As we close out another year in programmatic advertising, I wanted to share some thoughts around the trends and more importantly, the predictions I feel may shape the next 12 months in addressable TV advertising.
When a TV is connected to the internet, it provides marketers with all of the same targeting capabilities as desktop and mobile. However, it also presents streaming publishers and smart TV manufacturers with a choice; how best to serve these ads?
Fast forward to 2021 and thankfully many publishers and TV manufacturers now insert ads into content streams from the server-side via a process called server-side ad insertion (SSAI). This has removed the latency and frequency issues that for many advertisers was a blocker to them increasing their ad spend on BVOD, FAST, and AVOD services. I fully expect more on the sell-side to support SSAI in 2022 to meet the growing needs of viewers and advertisers alike for seamless ad breaks.
The pending industry wide roll out of the ads.cert 2.0 protocol from the IAB Tech Lab is going to make it even harder for bad actors to infiltrate the CTV supply ecosystem via fraudulent SSAI requests and I encourage all on both buy and sell sides in 2022 to promote its scaled adoption.
We have seen the biggest broadcasters in the UK this year such as Channel 4 and ITV innovating around programmatic ad delivery and I fully expect to see continued R&D around their BVOD services, clean room data activation, and measurement best practices in 2022.
7 in 10 CTV ad dollars will be transacted or fulfilled programmatically this year, which equates to more than $10 billion according to eMarketer. By the end of 2021, CTV ad spending will have increased by 59.9% to $14.44 billion.
OpenRTB will bring more than just automation efficiencies to the TV ecosystem, it will bring new advertisers to TV for the very first time. This is why it is important to realize the CTV opportunity is much more than just traditional TV ad budgets. The increasing precision in CTV targeting whether it’s contextual or people-based will give advertisers the choice of targeting a newsfeed within UGC or on the biggest screen in the house around professionally produced content. Which one do you think they will choose?!
The pie is much larger than linear TV and 2022 will illustrate this. New DTC, digital, and social advertisers will have an opportunity to enter TV for the very first time and take advantage of the granularity in targeting options available to them on CTVs due to updated parameters in the OpenRTB 2.6 spec due to be released shortly by the IAB Tech Lab.
If you work in a demand development role at a streaming publisher, SSP, DSP, or AdNet and are finding it difficult to pin down the correct agency contact to speak to regarding CTV budgets, don’t worry you are not alone. This recent poll I ran on LinkedIn clearly illustrates the agency holding companies are still trying to establish where streaming planning and activation sits. There is no real precedent for many so continue to persevere and engage with each team to better understand their requirements when it comes to CTV ad buys in 2022.
The TV hardware Infrastructure
The connected TV has moved beyond an expensive luxury to become the new affordable normal in many family living rooms. Global Smart TV ownership is projected to rise from 34% to 51% by 2026, from 665 million to 1.1 billion homes, according to a report by Strategy Analytics.
Eighty-two percent of US TV households have at least one internet-connected device, research from the Leichtman Research Group reveals. The same report shows that over 40% of all American TVs have smart TV functionality.
It’s not just the likes of Samsung, LG, Sony, and Panasonic that are operating in this highly competitive market, but we are also seeing new entrants like Sky Glass from the Comcast owned operator Sky. The Sky Glass TVs were launched on 18th October and represent Sky’s first big hardware launch since it was acquired by Comcast in 2018.
This is a really interesting play by Sky and one that I think goes to show just how important it will be for smart TV manufacturers in the future to ensure the content rights they have access to are just as important as the quality of their hardware if they want to remain in the mind’s eye of the consumer shopping for a new family television. It’s all well and good having the best resolution screen and amazing audio capabilities, but if manufacturers don’t have access to proprietary or in-demand syndicated content, they could see device sales eroded by competitors.
Each smart TV uses an operating system and if you are not familiar with these, this visual from TVREV does a great job in illustrating the key players by device and OS market share (2021).
The CTV IDs passed today are not subjected to the same browser headwinds as those in display advertising due to the fact that the TVs don’t use browsers but instead OS’s. The main identifiers passed in CTV advertising today by the big streaming apps are deterministic: The RIDA (Roku), TIFA (Samsung), AFAI (Amazon), and VIDA (Vizio).
So long as streaming publishers and smart TV manufactures support local privacy regulations such as GDPR and CCPA they will be able to continue passing deterministic device IDs back out to the buy side to target in 2022. There are currently 11 CMPs recognized by the TCF program for CTV. Contextual targeting is going to play an even greater role in CTV advertising next year also.
2022 will be the year that consumers increasingly discover & turn to AVOD & FAST services
New data from Vizio Ads and Magid shows that AVOD and FAST services have already established a solid position in people’s streaming lives. Further, it shows that most smart TV owners are now regularly watching ad-supported content.
A recent survey by The Trade Desk suggests a trend of “subscription fatigue” among the survey’s 2,600 respondents as the free streaming market continues to disrupt the dominante SVOD players.
Recent findings from video AdTech company Unruly illustrate that European TV viewers do not really want to exceed £20 per month when it comes to paying for their streaming content & are proactively seeking free alternatives. This consumer appetite for high quality and free TV delivered via their internet is being met by a number of high profile players entering the European market.
Rakuten TV who is already building a strong base of UK viewers, has recently announced the launch of 21 new channels in Spain, Italy, and France as part of ongoing expansion plans across key European territories.
In September this year, the US streaming provider Roku who is already available to streamers in the UK entered the German market.
Amazon’s AVOD streamer IMDb TV also launched in the UK this year, offering original programming and thousands of hours of library series and movies.
In this recent Q&A I hosted with Nik Dewar, European Sales Director of Samsung Ads, you can get a really good understanding of what is now possible to advertisers on connected televisions and how AVOD is really maturing as a viable alternative to SVOD services.
Keep an eye out on your travels in 2022 as I fully expect free streaming services to continue to market themselves to TV viewers who may not be aware of the free or low-cost alternatives to SVOD apps that now exist on their smart TVs.
Please tweet me any AVOD or FAST ads you see next year while out and about on your travels in Europe. I don’t want to be the only person who gets excited about spotting these ads and realising that with every ad displayed, another TV viewer will discover free services and change the TV advertising landscape as we know it forever.
So, what then am I predicting for the year ahead in ad-supported streaming?
- CTV Prediction 1
2022 Will be the breakout year for AVOD & FAST services globally
There is no doubt that the stay at home global lockdowns have driven TV viewers to discover AVOD and FAST services quicker than they may have done originally; however, this was a viewer driven trend that was already going to happen, the pandemic just accelerated TV viewing habits by several years in the short space of just 12 months!
According to research firm TDG, six-in-ten US connected-TV households now proactively watch a free ad-supported streaming service on television. SVOD fatigue is not just a US trend either, data from both Unruly and The Trade Desk suggest European TV viewers are already seeking free alternatives to SVOD.
Ad-supported services such as Rakuten, Pluto TV, Philo, Tubi, Xumo, Samsung TV+, The Roku Channel and others have quickly become household names. This is happening not just in the US, but in Europe also as many start to invest in ad campaigns to promote their free services to TV viewers and to educate them about the alternative apps on their connected televisions beyond the SVOD players who have thus far commanded the majority of viewers’ time because many have not been aware of the free alternatives that exist. If in any doubt, just look at the recent big Pluto TV push into Europe.
Free premium video streaming services started out small, capturing only a total of 30.6 million monthly viewers in 2018, before expanding their audience by almost 89% in 2019. By the end of this year, the AVOD & FAST platforms are expected to have close to 90 million monthly viewers in the US according to Insider Intelligence.
I predict that 2022 will be a breakout year for AVOD & FAST services globally. Not only are smart TV manufacturers going to make it much easier to discover these free Apps, but consumers are going to be more proactively searching for them driven by SVOD fatigue.
I am also predicting we will see a lot of really interesting innovation in the search space when it comes to TV Apps. Just imagine when the ease and intuitive nature of mobile search functionality reaches the home television, discoverability of ad-supported streaming services will really start to increase and that’s when things could get interesting from a paid CTV search perspective, how do AVOD & FAST Apps compete with each other to promote new content?! How do they ensure they are visible and promoted in all relevant TV viewer searches for content?!
CTV search, a space many will be watching closely in 2022 as the TV attention economy really heats up.
- CTV Prediction 2
We finally eradicate frequency problems on CTV for both advertisers & viewers!
Nothing frustrates streaming audiences more than that spinning wheel of doom, the loading sign that appears during an ad break while streaming content. To make matters worse, more often than not when the TV has finished buffering the same ad is played multiple times back to back in the same ad break making the viewing experience even more frustrating for the viewer and completely obliterating any type of frequency KPIs the advertiser may have pre-agreed with their ad agency buying the TV spots.
This experience has made some brands hesitant about increasing their ad spend in ad-supported streaming environments & the topic of poor frequency management in CTV has been discussed at length on webinars over the last 24 months.
I predict that 2022 will be the year our industry finally eradicates poor user and advertiser experiences on BVOD, AVOD and FAST apps on connected televisions. More and more streaming publishers are now adopting server-side ad insertion (SSAI) technologies that have been built from the ground up around TV and programmatic and this will enable CTV viewers to watch shows that deliver a seamless stream of content and ads that reflect their linear TV viewing experience. SSAI will also let publishers offer CTV advertisers the granular controls they require to manage variables such as frequency, competitive ad clash & position within the ad pod.
- CTV Prediction 3
A new type of advertiser enters TV for the very first time
The AdTech industry spends a lot of time talking about transitioning traditional/linear TV advertising dollars to addressable TV and with this topic of discussion, the issue of measurement always arises.
The discussion around what the future of TV measurement looks like and how best can we bridge the gap between traditional broadcast and the growing FAST and AVOD ecosystem is an extremely important one for traditional TV advertisers. However, I can’t help but feel we sometimes overlook the more immediate opportunity, and that is onboarding a new type of advertiser to TV for the very first time.
AVOD and FAST publishers are increasingly surfacing their first-party data and Smart TV manufacturers already make their ACR (Automatic Content Recognition) data available to advertisers. This increase of privacy-compliant audience data coupled with deterministic identifiers in the form of the Device ID entering the CTV supply ecosystem is attracting advertisers from both social and digital that have thus far been locked out of TV advertising due to the upfront spend commitments required and a lack of data for them to target.
I predict that 2022 will bring an influx of new DTC, digital and social advertisers to TV for the very first time. Local ad spend could migrate from social to CTV quickly. These advertisers will be testing, learning & ultimately establishing if they can pull budgets from social UGC environments or smaller digital screens to secure ads on the device that has thus far remained elusive to many advertisers, the big-screen television in the family living room. The measurement debate will continue and I fully expect to end 2022 with a lot of advancements in this space that will untimely enable traditional TV advertisers to target and measure their TV audiences where they are increasingly engaged, on FAST and AVOD services. I also predict the influx of political ad spend on TV in 2022 will be one of the main catalysts that drives innovation in CTV measurement next year.
- CTV Prediction 4
CTV SPO will build real momentum on the buy-side
The speed at which CTV publishers are migrating away from demand waterfalls and exclusive reseller agreements to implement a unified auction for their streaming inventory means many buyers today are faced with a similar dilemma they were several years ago when display publishers made the same switch from sequential demand waterfalls to header bidding.
This is why we are starting to hear more about SPO from the buy-side as they try to apply the same logic that worked so well for them in display to the growing AVOD and FAST supply ecosystem. Many of the parameters that underpinned display SPO will apply in CTV, however, several may differ such as AdPod/Slot configuration and the IAB protocols app-ads.txt & ads.cert 2.0.
Buyers will be doing everything in their power next year to ensure their path to a CTV app-based viewer/impression is as direct as it can be rather than bidding into multiple reseller auctions who may each be taking their percentage of media budget and with each hop, increasing the risk of exposure to bad actors spoofing the streaming App inventory the DSP is bidding on.
I predict that 2022 will be the year that the ad agencies and their appointed DSPs really get a grip on their CTV supply strategies via the practice of SPO and start to forge strategic relationships with SSPs who can offer secure supply paths underpinned by all IAB Tech Lab protocols. This includes support for the new parameters being introduced into the OpenRTB spec to ensure brands, their agencies and DSPs can take full advantage of the privacy-compliant targeting opportunities that now exist in CTV advertising.
- CTV Prediction 5
The CTV open marketplace will grow in importance
This is a topic that was debated heavily at the recent VideoWeek Roadmap event on a panel featuring Katie Coteman from Discovery, Hitesh Bhatt from Pubmatic and Justin Gupta from Google (Moderated brilliantly as per usual by Vincent Flood, Editor of Videoweek)
The majority of CTV transactions we see at Publica are still deal based (for context, we see over 350,000 different TV creatives flow through our platform each day) be it biddable PMPs or guaranteed deals via PG. This I believe is for several reasons, firstly, a lot of traffic we see is from the big global networks and they have really strong buy-side relationships who commit to upfront spend, so in these cases, it makes sense to transact within the controls of a deal where spend, inventory and audience data commitments have to be met. Brand safety is another reason many advertisers have cited as a key reason they have been slower to adopt the CTV OMP rather than deals, however, this is a mindset I believe will start to change in 2022 in line with new advancements around inventory security and transparency, such as ads.cert 2.0.
If the pandemic has taught us anything in TV advertising it is that advertisers now demand flexibility in their bookings. As more ad budgets enter CTV for the very first time, we are going to see a renewed interest in the open exchange and all of the benefits that come with it such as scale, data interoperability, identity and the ability to optimize in real-time based upon micro and macro trends.
In the FAST and AVOD ecosystem, we will see inventory liquidity continue to grow, driven by consumer adoption. It is these publishers that will benefit from the value that can be extracted from a transparent open marketplace. Many new ad-supported streaming services do not have the same deep-rooted buy-side relationships as broadcasters and networks so they will rely on the OMP for yield and demand discovery.
I predict that 2022 will be the year more and more CTV ad budgets are transacted in the open exchange underpinned by new security protocols such as ads.cert 2.0. I believe that digital and social advertisers will want to target audiences outside of deals dynamically and will be activating more first and third-party data within the OMP to hone their audience discovery strategies. I believe we will see more R&D from buy / sell sides and bodies such as the IAB Tech Lab around making the CTV OMP more brand-safe, privacy compliant, addressable & transparent to support the growing number of advertisers who wish to transact there in 2022. If you want to learn more about my thoughts on the CTV OMP, here is a piece I recently wrote for AdExchanger.
What comes next?
As we approach the end of 2021 and look ahead into 2022, I truly believe that as more programmatic buyers lean into CTV, the viewing experience is going to drastically improve for streaming audiences.
The event and panel circuit in 2022 will focus heavily around measurement and “who is going to replace Nielsen?” “What role can ACR data play in measurement” and many R&D teams I suspect will be heads down trying to figure out how the industry can unlock outcome-based measurement and attribution on smart TVs, i.e for every CTV ad dollar spent, how much is being returned?
Global broadcasters who have a linear heritage will continue to innovate, especially those in the UK who have already proven they can embrace programmatic and make it work on their terms. Average viewing across linear channels and BVOD services was 150 minutes per day per household in September with a total reach of 94.4% of UK audiences according to BARB.
SVOD, AVOD, and FAST players will continue to market their services and try to grow their share of the TV attention economy. SVOD and AVOD services had a 75.9% reach in the UK of TV viewers in September according to BARB and their extrapolated panel-based data.
Advertising agency groups will continue to invest in centres of CTV excellence such as Finecast from WPP as the brands they represent increasingly focus their attention on addressable TV. We will also see CTV focused startups launching at a record rate in 2022 such as LightBox who are working with brands to help them navigate streaming ad buying.
If you are wondering where the forecasted global growth in CTV ad spend will actually come from in 2022, I leave you with the results from this recent poll I conducted on LinkedIn.
Have a happy & healthy holiday, enjoy the streaming and hopefully see everybody in person next year!