The Potential In Programmatic OTT: Business Outcomes Vs. GRPs

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"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Jon Mansell, vice president of programmatic solutions and partnerships at WarnerMedia.

Connected TV (CTV) is at an inflection point, split between two competing measurement methodologies. Depending on the buyer’s vantage point, CTV is either a complement to traditional linear television or the final piece to a cross-screen digital puzzle.

CTV accounts for 12% of a user’s time spent with media, according to MAGNA, while it only receives 2% of total ad spend. Similar to the shift that followed mobile user growth over the last decade, the share of over-the-top (OTT) ad spend is likely to increase dramatically in the coming years. Advertising technology and media companies are investing heavily in programmatic and OTT/CTV offerings to provide stronger investment options for partners. The industry success metrics must evolve in parallel, and all players must understand the nuances of OTT/CTV.

First, let’s discuss the often-conflated terminology around OTT and CTV. OTT is professionally produced commercial-break content that is served across mobile, desktop and CTV, according to the IAB. CTV is merely a device type that often delivers OTT content. Challenges are introduced when budgets are siloed to CTV using the justification of the traditional TV viewing experience. Another hurdle is that OTT and CTV are often used interchangeably in the planning process. It is time to move on from both of these antiquated tendencies.

Targeting CTV in a silo undervalues its potential. OTT content should be bought in a consistent and increasingly screen-agnostic fashion that matches user behavior. This cross-screen approach is most valuable when custom audience targeting and impression-based attribution are applied simultaneously. However, there are lingering obstacles that prevent this uniform approach.

Identity management: CTV user identification is still in its infancy. As a consequence, audience match rates to CTV IDs are often less than half. Marketers looking to support the development of their programmatic strategies should resist the urge to silo CTV by applying custom targets across mobile and desktop OTT. As CTV match rates come into parity with mobile and desktop, frequency management will become more effective.

Performance transparency: Success in traditional TV investment is measured using panel-based demographic metrics and gross ratings point (GRP) as common currency. The key value here is that buyers and sellers have a common understanding of success. Programmatic advertising allows marketers to track far more tangible business outcomes such as app downloads and online purchases. However, the lack of visibility of these metrics leaves sellers unable to effectively optimize results or see their relative value vs. their competitive set. Programmatic buyers would be best served to share indexed rankings of how sellers perform to these custom performance outcomes. By doing this, a common currency can be achieved at parity with GRPs.

These challenges lead to confusion at the point of programmatic activation in OTT. Sellers often find out at the last minute whether to include mobile and desktop inventory or if they should optimize to a GRP or a custom outcome. For those new to buying programmatic OTT, there are three key areas to prioritize when making an investment:

  1. Outcomes: Correlating a tangible business outcome to an audience target must be the long-term focus. If attribution to a business outcome is out of reach, using a proxy metric is advisable. It’s hard to justify the tech fees in programmatic if GRPs are the KPI. Sharing with sellers how they are performing on these metrics relative to other media providers will pay dividends over time.
  2. Inventory: Before investing, advertisers should understand the pros and cons of purchasing video through the open exchange, direct-to-publisher private marketplaces or programmatic guarantees. Despite initiatives to the contrary, nonhuman traffic and inventory fraud are more present in the open exchange. Many traditional broadcast companies opt out of listing their inventory in the open exchange, choosing instead to maintain direct relationships with the buyer via programmatic direct-only.
  3. Pricing: Consistent pricing is an understandable goal, but fixed pricing undermines the value of programmatic. Negotiating a low fixed price will result in a campaign getting consistently outbid by other buyers for the best users.

As an industry, we hold the collective power to offer an enhanced viewing experience for the user. Buying programmatic OTT with a uniform approach and incorporating performance transparency into the seller dialogue will provide buyers with more effective outcomes over time. Users engaged with more relevant advertising will unlock boundless opportunities for OTT content to flourish.

Follow WarnerMedia (@WarnerMedia) and AdExchanger (@adexchanger) on Twitter.

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