Connected TV: Why Aren't Advertisers Flocking?

Some 60% of U.S. households now own a Connected TV (CTV) according to eMarketer. CTV consists of Smart TVs, connected devices like Roku and Apple TV, as well as gaming consoles like Xbox and PlayStation.

CTV usage has grown over 300% in the past year and now accounts for more prime-time streaming of TV and movies than DVRs, and twice as much as desktop and mobile consumption combined. However, anyone who has watched ad-supported CTV apps from broadcast and cable networks or “premium” publishers has seen the same poorly targeted commercials over and over again.

This happens because even though 160 million Americans are streaming content on CTV each month, CTV accounts for barely 1% of TV ad dollars. Why aren’t brands moving to CTV in droves when it’s no secret where viewers have shifted their time and attention? There are three roadblocks preventing the inevitable shift of tens of billions of linear TV and desktop ad dollars to CTV, all of which ultimately tie back to gaps in measurement:

1. TV and Web measurement incumbents have failed to bring forward a viable OTT measurement “currency” to validate audience size and makeup.

2. Legacy segmentation and targeting solutions are paralyzed by their dependence on cookies and device id’s. There are no cookies or device IDs on CTV.

3. There is no marketing attribution (i.e., brands and agencies have no way to analyze the efficacy).

Why is there is no measurement currency for CTV when creating one is mission-critical to the future of TV? So much of the value of CTV lies in the ability to engage viewers at a highly granular level with the precision and immediacy characteristic of digital marketing.

It follows that a true CTV measurement currency – one able to unlock the full value of the medium – must provide near-census level measurement and near-instantaneous reporting.

Real-time, census-based CTV audience tracking presents major challenges to a measurement industry establishment that has long relied on sample-based approaches. Proposed solutions often borrow from legacy tools and techniques, resulting in complex, sub-optimal offerings. An example is deploying SDK’s (software development kits).

However, these require frequent updates, and must be customized to each OTT network/publisher for each of the myriad devices that stream CTV content. All that data must then be reassembled on the back end to tally viewers for each network.

Census-level measurement is only half the battle. In a world that’s more about buying the audience than buying the content (exposures are guaranteed on CTV), advertisers need to know the composition of an audience to buy into a program. Demographics are mere table stakes for digital media like CTV – purchase, preference, and other consumer characteristics are often required to guide digital buys.

The current way to gather such information in the digital world is by dropping cookies on a PC or tracking mobile device IDs. These techniques are non-starters for CTV, as the entire CTV ecosystem is cookie-less, and CTV devices do not carry IDs. Simply put, audience segments based on cookies or device IDs cannot be bought on CTV.

Attribution presents another stumbling block for traditional audience measurement.

As with all digital media, “attribution” is much more than a report card delivered after the fact. It’s about a continuous feed of KPI’s used to monitor campaign performance and initiate course corrections in real time. That means having the ability to link CTV ad exposure to activities like browsing or purchasing that occur on other devices or outside the digital realm entirely.

That’s impossible if your CTV measurement solution exists in a vacuum. A panel-based approach could connect CTV advertising to other influences and behaviors, but relying on post-event sample-based reporting is no way to go through life in a digital world.

What’s the answer? A true measurement currency for CTV will have to be real-time and census-based, with rich profiling information and linkages to desired outcomes like shopping and buying. Easy enough, right? In truth, that depends on where you’re coming from.

Adapting legacy systems to the task will be a tractor pull – slow and arduous. Fresh approaches are needed if Connected TV is to have the measurement system needed to fully realize its potential, and viewers spared the mind-numbing effects of commercial overexposure.
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5 comments about "Connected TV: Why Aren't Advertisers Flocking?".
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  1. Ed Papazian from Media Dynamics Inc, March 10, 2016 at 3:14 a.m.

    Another reason why advertisers aren't flocking to connected TV is that they don't see the immense migration of "eyeballs" to CTV and away from "legacy TV that is being claimed. Of course, traditional TV ratings are fragmenting, meaning that the average commercial minute rating per channel is shrinking as audiences are divided between more channels. This is mistakenly being interpreted as TV is losing its audience big time when, actually, the surveys show that the amount of total time spent with "linear TV" is declining rather slowly and there are plenty of eyeballs there to be reached. Moreover, attaining reach with conventional TV buys is still fairly easy---providing one uses a wider array of channels, network types and dayparts than before. Until advertisers see the enormous losses in "linear TV" viewing time, not to be confused with average minute channel ratings, they are not going into panic mode and flocking to CTV or anywhere else. So far, Nielsen, when its data is interpreted by people who know what they are doing, is not supporting "the TV sky is falling" notion.

  2. Andre Swanston from Tru Optik replied, March 10, 2016 at 10:47 a.m.


    In no way implying linear TV is dead or that it doesn't make sense to spend money on traditional TV. However, the exponential growth in streaming TV is undeniable and I don't beleive advertisers and media companies can afford to play catch up. There already is billions of dollars of unmonetized media consumption across streamed TV content and millions of opportunities everyday for advertisers to reach consumers that they would be hard pressed to engage across linear TV and desktop video. 

  3. Ed Papazian from Media Dynamics Inc, March 10, 2016 at 11:11 a.m.

    Fair enough, Andre.

    But advertisers have a habit of asking questions that need answers. For example, how many streamers are they already reaching with their conventional TV campaigns? How many would be added by advertising on streaming venues? What are the costs per viewer of streaming vs TV? If streaming CPMs are considerably higher questions arise about the incremental ROI, etc. etc.

    Please note, I'm not for or against streaming as a way to advertise to consumers, but much streaming activity, currently, is alocated to venues that do not sell ads. So, if an advertiser were to consider this avenue, the specific merits of Direct TV, Hulu, and some other venues would have to be evaluated, objectively, not as the linchpins of a national ad campaign but as add-ons with better targeting, not reach, as their primary contributions.

  4. Leonard Zachary from T___n__, March 10, 2016 at 1:04 p.m.

    Ed Advertisers have questions on Attribution.....

  5. Douglas Ferguson from College of Charleston, March 11, 2016 at 10:20 a.m.

    Maybe advertisers know they're not welcome in an environment where the viewer is not a passive lump. Or reduced to mere eyeballs.