CTV Advertising At A Crossroads, FASTs Reflect A New Wide World Of Sports
1. CTV Advertising At A Crossroads
You will not see any stats on what I am about to tell you. Because it is in no one’s best interests to show you these stats.
But talk to anyone on any side of the CTV ad business and they will tell you that things are tough. That the dollars are still not following the eyeballs. That fill rates are low. That brands and agencies still irrationally favor linear. That we are still far from anything remotely resembling standardization or consensus.
What you will not find consensus on is why.
Given that one of the ad industry’s biggest events—Ad Week New York—is next week, it’s worth looking at all the proffered reasons, with the TL;DR caveat that they are all somewhat to blame.
Why It Matters
Let’s take a look at the multitude of reasons why CTV advertising is struggling, starting with the more obvious ones.
It’s Just Reruns: While “library content” is the odd euphemism the industry has adopted, let’s just call them what they are: reruns. Often of series that ran forty or fifty years ago. They are still beloved and still get audiences and there’s a strong argument to be made that commercials that run on this type of programming are more likely to break through because for the audience, the program is old, but the ad is actually new. (Or “net new” as the jargonistas like to say.)
None of that matters to many agencies and brands, though, who are still stuck in the “I need my new $20 million commercial to run on original programming” mindset. And so they’d rather spend money on first run series on network prime time than on CTV.
Which brings us to our next reason: Measurement On CTV Is Still Confusing AF. If you’re a brand manager, it’s a whole lot easier to tell the CMO that “the ads ran on Abbot Elementary and other prime time shows with an average Nielsen rating of X.X meaning we reached Y.Y viewers for a CPM of Z.Z” than to try and explain how you cobbled together a bunch of streaming buys, all of which were measured by different companies (including a lot of Grading Our Own Homework types) all of whom produce radically different stats that do not create anything vaguely resembling a coherent overview, let alone anything that could be used to create an apples-to-apples comparison to linear.
So there’s all that and it just reinforces the industry’s tendency to Default To The Path Of Least Resistance. Meaning that for years, no one on the ad side ever had to work that hard, linear TV being as close as you could get to automated without actual automation. So the idea that buying and measuring TV advertising might require math and a whole lot of analysis is anathema to many of the people in charge, and so they just avoid streaming and all its potential headaches.
There’s also the fact that streaming is all too often marketed as a way to reach very specific targeted audiences. Which is great for brands that want to reach specific targeted audiences, but if you are a major fast food chain or soft drink of the sort that spends nine digit sums on TV advertising, then your audience is “everyone with a mouth” and all you want is reach. Now it is easy enough to turn CTV into a reach extension vehicle—that’s been a big selling point for years. But it’s tough to make the argument for classic reach when it’s not being sold that way and when audiences on the individual platforms are not all that large. Here again, the path of least resistance theory means advertisers and their agencies don’t bother to try and add up all the options to get the wide-ranging reach they want. Even, curiously enough, when the number of people they reach on linear TV keeps dropping steadlily every quarter.
CTV’s fragmented landscape comes into play too when brands are attempting to reach targeted audiences. That’s because far too often the audiences they are attempting to target are too narrow, based, as they are, on digital targets, since that is often the only targeting data that brands and agencies have to rely on. This is something you might have heard me refer to as “Left-Handed Juggler Syndrome.”
Meaning that brands will go to Google or Meta and say “we want to reach left-handed jugglers.” And because Google and Meta have audiences in the billions, they are able to respond, “Great! We’ve got 115,000 of them!” Whereas when they go to one of the many FAST services, the response is likely to be, “Sorry, neither of them are watching this week!”
And again, rather than try and find those left-handed jugglers across multiple services, brands decide their audience is not on streaming and give up.
There are other reasons too: SVOD services charging insanely high CPMs for originals, a complete or partial lack of transparency as to where and when ads run, the inability of SVOD services not named Amazon or Hulu that actually have high profile original content to accumulate any sort of ad-supported audience in the US, and concerns about brand safety and privacy.
Fortunately, there are solutions.
What You Need To Do About It
At a macro level, the industry can do nothing and chances are good the issues will sort themselves out as more and more viewers shift to streaming and brands and agencies can’t really make a case for linear anymore.
But the result will be that the money will move grudgingly, much of it will be funneled to YouTube instead and profits will be a fraction of what they could be.
Which is why it is very much in everyone’s interest for the industry to take a few basic steps towards ameliorating these issues.
Rely more on contextual targeting. It lets you reach bigger audiences. It lets you reach them across multiple services. You can use it to get better measurement. You can combine it with actual demographic targeting. You can avoid privacy and brand safety issues, and not be affected by the roll out of IPV6, which will completely mess up IP-based targeting and tracking.
Collaborate more. The more you actually work together and agree on things, the easier it is for buyers. Again, no one is going to be the only winner. There will be lots of winners. But there will be far more losers if you don’t get your acts together.
Decide on a common standard of measurement. This is part of a greater collaboration argument, but everyone agreeing that, say, 15 seconds is a “view” is going to go a long way.
Stop making everything so difficult. It often seems as if the industry goes out of its way to make everything way more complicated than it needs to be, from processes and procedures to lingo. Just stop, because you are only hurting yourselves.
Look at the “Total TV” system that’s worked elsewhere in the world: It involves selling linear and streaming together and selling premium inventory directly and non-premium programmatically. We just did two webinars about it. [Follow the links to watch them for free!]
Go Big On Innovation: Figure out how to make shoppable work for companies not named Amazon. Double down on interactivity and self-service. Recognize that there’s no reason commercials need to be 15 or 30 seconds.
None of these suggestions are rocket science or new—you’ll have to pay for that kind of thinking. But internalize them. Because you need to do something while you still can.
2. FASTs Reflect A New Wide World Of Sports
A new FAST service called FLS (Free Live Sports) launched last week. It is, exactly as the name implies, a service that shows multiple live sporting events for free.
Now, in full disclosure, the principals are all good friends of mine, but that doesn’t detract from the fact that the service is a bellwether for a larger industry trend.
Which is that there is a whole range of niche sports with passionate audiences that have never been able to broadcast their games live before, and services like FLS are making that possible. And that once those niche sports (everything from parkour to lacrosse to chess) are on TV, they’re likely to find even more dedicated fans.
Which is why live sports on FAST makes so much sense.
Why It Matters
As the first story notes, CTV is struggling with fill rates. But sports is, in many ways, a panacea for that. People watch longer. The audiences are predictable. The content is brand safe. It is easy to sell merchandise. Live is a lot easier to measure than on demand. It’s “net new” every time. It’s easy to promote outside of the platform on social media. There are built-in promotional platforms—fan subreddits and the like. The Big Four US sports are losing their grip on younger audiences as they get too slick and their rights deals continue to be a source of Real Housewives-level drama.
FLS is clearly onto something too, as witnessed by the other companies leaping into the FAST sports arena. (That was such an easy pun.) Take C15, a VC-funded platform, along with single sport platforms like Volleyball World’s VBTV, the subject of a recent TVREV profile.
More than that though, FASTs have been struggling for a raison d’etre—there are only so many times someone will watch the Andy Griffith Show channel or an 80s movie like Heathers or Encino Man. So live sports gives people a reason to keep going back to the well, along with fresh content to keep them engaged.
Better still: niche sports don’t come with the hefty price tags that traditional sports do, making them an ideal fit for FASTs, who don’t have anything approaching the deep pockets of an Amazon or Google.
Seems like a win all around.
What You Need To Do About It
The success of sports-focused FAST services is going to lead to a whole lot of imitators. Such is the nature of the business. If you are going to try this, make sure you’ve got an angle. Otherwise you’re just going to disappear into the abyss.
If you are one of the new sports-focused FASTs, make sure you take advantage of the various innovations available thanks to streaming, from replays to betting to in-app stats to the ability to choose different camera angles.
Also be sure to cultivate and grow all those online fan communities, as they will be your best brand ambassadors and they will be thrilled to be recognized by you. And don’t forget about shoulder content.
I suspect you already knew all that, but JIC, something to think about.
