Commentary
Predicting The Future Will Matter More In CTV Ads Than Optimizing In Real Time
- by Dave Morgan , Featured Contributor, May 2, 2024
There’s no question the future of TV advertising will be data-driven and automated, as well as increasingly streamed and optimized at the impression level.
Many digital folks assume this “programmatic” future for TV and CTV advertising will be real-time-bidded, much like what happened over the past decade in banners, social and web video. I don’t share that assumption.
Instead, I believe that while CTV advertising -- and much of linear as well -- will be digitally (programmatically) planned, bought, sold, measured and optimized, the real-time-bidded and optimized component will shrink, not grow.
Why? Because buying ads on CTV is about buying the full-screen attention of audiences. It’s not about chasing clicks on banners, though advertisers are increasingly valuing closed-loop measurements and attributions.
Since people and their attention are fundamentally scarce, we’re already seeing the bulk of CTV ad spend shift into private marketplaces and “programmatic guaranteed” buys, increasingly done by insertion orders rather than open bids.
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If more and more CTV ad money moves in “forward market” transactions (the term that The Trade Desk is giving it), here are some of the implications this will have for players in the CTV ad market:
- Fewer CTV ad transactions for real-time bidding
- Fewer intermediaries in CTV transaction
- Lower platform fees captured by DSPs & SSPs
- Higher data fees, with DSPs and SSPs fighting to capture them
- Less “scrapable” user/publisher data on open exchanges
- Growth in importance of verified identity data
- Growth in “walled garden” share of CTV ad transactions
There’s a lot to unpack in this list above, which I will endeavor to do in future columns. In the meantime, the biggest takeaway is that much of the value in the CTV ad market -- certainly for ad optimization -- will shift from real-time decisioning to forward market planning and commitments.
Predicting the future will matter more in CTV ads than optimizing the present. Are you ready for that?
Dave, some good points, especially about not just buying clicks, etc.
I see the potential value of programmatic buying---if issues like fraud, poor ad placement etc. can be solved. However I'm not so sure that computerized selling and buying is going to work for the major TV advertising companies or those who sell time to them. One of the supposed benefits of programmatic was that the computers could canvass all of the millions of websites offering ad time or space and, with the aid of targeting generate very low CPMs.However the costs of going programmatic are about 10 times the corresponding costs for traditional media---like 35-40%, or more. Supposedly the CPM savings justify this---but do they? And what about issues like reach attainment when the computers have no way to assess user duplication across venues or program content values?
The way things are developing, it looks as if 10-15 CTV ad sellers will account for 90%+ of CTV's national ad income for TV-style-advertisers and dealing direct with such a limited number of sellers is hardly out-of the question for a savvy media agency. Also, the kinds of sellers we are talking about---Hulu, Paramount +, Netflix, Amazon, etc. ---are not likely to turn over their prime quality GRP inventory to the computers, nor will the larger advertisers --many of whom have major "must buys" on their media shopping list, be willing renounce these buys when a computer thinks that it has found a cheaper way to reach targeted audiences. Sports buyers are going to buy sports no matter what and the same goes for news buyers with news and those that feel they need to be in big time specials or simply in broadcast network prime time. These account for a huge share of national TV ad spend---probably around 50% of it.
So, I see a situation developing where there are two kinds of CTV buying---one as you indicated--- for individual brand buys---not the upfront--as well as small budget advertisers , local advertisers and direct response/search advertisers; the other for companies like P&G, General Motors, Coca Cola, etc. for their branding efforts. I also see this latter group transferring more and more of their linear TV ad spend to CTV--to the point where it accounts for 40-50% of the ad dollars---or, maybe more. I don't think that it's reasonable to assume that these advertisers---or the major time sellers will go all computer any time soon no matter what the theoretical promises of programmatic buying---and selling---may be.
Just my ever humble opinion--which may change as future events dictate.
Ed, good points. Many see an "always on" upfront, where brands and agencies are constantly doing forward market reserve buying.