for all of a corporation's brands ----often in many varied product categories---for upfront buys. As the sellers and buyers need a single, unifying 'demo" to base their audience guarantees on, we are stuck with something like adults aged 18-49---or, if the sellers wise up, adults aged 18+---as either way it makes little difference. We must also recognize that a huge portion of national linear TV time is allocated to must buys---sports, news, specials, certain non-prime shows such as "Today", etc. so that money is out of play---it doesn't matter what the data reveals about better ways to target or any of the talked about add-on metrics like attentiveness, clickthroughs, etc. advertisers will keep buying time in the must buy shows regardless. By the way, only a small portion of the upfront buys are cancelled in a typical year---the only exception was 2020 when the pandemic hit us.
We monitor the upfronts very closely---and have done so since the 1980s. While there is considerable speculation about alternative sources being used instead of Nielsen, we don't see much beyond a number of cases---usually for specific brand deals---where a network or cable channel includes an add-on guarantee based on data from other sources ---attentiveness, clickthroughs, etc.--- which it feels comfortable with. Net, net, we think that roughly 95% of the coming upfront will be negotiated based on the current Nielsen people meter panel's findings.
Just for the record, I am one of those who keep advocating new ways to deal with the upfront. For example, why not two upfronts? The first would be for individual brands who are freed by their CMOs to seek better targeting opportunities as well as more attentive audiences---even if they pay higher CPMs. Once this is done, the sellers could invite CPM chomping advertisers who want to play the futures game to participate in a second---mass audience/lower CPM upfront. Thatway everybody---including the sellers --wins.