Marketers Face A Radically New Supply Landscape In CTV

With the massive shift to streaming throughout the past year, connected TV (CTV) represents the next wave of growth in programmatic buying.

In 2021, $9.5 billion of television advertising is going to be traded through programmatic auctions powered by DSPs and ad exchanges. The open internet, by contrast, will be a $56 billion category this year. CTV represents a significant portion of open programmatic inventory available.

The top 16 content owners – including WarnerMedia, ViacomCBS, Disney and NBCUniversal – control 80% of CTV supply, but they account for just 8% of bid requests for CTV inventory.

“There’s a 10X under-representation of supply from the most important controllers of CTV inventory because they’re the incumbents,” Jounce Media President Chris Kane said Tuesday during AdExchanger’s CTV Day Innovation Labs event.

Kane, in a presentation called “The Programmatic TV Supply Landscape,” said that as marketers shift their TV investments to programmatic auctions, they face a radically new supply landscape that is extremely fragmented.

Virtual Multichannel Video Programming Distributors (vMVPDs) such as Fubo TV, Hulu and AT&T TV dominate the category, while premium content owners largely sit on the sidelines.

“The incumbents will maintain legacy sales practices while monitoring how other companies in the space – the innovators and opportunists – monetize their inventory,” he said, adding that CTV adoption cannot grow substantially without the full adoption by content owners.

“What needs to happen is that marketers need to demonstrate to these content owners that it is financially rational to participate in programmatic auctions,” Kane said.

The combination of web, mobile app and CTV supply creates a $66 billion open internet category. Kane said that this year, about 14% or 15% of all programmatically-traded advertising is going to be television inventory, but still only accounts for just 6% or 7% of all television advertising.

“It’s certainly big enough to care about, but it’s also unclear if this is going to become a large or potentially dominant way that TV advertising gets treated – or if this is sort of an experiment that ultimately will never amount to a large share of global TV advertising,” he said.

Not ‘gating’ inventory

But some execs questioned Jounce’s findings.

Jim Keller, Discovery’s EVP of digital and advanced advertising sales, said that Discovery hasn’t been gating its inventory.

Speaking on a panel called “The Programmer POV,” Keller said that more and more marketers and agencies are leaning into programmatic, whether through programmatic guarantees [PG] or private marketplaces [PMP] with variable pricing or fixed pricing.

“We’re trying to find ways to create a frictionless way to get access to the inventory,” he said. “We’re putting all of our inventory available into the programmatic pipes. The growth of programmatic for major publishers like ourselves is only going to continue to grow.”

Evan Adlman, SVP of advanced advertising and digital partnerships at AMC Networks, said he was also surprised by Jounce’s low percentage. He added that AMC is experiencing the opposite in its “strong” digital direct business.

“The growth in our reach and viewership has gone at a pace faster than expected,” he said. “With all of the AVOD and FAST [Free Ad-Supported TV] inventory that we have with sales rights, we’ve built a very strong programmatic-first approach to it.”

Nearly 90% of Discovery’s programmatic transactions are PMP and PG, and barely any inventory is sold on an open exchange. The real challenge, Adlman said, is getting dollars to flow from linear to the premium content in CTV.

“The ability for brands to really take advantage of what CTV can offer – whether it be programmatic or not – is where we need the industry to come together and help us out with,” he said.

A fragmented landscape

So who’s selling CTV programmatically besides content owners? A lot of other groups have access to CTV inventory, as it turns out:

CTV is broken into five categories that include vMVPDs; free ad-supported television apps (FAST) such as Tubi and Pluto TV; electronic programming guides (EPGs), which are pre-loaded channels in smart TV and CTV devices such as the Roku Channel; direct-to-consumer apps like Paramount Plus, Discovery Plus and 13 others that can be widely distributed across multiple operating systems but carry content from a single content owner; and even audio apps like Pandora, Spotify and TuneIn.

While that feels like a long list, it’s short by digital standards. Kane said that there are just nine major operating systems and 12 app developers.

“We’re talking about fewer than 100 different apps that represent two-thirds of supply – that is radically more concentrated than the web and mobile app space,” Kane said.

While working directly with those app developers to access the majority of CTV inventory may fundamentally change CTV planning, execution and measurement, Kane added that it’s common to have multiple sellers jointly monetizing a piece of inventory within those major apps because of CTV sales rights, which complicates the supply chain process.

“Each one of these supply paths has fragmented sales rights. Marketers might not need to buy through all of them, but you would need to buy through many of them, in order to gain full access to this CTV supply,” he said.

But the process needn’t be complicated. Kane advised filtering based on the seller of the ad spot in order to simplify the CTV supply landscape.

“If I’m trading with Viacom CBS, what matters most is that I’m trading with ViacomCBS and what matters less is if I’m in the Paramount Plus app, or in a Hulu app on Roku, or in a Sling app on Amazon Fire,” he said. “We need to be able to separate out this notion of the property on which my ad ran, from the seller that is collecting payment from the exchange.”

While there are many hundreds or even thousands of properties, the list of sellers operating auctions is smaller, Kane said. This makes it easier for marketers to evaluate based on which sellers give them the best performance.

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