More than 200 million homes in the United States use connected televisions, which has translated to CTV advertising spending ballooning into a $7 billion industry.
The small, yet quickly growing portion of digital advertising is competing directly with traditional TV ad dollars.
Independent video ad management platform Beachfront is solving many of the biggest challenges in CTV by paving a path for advertisers to increasingly use podding to create a more seamless user experience for viewers, and drive effective operations for those who are delivering the content.
Frank Sinton, President and Founder at Beachfront, sat down with us to explain how the company plans on creating a stateful podding model across the industry, and an efficient infrastructure by way of CTV innovation.
How would you describe the current state of CTV ad tech?
CTV ad tech is in need of a change. If you look at the current ad tech infrastructure and how it was built for video over the past 12 years, we’re in a state where we’re using a lot of the same infrastructure that we used for desktop and mobile web. In these Web-based environments, there is typically one piece of video content on a page and pre-roll before it. There is one-to-one mapping of a video and an advertisement.
TV is a lot different. TV is a continuous stream of content with multiple ad breaks. We have to treat it much differently than what the web-based, legacy ad tech infrastructure has done. It’s not one-to-one mapping anymore. It’s many-to-one mapping for a continuous stream of content. And each ad breaks also has multiple ads. The CTV ad experience is much closer to TV than the web. What’s in place right now doesn’t do full ad-pod or full ad-break auctioning and decisioning at once. There is a lot of change that needs to happen for Connected TV advertising to really work properly.
Frank Sinton, President and Founder at Beachfront, sat down with us to explain how the company plans on creating a stateful podding model across the industry, and an efficient infrastructure by way of CTV innovation. Recently, Sinton shared some thoughts on this topic with StreamingMedia as well.
How is 1.0 web ad tech a detriment to podding?
It’s being used fairly ineffectively. We need to change the way we transact connected TV. If you look at connected TV as an extension of TV, rather than an extension of digital, you’ll start to understand why. The rule of TV buying, programming and positioning within pods — those are not done today in the digital world.
Digital needs to start offering these types of packages to TV buyers who are now buying connected TVs. There is a lot of ad tech that is still going after web-based architecture. We need to reconfigure it. For example, competitive separation rules – i.e. not showing competitive brands in a single ad break – is something that digital programmatic infrastructure doesn’t take into account. Those are the kind of rules that are standard in TV, that we now need to apply to connected TV. But it’s not being applied very effectively because the ad tech infrastructure is not built for it. That’s what we’re trying to change at Beachfront and offer solutions to the pain points.
How does the stateless model of CTV programmatic hurt the industry?
First, there is over-requesting of slots from the same user. Not only does this cost money for SSPs and DSPs alike, but this also confuses bidders and ultimately hurts publishers due to potentially being marked as fraud or gaming of QPS (Queries Per Second).
As an illustration, let’s say the average connected TV publisher is working with 10 partners. Every slot is auctioned off in a stateless manner to each SSP. Think about an ad break with 120 seconds. You can break it up into eight slots, which is what a lot of publishers do for 15 seconds ads. If you multiply eight times 10 SSPs for one user, those 80 requests for reaching one user is a huge strain on the technology and infrastructure that’s costing everyone in the middle money.
Additionally, in a stateless model advertisers don’t know if they are going to be adjacent to a competitor or an advertiser that you may not want to be next to. You don’t know any of that. You’re only bidding on one slot in a stateless manner. It becomes a problem when marketers are trying to run an effective campaign.
If CTV were doing in a stateful manner — meaning full request/response for an entire pod — an advertiser can bid on a slot within a pod and know who the other advertisers are within it, and even know what position you’re being placed in. You can then be able to better optimize based on position and what the best ROI could be. The advertising becomes much more effective.
Finally, for the advertisers, you’re seeing a lot of the same requests for the same user. You may flag it as fraud, or something that doesn’t look right. If the advertiser bids on one or two of those slots, they may win one, but it may not get delivered because of competitive separation, or other rules.
Why are auctioning entire pods through a stateful system better for publishers and DSPs alike?
For publishers, they are now able to have stateful auctions for the DSP. For example, for a pod with four slots, they can have four advertisers across those four different slots in the pod. The mix of advertisers creates bid diversity, driving more revenue. Publishers are increasing the number of advertisers bidding in the slots within the inventory as opposed to a slot-based system that yields repetitive advertisers — sometimes as many as six or seven times. The bottom line is that podded requests/responses versus slot-based auctioning creates advertiser diversity, decreases infrastructure strain, and it helps publishers generate more revenue on ad breaks. On the DSP side, they dramatically reduce the number of requests and increases use rate, which is the number of times a winning bid is able to convert to an impression.
Why does CTV advertising need podding?
It needs smart podding. CTV continues to be “dumb” slot-based podding, which is why we see the same advertising presented during programs over and over again.
We are working on bringing smart podding to the forefront throughout the user session, like reducing the duration of the pod over time and user-based frequency capping for certain kinds of categories. Or even advertisers doing that across the user session if they are binge watching. Podding is something that exists in TV with ad breaks, but the important part is that we need to be much smarter and extend this eventually much further beyond just the pod. We need to take into the account the user experience.
Is the user experience being overlooked in CTV?
It’s important for brands to be asking questions about the user experience, and how their brand is being seen from the realm of connected TV. What are the controls being placed on the likes of frequency capping and competitive separation? They need to be asking questions about the content, and the context of which it’s being delivered in. If I was a CMO, I would be really pushing for those things, and it’s how my partners are handling it because those pieces are critical for brand equity, safety, and ROI.
How can programmatic auctions leverage more info for decisioning?
We deal on the publisher side, so we deal with the content — the channel, show, episode and other content signals for advertisers to transact on, as well as audience-based and device signals. The use-case around CTV is binge watching. Tracking the user sessions across many different programs and determining the effect on the advertiser experience is key.
So much focus for publishers is on the content experience and not enough focus is on the advertising experience. That’s what we’re trying to optimize on the publisher side – generating more revenue but not at the detriment of the user experience. We’re working with the demand side to optimize it as well.
How can the industry capitalize on surging CTV growth?
You’re reaching the “cord-cutter” and “cord-never” audience. It’s an audience that you cannot reach elsewhere, especially via traditional TV. That audience is a pretty sophisticated one, so you want to reach them in a way that makes sense in a non-disruptive way, taking into account frequency capping, and things of that nature. You don’t want to piss them off.
You have to look at it from the standpoint of reaching an audience that you can’t get elsewhere, especially in a way that is understandable to them with the user experience being top of mind. Those are very important factors for connected TV.
What are the changes that need to be instituted on CTV advertising moving forward?
As I stated earlier, the programmatic infrastructure needs to change with how it is done currently – mainly, that means going from slot-by-slot to pod-by-pod. That’s a big underlying infrastructure change that needs to happen. That’s something that we’re championing going forward. If we can figure that out, we solve a lot of underlying problematic issues as well in regard to frequency, competitive separation and engagement. That’s why we’re pushing forward on this new ad tech infrastructure.
Unified decisioning across direct sold and programmatic sold is another area that the industry needs to pay attention to because it hasn’t been fully solved yet. From a publisher and user perspective, the industry needs to do a much better job of understanding who the advertiser is, and what kind of ad it is. It’s not as simple as it sounds. It’s an area where everyone needs to do a much better job.
Where do you see CTV advertising in 2030?
By 2030, I would like an environment where advertisers can buy across traditional TV and connected TV, all in one transaction. Building a target audience and tracking ROI across both those environments is imperative. We look at everything across all endpoints.
In 10 years, you’ll have the majority of traditional TV being sold in conjunction with connected TV. Currently, only 3-to-5 percent is addressable. Over the next decade, if we can get a majority at over 50% that is addressable, that would be a great win. Part of that is just shifting the audience to CTV and cutting the cord, but also legacy set-top boxes is not going away anytime soon.