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Making the Case for Supercharging TV Ads

Paul Davies
11/27/2017
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Despite the rise of VoD and catch-up programming, linear television is still the preferred destination for advertisers. The reason is simple: The mass concurrent reach offered by linear TV is simply not matched by any other medium. But with viewers moving to a fragmented online environment, how will broadcasters and other content providers attract major ad spend?

Let's not shy away from the fact that the video landscape is fundamentally changing due to the advent of IP-delivered video streams, and that ad spend in the digital world is looking increasingly fragmented across a multitude of digital platforms and devices. So, as audiences and advertisers flock to online platforms, what does this mean for ad spending in television? And what are the implications for the television industry as a whole?

Just a few years ago, the future of live television was a lot more uncertain than it is today. SVoD and VoD services were in the ascendancy, taking viewers away from traditionally delivered TV to OTT platforms and apps. Meanwhile, live TV was struggling to establish itself in the online arena. Where live streaming was available it was proving very hard to monetize.

The landscape today is very different and live TV is now the fastest growing area of online video. FreeWheel's Q2 Video Monetization Report noted a 40% year-on-year growth for live online viewing. One of the big factors in this growth is that cutting-edge advancements in ad-tech such as server-side dynamic ad insertion (DAI) have enabled content rights holders to effectively monetize live simulcasts.

Server-side DAI is an important advancement because it allows advertising to be injected in a way that reflects the smooth, disruption-free experience of traditional linear TV viewing. Without it, ads simply could not be delivered without buffering or some form of noticeable disruption to the viewing experience. Such disruptions may be considered just about passable for VoD but for live TV, where ad breaks have definitive start and end points, a more seamless form of delivery is required.

However, there is another, potentially huge, benefit of DAI that has not yet been fully exploited: the ability to apply user addressability. Data is the new gold, and dynamic ad insertion is opening up opportunities for broadcasters and pay-TV providers to enhance the value of their online inventory through addressable advertising. This opportunity also exists in VoD, of course, but in live streaming it can be "supercharged."

There are several reasons for this. First, linear TV is very much a "lean back" experience for viewers. Once they press play, that's it. When ad breaks occur, they're not as disruptive as they would be for the most part on VoD. That's partly because of the seamlessness of the ad stitching, but also because it's a known experience: Ad breaks every 10-15 minutes in live channels, or at breaks in play, are the norm if viewers are watching sports, and it's been happening for decades already.

Another reason is the nature of the content. According to FreeWheel's report, sports action makes up 73% of linear viewing online. It's captive viewing, and it delivers concurrent audiences at scale. There's more availability than ever before, too. An example is Australia's Seven Network, which scaled up to 16 live online channels for the Australian Open earlier this year. Every match on every court was telecast, with dynamic ad insertion opening up brand new inventory in each one. It's a sports fan's dream come true.

Taken together, these factors create a very valuable advertising proposition. That proposition has the potential to be "supercharged" when you apply an advanced data strategy. At Yospace we see average view-through rates of replaced ad breaks across 300+ channels surpassing 96%, which shows that viewers are responding extremely well to advertising delivered by DAI.

After the Australian Open, Seven Network reported that the value of its inventory in live channels online surpassed that of traditionally delivered television. Reports like this shouldn't surprise really, given the strength of the view-through rates. With that in mind, we may well get to a point where there's more value in live online viewing across the board compared to traditional linear TV. If we reach that point, it could be a game changer.

While that scenario may be some ways off yet, the potential is clearly there if broadcasters and pay-TV providers can seize the data opportunity. The need to do so will become much more pertinent should major Internet companies develop their taste for sports rights, as many observers believe will be the case. But if broadcasters and pay-TV providers can offer mass concurrency in an online environment, with data-driven targeting enabled, then the advertisers will follow.

Amid all the speculation, one thing is certainly true: Broadcasters and other content providers, especially major rights holders, find themselves in a much stronger position today than they were a few years ago. And with the right moves over the next 12-18 months, they could be even stronger yet.

— Paul Davies, Communications and Marketing, Yospace

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kq4ym
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kq4ym,
User Rank: Light Sabre
12/11/2017 | 12:55:39 PM
Re: Struggle
Despite the possibilities of ads on streaming media it doesn't seem that there's much there that would make me buy let alone watch intently the ads. Compared to linear traditional ads it's still pretty much an annoyance that folks haven't quite taken to yet.
Michelle
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Michelle,
User Rank: Light Sabre
11/28/2017 | 2:10:51 PM
Re: Struggle
That's interesting! I assume ad spots are filled through Sling and not ESPN. I wonder if advertisers can continue running ads on all the ad-supported streaming providers.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
11/27/2017 | 11:25:12 AM
Struggle
Advertisers are very much lost on the fragmentation of viewers. Case in point is ESPN on Sling TV. Often when you watch there the ad spots aren't even filled!
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