The Inefficiency Of Selling Linear and Streaming TV Separately
In the ever-evolving landscape of television, the traditional boundaries between linear and streaming TV are becoming increasingly blurred. Yet, the industry continues to treat them as distinct entities, selling ad inventory separately for each platform. Some brands and agencies even lump streaming in with digital video and buy them that way. This approach is not only inefficient but also fails to align with the way consumers actually view content.
A Unified Approach: Premium vs. Non-Premium Inventory
Consumers don’t differentiate between “linear” and “streaming” or “TV” and “digital.” To them, it’s all just “TV.” Given this, it’s time to rethink how we sell advertising inventory so that it aligns with the way viewers see it. Instead of the outdated dichotomy of linear versus streaming, we need to categorize inventory into “premium” and “non-premium” across both platforms.
This is not as crazy as it sounds—it has been proven to increase CPMs and thus profitability. But first, a little on how it would work.
“Premium inventory” e.g., top-rated originals, library hits and prime-time slots, would continue to be sold via direct sales. This method ensures publishers will continue to get top dollar for their best content, maintaining the profitability of their premium offerings. Direct sales offer a level of control and personalization that is crucial for high-profile offerings, whether those offerings are on linear or on streaming.
The latter is key for two reasons: more and more viewers are becoming “streaming first” viewers, even if they still do keep a linear subscription, and more and more streaming services are rolling out originals and picking up sports rights. The combination means there is more premium content on streaming and that more people are watching it.
All the more reason to sell it directly.
Non-premium inventory, OTOH, is better suited for programmatic – or at least automated - sales. Automated buying excels at targeting specific audiences, making it an ideal solution for monetizing non-premium content. By leveraging data and automation, programmatic sales can connect niche audiences with the advertisers who are looking for them, thus maximizing value, fill rates, and utilization.
Automated audience-based trading has long been the go-to for streaming inventory, but it’s time for linear services to adopt it too, at least for their non-premium inventory.
This is not as painful as it sounds. Spot buying is notoriously inefficient for low-value inventory and uses up needless resources. Automating it has been proven to drive up profitability while also lowering trading costs.
And by “proven” I mean “proven with real-world examples in markets outside the US.”
Countries like the UK, the Nordics, France, and Mexico have already successfully adopted this model of audience-based trading with automated placement and optimization. Instead of manually placing spots, agencies use an advanced system that automatically places inventory while continuously working to improve the overall value of those spots.
Given the impressive results— an up to 20% rise in revenue thanks to increased inventory, coupled with an 80% gain in efficiency—it’s not much of a stretch to conclude that a similar shift in the U.S. market could yield similar results.
All it will take is one forward-thinking brand or agency to make the leap and demonstrate the effectiveness of this strategy. (Again, not a guess—this is what happened in the UK and elsewhere in Europe.) Once that happens, others are sure to follow. This domino effect will lead to widespread adoption, providing the industry with a path to greater profitability.
Looking to the future, this strategy will help take the edge off the transition from linear to streaming. Maintaining consistent buying patterns across both formats allows for a smoother shift for advertisers and publishers alike. This consistency not only raises CPMs but also enhances overall profitability through greater efficiency.
As more and more viewers move to streaming and the industry grows more reliant on ad revenue, it’s critical that the industry evolves its approach to ad sales.
Letting go of the artificial divide between linear and streaming and focusing on premium versus non-premium inventory will allow publishers to better align their offerings with consumer behavior. It will help them increase profitability across the board while showcasing the benefits of ads running on the big screen, all that sight, sound and motion we’ve been talking about for years.
The only question is, who is going to raise their hand to be the first to take us there?
Intrigued? We will be discussing these topics and more in our upcoming webinar sponsored by Imagine Communications. Leave your thoughts in the comments on LinkedIn to help us frame out the conversation.
