Almost five years ago, one advertising “newcomer” poised to flourish was advertising-supported video on demand (AVOD) within connected TV (CTV) and over-the-top (OTT) platforms.
Fast-forward to 2023, traditional TV has been drastically cut from households nationwide, with 36% of the US population cutting the cord and 93% of viewers reporting they access streaming video platforms.
Amid inflation and subscription fatigue, the subscription video on demand (SVOD) market has drastically slowed down, while, as predicted, AVOD services are experiencing growth. In fact, AVOD has entered a golden age.
So what does this mean for advertisers, as free ad-supported TV (FAST) continues to evolve?
And how can targeted campaigns work if data resides with content owners? Could competing standards for currency and measurement be standing in the way of progress?
Here are four considerations brands and content owners should keep top of mind to unlock the possibilities of CTV.
1. Contextual targeting will make its resurgence in CTV
Contextual targeting is gaining traction for CTV ad campaigns. In using data and algorithms to analyze TV programming, advertisers can deliver increasingly relevant ads to viewers and strengthen campaign performance.
Contextual targeting also removes privacy concerns associated with device IDs and IP addresses, allowing advertisers to reach a wider audience and identify shows based on tags and universal category IDs.
Contextual targeting is well-positioned for the future of AVOD and FAST networks, primarily because these platforms have an extremely diverse range of content compared to linear TV, offering thousands of channels across varied genres.
2. Programmatic guaranteed: benefits and differentiators
With budgets getting tighter and the evolution of TV and digital upfronts, advertisers could benefit from a little extra assurance in the programmatic buying landscape. Luckily, there’s a method that offers this.
Programmatic guaranteed deals offer a certain level of security in ad inventory. They enable advertisers to reserve ad inventory in advance at a fixed rate (CPM) and often target against specific audience segments and/or viewership currencies. In addition, their ads can appear on specific CTV channels, at specific times, and garner a guaranteed number of impressions.
Publishers can fill their premium ad slots and reduce the likelihood of them being left unsold, and advertisers can rest assured that their ads will be shown to a target audience.
3. Competing standards for data, measurement and currency could impede progress
Advertisers are increasingly targeting FAST audiences via data suppliers like TransUnion’s TruOptik to deliver audience targeting, measurement, and attribution to connected TV publishers. The potential for precise targeting at scale with FAST is in sight.
However, the jury is still out as to whether advertisers will prefer to use data targeting on the media company side via programmatic guaranteed deals or use data via demand side platforms in the “scatter market.”
Plus, in the wake of upcoming cookie deprecation in browsers, there are several initiatives in the industry to create omni-media universal identifiers not reliant on IP addresses that substantially advance advertisers’ ability to target and measure AVOD audiences. It’s a jump ball between platforms like ID5, The Trade Desk’s UID and LiveRamp’s RampID. And these efforts are all against a backdrop of a crazy quilt of privacy laws. Could this clash of standards delay FAST’s growth as a scalable, premium solution?
Gone are the days of a single TV advertising currency. This year has been a turning point, as premium video advertising moves toward a multicurrency future. Warner Bros. Discovery’s move to team up with Comscore and VideoAmp to enable alternative currencies is one example. Paramount has been vocal about its willingness to trade on multiple currencies. And the recently announced US Joint Industry Committee’s (JIC) initial requirements for premium video cross-platform currencies is the biggest collaborative forum yet to focus on premium video measurement.
4. Looking ahead: the future of AVOD/FAST vs. SVOD
By the end of 2023, an interesting adjacent trend will emerge: look for all major SVOD services in developed markets to have launched an ad-supported tier to complement ad-free options. Ad-free SVOD tiers are rolling out to follow audiences and ad dollars – most notably with Netflix’s rollout of its ad-supported tier.
The SVOD formerly known as HBO Max, now Max, is launching its much anticipated Max Ad Lite $9.99/month offering. Other subscription brands are following suit, hoping to garner eyeballs from cord-cutting consumers ready to partake in ad-supported flavors. By the end of the following year, half of these providers will have also launched a free ad-supported TV (FAST) service.
More advertisers, especially marketers, who have been slow to embrace AVOD, will increasingly gravitate to primarily AVOD services, leading to increased competition for available ad space. By the end of the decade, ad-funded video on demand will be the norm, not the anomaly.
“On TV & Video” is a column exploring opportunities and challenges in advanced TV and video.
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