How Media Companies Are Approaching Addressable TV
Connected TV (CTV), addressable TV, over-the-top video (OTT)—whatever you call it, people have changed how they consume media. And advertisers have followed suit.
Sean Corcoran, US CEO of Mediahub, says TV is experiencing a seismic change. “There’s a shift toward something different in the TV space. I think you’re seeing the consumer drive the whole thing in that direction. Half of all viewership is streaming and YouTube is the biggest app there.”
This presents a huge opportunity to reach audiences in a different way.
In this article, we’ll explore the current state of addressable TV and how advertisers can position themselves ahead of the curve for this growing media channel.
The Current State of CTV
CTV refers to the device that allows people to download, stream, or consume online media.
Think: smart TVs, gaming consoles, Roku, Apple TV, Amazon Fire TV, etc. The “connected” part speaks to a built-in internet capability.
While many of these CTV devices have been around for many years, today’s landscape is different due to:
- The proliferation of OTT providers, or the streaming services that deliver content online, like Netflix, Hulu, Prime Video, Disney+, or Spotify. There are many ways to consume content these days.
- The changing preferences of audiences. Younger audiences typically aren’t watching episodic shows, or long-form video. The consumption behaviors of all generations have changed, and that impacts programming and advertising.
- The exploration into programmatic. All these platforms offer ad placement, but how—and with how much success—varies greatly. Things are evolving quickly.
This all has led to what media companies call “addressable TV,” or simply, a type of television advertising based on CTV and OTT programming.
“With streamers coming in, I do think there’s a real push forward,” says Dave Penski, CEO of Publicis Media. “The ability to do audience-targeted television, or audience-targeted video at specific audiences, is prevalent on every plan. All of our clients are at least doing something in this category and seeing value from it.”
The Opportunity of Addressable TV for Advertisers
CTV is a user acquisition channel with incredible reach. Gone are the days of gathering around to watch primetime television shows. These days, CTV is essential to the modern home, with everybody consuming on different platforms and devices.
And it’s a buyer’s market.
Penski says this was the first year in a long time—probably ten or more years—where there’s been more supply than demand. There was unsold inventory in linear. He says the value of CTV, or what he calls “advanced TV,” is proving out.
Beyond just having greater reach and the early success of advertisers, Doug Rozen, former CEO of Dentsu, sees an opportunity to transform the customer experience. “You can align CTV with other touch-points in the customer experience, like direct mail lined up with video drops, email, display linked with all these activities. I think that’s what’s getting more interesting; it’s a better customer experience versus a cookie-based experience,” he says.
The Challenge for Advertisers
One challenge for advertisers is choosing how to parcel out budget most effectively across the media mix. Andrew Meaden, Global Head of Investments at GroupM, expects to see a decline in linear, as it’s getting older and less exciting for advertisers. But perhaps there’s an opportunity for the advertisers who stay in linear to also lean into CTV.
Within CTV, you’ll have to determine which platforms services to invest in. Not all service providers offer the same audience volume, CPMs, or expected outcomes.
Meaden expects historical CPMs in linear to rise due to less supply. Advertising companies will need to account for the increase in cost by explaining the benefits of higher quality impressions, greater engagement, and reduced clutter. “If you’re looking at historical CPMs, it might look expensive in comparison and that’s quite a big intellectual leap for some. Clients must go back and justify that, and no one wants to look like they’re paying more,” he adds.
There’s also the challenge of measurement. “As video gets more addressable, you start to move away from panel-based measurement into more signal or more clear and better measurement opportunities. And I think that’s what’s putting a lot of heat on all the conversations around measurement,” says Rozen.
And finally, with an upcoming election year, the lingering impact of COVID-19, and a possible recession, there’s unknowns about how advertisers choose to spend budgets. Many expect bumpiness, but perhaps that means opportunity. “If you’re a brand who can, lean in now. There’s supply. There’s opportunity. Many brands are focused on performance and outcomes because of pressure. But I think brands can do an unbelievably efficient job of building brands right now—better than any other time,” says Rozen.
Role of AI
AI may not be an obvious conversation in the CTV realm, but it’s relevant to agency executives for two reasons: automation and creative development.
Most media companies have adopted AI in a fairly limited here to now, but with expectations of growing applications to help modernize and streamline operations and effectiveness.
“We need to look at getting much more automated, with linear media particularly. In the past, it’s been too expensive to develop our own technology or software. But generative AI makes it quite possible now,” says Meaden.
Rozen adds that holding companies who work on behalf of clients could do a whole host more with AI.
The other AI discussion with CTV and addressable TV is in creative development. This is an exciting opportunity for creative teams and agencies to get back to developing innovative advertising campaigns, though the biggest challenge will be approvals, governance, and building an AI process.
Looking Long Term
CTV has been a topic of conversation for a few years, but progression has been slow.
Penski urges media leaders to look longer term, “If we look at things year to year, you don’t see as much improvement. If you look at the five-year period, it’s a massive improvement … We’ve made an incredible leap forward. The amount of inventory we have, that we’re able to target in a more personalized way, is improving.”
While there is still much to fine tune with addressable TV, media companies overwhelmingly consider it to be the future. Early advertising adopters will benefit from the buyer’s market and being early to market.
To dive deeper into CTV, AI, and predictions for 2024 from Penski, Meaden, Corcoran, and Rozen, watch the panel, Media’s Uncharted Path Ahead.
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