Can AVOD Catch Up To The Hype?; Ecommerce Is Priceless – No, Seriously

Comic: Things no one asked, ever.

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Hope And Pr-AVOD

Ad-supported video on demand (AVOD) is commanding a lot of interest right now. Practically every ad tech company is banking on CTV to outgrow web display. 

After all, the thinking goes, consumers can’t just keep shelling out for more and more ad-free services, can they?

But it’s time for reality to catch up with the hype.  

AVOD was a $1.3 billion category in the US last year, according to a new MediaRadar report. That number may be growing, but also represents just 3% of online ad spend.

YouTube, Amazon and Roku have plenty of CTV inventory, but they’re also building higher and higher garden walls around their platforms.

The big five AVOD players – HBO Max, NBCUniversal’s Peacock, Discovery+, Hulu and Paramount+ – account for two-thirds of ad spend. With practically the entire advertising ecosystem on the wagon, it’s a lot for five horses to pull.

Too many companies are banking on too much growth from CTV for apps like HBO Max, Paramount+ and Peacock to meet those requirements, even if the apps take off. 

And speaking of those apps taking off, “media” is by far the highest-spending industry lapping up AVOD advertising, whereas linear TV indexes higher on pharma, food and auto. Put another way, AVOD is riding a sugar high right now of media, entertainment and tech companies promoting their own apps and new shows. Can it last?

If You Have To Ask, You Can’t Afford It

Thousands of US households received a toy and gift catalog from Amazon over the holidays. That’s hardly shocking. But The New York Times reports that many shoppers were surprised to discover one thing missing from the catalog: prices. 

I mean, come on, we’re not buying yachts here. 

But the absence of price tags in Amazon’s gift catalog points to important trends in ecommerce and advertising. 

For one thing, pricing has become more closely tied to supply-chain data and factors such as advertising as brands focus on managing profit margin rather than targeting sales at a specific price. That’s partly why many retailers and store-based brands have been able to grow profits despite supply-chain price increases. They ran fewer Black Friday-style discounts and dynamically raised prices across retailers. 

Food and household staples that were one price stable now “swing back and forth and, at times, are subject to price surges more commonly found in ride-hailing services. And popular Lego kits or products that can go quickly from abundant to back-ordered (looking at you, toilet paper) are subject to “Bitcoin-like” pricing volatility. 

Carbon Call

On Monday, the SSP Magnite acquired Carbon, a revenue management platform that publishers use to track and attribute campaigns.

Carbon is a handy point solution to support seller-defined audiences, which is trendy right now because inventory sellers have a lot of bargaining power in the land of CTV. Streaming viewers are a gold mine of first-party data for publishers to create unique audience segments and help with addressability.

The move also makes sense for Magnite because it’s all-in on CTV, which now makes up one-third of the SSP’s revenue.

“Carbon’s technology will help build the [very] foundation for the omnichannel audience creation tools we’re developing at Magnite,” a Magnite spokesperson told AdExchanger.

Carbon is a small acqui-hire, but one that could help the company continue to demonstrate its value (aka ROI) as a CTV and video ad server. 

As the CTV honeymoon phase wears off, advertisers will demand more control and transparency in exchange for the relatively high CPMs they’ll have to pay for CTV. Publishers and their SSPs are realizing the power (and money) will only come to those that can prove they reached a particular audience or drove a business outcome.

But Wait, There’s More!

Eric Seufert on the economics of advertising auctions. [Mobile Dev Memo]

Insider and Axel Springer back a new podcast company called Spooler. [Axios]

Did TikTok make books cool again? [Insider]

Speaking of TikTok, the platform now supports 10-minute videos. [The Verge]

Here comes the full Amazonification of Whole Foods. [NYT]

And here are all the ways Google is under scrutiny because of its privacy standards. [Bloomberg]

You’re Hired!

Weber Shandwick plucks Ridhi Malhotra from Zenith for a top analytics role. [MediaPost]

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