Addressable is poised for massive growth in 2020. To keep you in the know, TV[R]EV will be coming at you every week with a series of new profiles and videos to shine a spotlight on this trend, continuing with this Q&A with SpotX‘s Allen Klosowski.
This interview is part of our new Special Report on Addressable TV Advertising. Written by Mike Shields and Alan Wolk, with an assist from Tom Morgan, the report offers 50 pages of deep dive insight into how addressable TV advertising is bought, sold and measured, who is doing it, and where it’s headed.
Allen Klosowski leads the Advanced Solutions Group at SpotX, one of the leading supply side platforms, where he has a front row seat on the growth of the addressable ad industry. “Advertisers are excited about the shift,” he said, “but they’re still figuring it out.” He notes that the money is starting to shift over to addressable too, as it starts to build scale. The difference though, is that brands are saying “I want to spend millions of dollars, but I want to choose which impressions I’m getting based on my data, versus you, the programmer, choosing which impressions I’m getting. That’s a huge change in the way brands are looking at TV advertising.”
Alan Wolk: Some people in the industry see addressable TV advertising and OTT as two very distinctive markets, while others see them as essentially synonymous and set to converge. What is your take?
Allen Klosowski: It’s an interesting question. We see addressable as the ability to customize and personalize advertising on any device anywhere. You’ve got addressable TV, which has traditionally been defined as being implemented by the big cable companies primarily using set top box infrastructure. We see that as a subset of addressable advertising overall. What I would say is that there’s a convergence that’s happening across the board because the future of addressable TV doesn’t look anything like the past.
In the future, cable companies’ infrastructures are going to look a lot more like OTT and digital than the systems of the past, and that’s when you have the opportunity for advertising to start really ramping up. At a certain point, does it really matter how somebody is consuming? Technology is going to allow more personalized and addressable advertising on the TV screen regardless of content delivery method. People who continue to think of it as only cable-style VOD and linear are going to be stuck in the past.
AW: What’s the biggest challenge this industry has to overcome in order for addressable to grow faster?
AK: The industry is starting to overcome some of the biggest challenges we had with addressable in the past, namely fragmentation of inventory and lack of scale. Right now there’s a tremendous opportunity, given the variety of ways that people are consuming video content, to create a liquid and scalable marketplace. That’s what we’re most excited about and we think it’s already starting to happen.
That said, the biggest challenge for anyone on the supply side is waiting for all these new initiatives to actually come to fruition. Right now we’re at the early stages of TV OEMs figuring out what the right standards are for on-the-glass ad replacement. Similarly, we’re seeing tracton on the operator side too—look at what NCTC and MobiTV are doing to try and make addressable a reality for smaller MVPDs. But that’s really our challenge, waiting for initiatives like OAR and ATSC 3.0 to launch and gain traction and for operators to transition to something that looks like an OTT back-end.
AW: Is there still a problem with siloed buying structures within big agencies?
AK: It depends. Yes, a lot of agency buying teams are still pretty old world. And yes, the notion of brands buying ads based on ratings is not going to go away anytime soon.
That said, many agencies have really started integrating via the creation of advanced TV teams, or by pushing their TV teams and their digital teams to work together in a way that you didn’t see a few years ago, which means they’re all starting to ask the right questions and they are starting to ramp up their plans. It’s going to take time but this is the new reality that all the agencies are faced with now and they’re all responding to it positively.
AW: How are DTC brands driving the shift to addressable?
AK: Small and medium DTC brands are really at the center of this push to addressable. It’s a chance for them to start running TV commercials which makes them feel bigger to consumers than if they were still just running social campaigns. A lot of OTT platforms offer self-serve capabilities and that’s huge for DTC brands–they can start running campaigns in 15 minutes, which is what they are used to doing on social. So if we can continue to make it as easy to buy TV as it is to buy digital on these walled garden platforms, and if we can give them the ability to test and iterate, the way they can on these walled garden platforms–that is a tremendous opportunity for TV.
AW: Over the next few months you’re going to see a massive amount of new streaming services—several of which carry zero ads. Is this going to push people further away from ad-supported TV?
AK: I think it’s good for the TV ad business. If you look at most of the services that are rolling out, there’s a handful that are going to be just primarily subscription-based, which is fine. I think some of them will probably be subscription based even with ads, and some will be leaning more towards the advertising side of things, We believe that advertising is a critical component of TV , and that these services in general are just going to bring more people into the fold. I do think price sensitivity is an issue for consumers, which is good for ad supported platforms, since I find it hard to believe that people are going to start subscribing to each and every one of these new services. So I think the ad supported models are going to get a lot of traction and that will increase the ability to run addressable campaigns at scale.
AW: Over time, does addressable TV become more of a programmatic marketplace, or an upfront driven market?
AK: Actually, the idea that that the upfront and programmatic markets could combine into one seems to be one of the biggest asks that our customers have right now. Brands want to bring their own data to the table, and they want to be able to say, ‘Hey based on our audience segments or proprietary targets, how many people can you deliver and what sort of reach and frequency can you give us against that audience next year?’ They want to be able to do things like programmatically guaranteed upfront buys where they’re actually going to commit a budget to reserve their audience inventory but transact programmatically. That is probably the number one topic on the minds of most of our major broadcast partners.
You can check out more insights on addressable in our massive new State of Addressable Advertising report.