Hot Takes: Will CTV Take The Lead In The New Hybrid Ecosystem?

Given that all of the major SVOD services are now running advertising in one form or another (Apple and Amazon are running ads during their sports broadcasts, everyone else has, or will have, an ad-supported tier) we asked our TVREV Thought Leaders Circle members if they thought that would change the way brands view CTV and its importance vis a vis linear, and what changes still need to happen to make CTV more efficient and desirable.

Raf Bagdassarian, CEO at Paket Media was of the opinion that viewers might start to realize that paying for ad-free TV wasn’t such a burden after all and that various types of bundles would emerge from the current maelstrom as well.

Just as the pendulum swung hard toward SVOD, it’s swinging with a vengeance to AVOD. While this is a good and necessary adjustment, such swings invariably result in greater longer-term clarity as to what the market really wants. Services offering some hybrid approach of AVOD/SVOD may fare particularly well, as I suspect many consumers will realize spending a modest fee to minimize or eliminate ads wasn’t such a bad idea (what is a minute of one’s life worth anyway?). Look also to novel bundling solutions that create premium value around consumer interests to more permanently drive the re-adoption of sub-based services.

Joseph Hirsch, General Manager of SpringServe, now part of Magnite, focused on the need to keep the consumer experience front and center, something he noted could be improved by systematic testing.

SVOD incorporating ad-supported tiers in their services provides more opportunities and more complexities for brands as they turn to CTV to reach audiences. The growth in CTV inventory, measurement and attribution options, and the innovations in identity solutions provides new opportunities to reach consumers through channels that were previously closed off to advertisers. The publishers, content owners and platforms that execute the best ad experiences while keeping the needs and experience of the end-user top of mind will find the greatest success. Addressing concerns of ad relevance, acceptable levels of ad frequency, engaging formats, and pod structure, can vary from user to user. For a publisher or broadcaster, testing these approaches systematically will be critical to growing their revenue and improving the ad experience for the end-viewer.

Alexandra Klausner, Product Marketing at Conviva, was of the opinion that premium services like Netflix will not resort to traditional 30 second spots, opting for more original ad units and interfaces. She also pointed out that measurement will be an issue, particularly for companies like Netflix that have not readily shared their viewing numbers in the past.

When we think about premium streamers adding in advertising, we need to first think about measurement. Netflix has traditionally not liked sharing much about their audience make up or viewing numbers and they will likely not use a traditional currency. Netflix is well positioned to determine the currency advertisers will buy inventory with going forward. Once measurement is determined what ad products on premium services will look like becomes the question. I suspect that Netflix and Disney + will not settle for solutions like pre-roll and mid-roll for many reasons such as the fact originals aren’t set up for this, they want to continue to have reputations as an innovator and people willing to pay more to have a service without ads will probably skew more affluent and continue to be harder for brands to reach. These premium streams need to think about how to make the ad experience less invasive and more valuable to brands and viewers alike. In particular, I think we will see ad product innovation around ecommerce. Amazon prime lets you pause and see who actors on the screen are on IMDB - why not have that for products on the screen? Or pay to watch a particular program ad free? Last, while many people will choose to include ads in their streaming services, many will not mind spending a few more dollars to continue not to have ads.

Field Garthwaite, CEO of IRIS.TV was focused on the lack of transparency on CTV around where ads run and how his firm’s IRIS_ID can help with that. (Check out our TVREV Special Report to learn more.)

The #1 issue currently facing media buyers is a lack of transparency in CTV. Every programmer has their own metadata standards, which makes it challenging for buyers to buy brand safe and relevant ad inventory at large scale across different platforms and devices.

The IRIS_ID is a content identifier that solves this problem by creating consistent access to metadata from hundreds of broadcasters, publishers, and FAST channels. The leading data companies in contextual and brand safety are using the IRIS_ID to access video-level data and to bring their contextual and brand safety data segments into the CTV market. Brands and agencies then use that data, which travels with the content via the IRIS_ID, to plan, target, verify and measure their campaigns. The net result is that the IRIS_ID is bringing greater transparency and value for both advertisers and content owners into the CTV market. It is a privacy first data set which will allow advertisers to invest TV size budgets in the CTV market with or without identity data.

Perianne Grignon, VP Strategy at Mediaocean pointed out that brands will want to understand how ads on the various new ad-supported platforms perform before opening up their checkbooks or crypto wallets, as the case may be.

Brands and agencies will make the decision on what to pilot based on factors such as the ability to build unduplicated reach at a good price point, the environment, and whether it enhances the brand creative message, along with the impact on the overall economics of the deal. As for whether certain streaming ad buys are considered ‘prestige,’ what’s even more important is how prominent the ads are, what share of voice they get, and how the publishers will draw attention to the placements. Prestige may get a pilot done, but performance will determine whether budgets shift over.

Stuart Schwartzapfel, SVP of Media Partnerships at iSpot, noted that brands are going to be less focused on prestige and more focused on performance, business outcomes in particular.

Brands will ultimately advertise where audiences are, but also want to be able to transact with confidence and know that the inventory they're buying is actually being seen. The more connected TV can share around ad performance, how it tracks to business outcomes and how it creates incremental lift beyond linear, the more value brands will assign to those buys.

Adam Bergman, VP, National Ad Sales at VIZIO pointed out the advantages of superior measurement that CTV offered as well as the ability to use that data to better target ads to a relevant audience.

CTV actually opens the door for new ways for brands to understand the efficacy of their campaigns and through the use of viewing data, can improve an advertisers’ incremental reach, and the ability to connect with streaming viewers whom they couldn’t reach with a traditional TV campaign. For brands, CTV opens up a better understanding of consumer viewership habits -- actually knowing what hits the glass and understanding what consumers care about allows for better campaigns for advertisers. We are moving to a world where all CTV advertising is capable of being addressable which means a more relevant advertising experience for consumers and for brands a better way to connect with local and national audiences in a way that regular linear advertising simply can’t do.

Jeff Fagel, CMO at MadHive observed that advertisers would make use of different services to meet different needs, relying on premium services for branding while looking to local, linear and other CTV options for more performance-based outcomes.

With all the major SVOD services starting to explore advertising options, it’s definitely going to be another milestone in the migration to streaming for brands. Brands will look toward premium TV to continue building their brand, but as an industry, providing predictable and performance-based outcomes will be necessary. Advertisers and agencies can now buy both audiences and outcomes across local & national linear TV, CTV, and programmatic video with universal measurement in one modern TV platform.”

And finally Justin Fromm, Head of Insights at Samsung Ads cited research showing that almost three-quarters of Samsung TV households watch ad-supported streaming as proof of consumer acceptance while noting that the shift of sports to streaming would help bring advertisers along as well.

While “the year of mobile” lasted for nearly a decade, there is no doubt that the year of CTV is 2022. CTV penetration is well past critical mass in the U.S. and nearly ubiquitous among Samsung TV owners. The majority of streamers are also watching ad-supported content. 74% of Samsung TV households use ad-supported streaming as FASTs quickly become the new go-to for always-on viewing. Last year, Samsung Ads published the Rule of 40 in which we demonstrated that shifting 40% of linear budgets to AVOD is necessary to equivalize reach across viewers who had shifted most of their viewing to streaming. The shift of sports to streaming – including the NFL, MLB, and others – is not only the clearest proof that the pendulum has swung, but will force advertisers who have held off on shifting their strategy, whether due to complexity or legacy pricing, to re-examine their approach.

Our TVREV take is that this moment presents a huge opportunity for CTV to prove its worth. With more inventory and more desirable audiences on CTV, the various streaming services can take the lead in pushing for greater uniformity and fewer walled gardens. Advertisers’ desire to be associated with the sorts of premium upscale audiences that watch SVOD will make that task somewhat easier.

Determining the right type of ad units for services like Netflix, Disney+ and HBO Max where shows are not shot in a way that makes allowances for commercial breaks will be tricky but should lead to less intrusive ad formats that create a better user experience overall.

Transparency will be key too, as brands used to buying TV advertising are not comfortable having no idea as to the sort of content their ads ran adjacent to, no matter how well those placements reached their target audience.

Finally, measurement will be critical as always, and the ability to provide performance metrics like business outcomes will continue to help set CTV apart.