Commentary

Future Of CTV Ads: All About Yield, Relevance, Reach, NOT Real-Time Bidding

by Dave Morgan , Featured Contributor, June 30, 2022

Connected TV advertising will not be written by real-time bidding machines. Nope, as much as folks try to retrofit programmatic platforms built for the world of digital banners, social and search to handle the fast-growing CTV ad market, it’s not going to take.

Yield, relevance and reach will be the drivers of CTV ads’ future, not real-time open auctions and bid coverage. Yep, that means probably 95% of the tech stack that powers the real-time programmatic world won’t be needed

In the world of CTV advertising, the power resides with publishers, not advertisers. Why? Because the supply of premium CTV advertising inventory (exclusive audience attention to a large screen) is scarce and precious, the opposite of digital banner inventory, which is plentiful and commoditized.

With scarcity ruling, publishers will increasingly seek advertisers that guarantee future buys at premium prices, impression-based pricing (just as they do in linear TV’s upfront and scatter markets). They will curate those ads, recognizing that bad ads can chase away viewership.

CTV publishers will be less interested in supporting the needs of performance-based advertisers (last-second buys, retargeting and cost-per-click or -lead pricing), because brand advertisers will be comfortable prepurchasing significant portions of the inventory just as they do in linear TV. Those advertisers care much more about reach, relevance, frequency control and issues like viewability and ad separation.

Of course, CTV advertising will have plenty of response-oriented marketers, and techniques like retargeting and closed-loop optimization will be key tools of theirs -- but those marketers will find that they have to fit themselves into the CTV publishers’ ecosystem and rules. Unlike the world of digital banners and digital video, it won’t be the publishers trying to fit into the performance marketers’ ecosystem and rules.

What do you think? Will the CTV ad world be as different from digital banners and digital video as I’m predicting?

advertising, connected tv

3 comments about "Future Of CTV Ads: All About Yield, Relevance, Reach, NOT Real-Time Bidding".

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Ed Papazian from Media Dynamics Inc, June 30, 2022 at 1:27 p.m.
I think that you are right, Dave. I would only add that CTV/AVOD is going to evolve as simply a better way to target consumers for TV advertisers---branding advertisers, mainly---not as an extension of digital display advertising with its programmatic, CPM -driven approach which works for direct marketers and search advertisers who operate very differently from advertisers who have long supported"linear TV". Of course, there will always be a place for DR and search advertising on CTV/AVOD---but not necessarily in or adjacent to the same content that presents the branding campaigns to viewers. In other words, if it is to prosper re ad revenues, CTV and AVOD will have to become ad-friendly in terms of how ads are scheduled and audience metrics. No more exhorbitant buying, target researching and commercial distribution fees for "middlemen". And much of the buying for big time branding spenders will be done direct---as will the selling. I wonder if Reed Hastings understans this?
Reply

Gabriel Greenberg from Octillion, June 30, 2022 at 1:36 p.m.

I am not sure I agree Dave and Ed.

I agree that publishers have full control.

The issue at hand is that CTV is being undersold by most publishers in their effort to sell it like they do TV. What I mean is that they would rather clear a huge upfront (thus underselling most impressions) vs letting them set a floor that they will not go under and allowing the market to bid up/pay more for the impression or at least some hybrid of the two.

In my experience in the space, when we see publsihers say they are sold out and then have buyers on the other side willing to pay a premium in the biddable market, to me it seems more like TV sellers trying to hold on to a linear approach vs accepting that programamtic is not a race to the bottom but rather a means to get better yield for most impressions.

I do also agree that all of the resellers and middlemen need to be cleaned out of the market and ads.json will at least let buyers and sellers to see who is adding a fee to the game.

I also expect far more direct pub integrations like Tubi is doing - but with better tech to help manage yield and ensure we do not under value or under sell or worse let impressions fall empyt on the floor.

Dave Morgan from Simulmedia replied, June 30, 2022 at 1:41 p.m.

Gabe, I agree. While I didn't get into the detail, I do believe that CTV today is being undersold and is too releiant on resellers. I do believe that it will be better sold than linear. Your point, though, is a very good one. We are at risk of TV sellers falling into bad habits and not selling CTV better than they sell linear.