“On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Ben Antier, CPO and cofounder at Publica.
The state of the CTV market can be summed up in three simple stats:
Cord cutting is going to double this year according to Trade Desk. Consumers prefer Free Ad-Supported TV (FAST) according to Unruly. And the CTV advertising market only represents 10% of the traditional TV market.
So viewers are switching to CTV, they’re watching ad-supported content, and yet ad dollars are not following: why is that?
I believe that the fundamental advertising infrastructure is at cause. Advertisers don’t have a simple, trusted, and efficient way of transitioning budgets from cable to connected TV. But instead of focusing on all of these elements at once, today I’ll focus on what I think is the biggest factor that will drive ad dollars towards CTV — the ability to target audiences efficiently and at scale.
CTV at the center of the Identity Graph.
The major shifts within the advertising industry over the past decade have all been driven by increased ability to target people. First going from desktop to mobile, and then even more so by shifting from mobile to social. On desktop, cookies enabled (I have to use past tense here) advertisers to retarget users at scale. On mobile, device identifiers created (again past tense…) the missing link in many identity graphs unleashing the full power of audience targeting.
Then, first-party user identifiers owned by social platforms came along and advertising was changed forever. With cookies going away, mobile identifiers being removed and the high pressure facing social platforms, I believe the CTV Device ID is going to become the center of the audience puzzle, providing the ability to link people and their devices in a secure way at the household level.
Some may ask: Won’t the CTV Device IDs share the same fate as IDFAs and end up being removed by device manufacturers? I believe they will evolve (I’m a big proponent of hashed device IDs that can be resolved server-side by a trusted third party) but the CTV manufacturers won’t get rid of them.
First, the value proposition of the “free streaming with ads” model is clear to everyone. When you watch a sports game, you don’t expect to sit through a black screen during every time out.
Second, CTV provides the most secure tools for audience-based targeting because it is a “server-side” ecosystem. Once consent has been granted by the user, the app chooses which data points to send to the server. From there, no other application has access to the client to perform any data collection. The publisher is fully in control.
So we’ve just seen that the connected TV device provides the best entry point to a privacy-centric audience monetization strategy. But how will this help ad dollars transition for cable to CTV?
It’s all about data.
TV advertisers are currently buying cable TV inventory because it is the highest impact format available. It’s the same reason why video has taken over the web, the only difference is that it’s in full HD in your living room. So from a format perspective, CTV is unbeatable.
TV advertisers are also willing to spend so much because it is very easy to understand what content they are buying. In the programmatic space, we tend to lose track of that, which is why companies like Iris.tv and Peer39 are so relevant today.
They help bridge the gap between the publisher and the advertiser, giving transparency to buyers into the content they purchase, which brings CTV on par with traditional TV from a format and context perspective. But the true reason why $70 billion dollars are about to shift to the digital realm is because of the ability to inform buys with data that is no longer based on panels, but on secure, anonymized, privacy-compliant deterministic data.
So people-based TV advertising is going to ultimately move dollars from cable to CTV but it’s not going to stop there. If the open-garden ad tech ecosystem continues to grow, I believe that more and more advertising dollars will shift away from social platforms and into the streaming world. At the end of the day, if you have the same targeting capabilities on a user-generated feed and on a full-HD TV in the middle of the living room, we all know where advertisers will spend their budgets.