The power of reaching consumers via the largest screen in the house is already well established. What marketers now need to know, in order to truly take advantage of ad-driven CTV, is how to achieve cost-effective scale.

Currently, most CTV ad slots are purchased in a similar fashion to traditional linear TV – via direct insertion order (IO). This ‘white glove service’ has proved effective for many years, and relies upon marketers contacting broadcasters and platforms directly, and agreeing the predetermined details of a campaign – such as cost, run-time, creative – in advance.

However, as CTV has grown, so has the need for a purchasing method that grants marketers the ability to achieve optimal ROI on CTV. Programmatic purchasing has evolved alongside CTV and now meets this need to provide marketers with a buying experience similar to that of digital, to more effectively maximise the potential of their ad budgets.

The evolution of programmatic CTV

In its early usage, the auction-based programmatic purchasing method was mostly utilised in order to sell unused ad inventory in digital environments. But as CTV publishers and platforms continue to permeate audiences, and buyers take to the increased control of the purchasing process that programmatic enables, the amount of spend in programmatic CTV has grown – spend increased by 97% in EMEA between 2020 and 2021 alone. As demand from buyers has increased, CTV publishers have responded by making more of their inventory available for programmatic trading.

Where programmatic CTV has differed from its digital counterpart is in its increased use of private marketplace deals. At its core, programmatic buying is an automated auction that allows buyers and sellers to be connected rapidly. Deals can be achieved via an open auction, where any number of parties can take part in the process, or via private auctions, where a publisher invites trusted advertising partners to participate. Additionally, there are preferred and guaranteed deals, offering priority access and pricing on pre-negotiated terms.

Private market auctions have flourished in CTV due to the nuances of the channel. TV ads are the most trusted among UK consumers, and it is therefore no surprise that CTV publishers want to keep a close watch on which brands are advertising on their platforms to ensure high quality ad experiences. For marketers, CTV is also unique in that data activation is often coming from the supply side of the programmatic chain, enabling marketers to access the rich first-party data of media owners and device manufacturers.

Tailoring your buying

While increasing amounts of spend is moving to programmatic, direct purchasing via an IO  also allows an effective way to transact for both buyers and sellers, and in many ways provides a similar offering. Buyers are guaranteed a quality ad slot while having clarity over delivery, while also able to harness CTV publishers’ premium inventory for a set price.

However, for buyers and sellers looking for flexibility in their transactions, programmatic purchasing can offer some additional perks. Guaranteed programmatic deals, for example, act in a similar way to direct IO — selling for a fixed price with a specific amount of inventory. But, additionally, doing so programmatically enables buyers to retain the benefits of utilising a DSP, giving users increased control — easing workflow and allowing for optimisation mid-flight — and  more holistic reporting.

But, while programmatic purchasing may technically be able to offer these benefits, advertisers might currently find their programmatic choices restricted by publisher capabilities and offerings. Buyside appetite for programmatic executions shows no signs of slowing, so ultimately CTV publishers and broadcasters who are amenable to programmatic routes stand to benefit.

Taking buying to the next level

Programmatic ad buying in digital environments is at a crossroads. With third-party identifiers set to be phased out, there is an increasing importance being placed on first party data — and as a result, on the owners of this data, such as publishers and device manufacturers — to ensure effective targeting and measurement.

Traditional measures such as Barb have provided advertisers with a base level of insights in order to effectively run campaigns. However, the emergence of technology like automated content recognition (ACR) – a privacy-first, anonymised alternative content identification technology – and first party data from platforms and device manufacturers gives buyers more granular insights to drive their campaigns at scale and speed.

These insights can then be fed back into a marketer’s buying strategy, allowing for fine-tuning of campaigns in-flight. Furthermore, utilising programmatic CTV can turn the medium into the cornerstone of an omnichannel campaign. This approach – which gives marketers the ability to run a cohesive, holistic campaign across multiple devices – allows for optimal targeting and retargeting throughout the sales funnel. By identifying and retargeting exposed audiences across devices, with differing creative, marketers can better tell the story of their campaign and grab consumer attention.

For marketers looking to generate the best ROI, and gain maximum reach and impressions via CTV in a cost effective way, finding a balance between direct and programmatic deals is vital. While there are currently similarities in both purchasing methods, as publishers compete for ad spend investments, the additional flexibility of programmatic and offer of tailored purchasing options will become a differentiator. In turn, the greater autonomy, transparency, measurement, and targeting capabilities will become central to every campaign on the channel, and buyers will increasingly be looking towards programmatic CTV.

Importantly he notes that, when viewed from an ‘all-adults’ point of view (rather than just 16-34s), dedicating 10% of campaign budgets to BVOD “doesn’t drive a cost-effective response”. Although in this instance, while the effective reach looks similar to a 100% linear campaign, the profile of this type of reach is comprised of a much younger audience.

Hill also reviewed the inflation TV pricing underwent last year and across different age groups, remarking that the rise in average CPT for adults had been “reasonable” – from just over £4 to almost £6 between 2020 and 2021, according to BARB and AA/WARC data. In contrast, for 16-34s, CPT had risen from £35 to around £52. Hill believes the upshot of this dramatic rise in CPT for 16-34 audiences is that BVOD may become a “starting point” for advertisers’ media plans, since BVOD pricing has been “pretty static” (hovering around £25-35).

Hill emphasised that, while TV is getting more expensive, inflation is not a challenge for TV alone. Using AA/WARC, BARB and Comscore data, Thinkbox estimates that the average cost per thousand for a 30-second TV ad was £7 in 2021, while the cost for a YouTube ad was approximately £10. Other online video ads cost almost £90 last year according to Thinkbox, due to the fact that ads on these platforms are “very easily skipped”.

Hill said: “We need to think about the value of TV rather than just the fact that its price is changing because of a supply-demand dynamic. Cost-effective reach remains a priority for media planners.”

Reviewing BARB data, Hill also showed that 65% of UK adults can “easily be reached through linear TV”, with this proportion of the population consuming somewhere between 50-501+ TV ads a week through traditional broadcasting. Beyond this 65% it becomes harder to reach audiences, Hill remarked, with 8.7 million viewers watching linear but consuming less than 50 ads per week.

Hill outlined how UK TV ad spend has seen significant increases across different sectors and particularly from online businesses. According to AA/WARC estimates for 2021, TV experienced a surge in ad spend from food delivery/food subscription businesses (such as Just Eat, Uber Eats etc.) with total TV ad spend from this sector reaching £127m – a rise of 184% (£82m). Similarly, the online second-hand car sector (which includes companies such as webuyanycar.com and Cazoo) spent £74m last year on TV – an increase of 222% (£51m). Another sector which increased its TV ad spend heavily was the market for streaming services. Across 2021, streaming service providers spent £52m on TV, up from £21m in the previous year.

He said: “[During the pandemic] a whole range of micro online businesses were using TV to grow. They’re using it because it is a shop window for their brands. They might not have a physical presence and so need to be front-of-mind [among consumers]. They have a need to scale quickly and TV is good at this because you can speak to lots of people in a very short time.”

An important benefit of advertising on TV Hill highlighted is not just that it drives traffic, but also that “the people coming to your business when you’re advertising on TV are more likely to buy.”

He reviewed the econometric breakdown of a campaign from an advertiser in the furniture industry. When aggregate exposure was between 0 and 10m weekly TV impacts, the conversion rate for viewers was just over 0.8%, while when aggregate exposure was between 60 to 70m weekly TV impacts, the conversion rate rose significantly to almost 1.8%.

Speaking at Connected TV World Summit last month, the Belgian telco noted that by tagging data streams and tagging the video in which the ad is played, it knows which viewers have watched any given linear ad. As Proximus moves towards linking both linear and digital with addressable, the ability for the company to track which viewers have not been exposed to certain ads allows for addressable campaigns to run across devices.

He remarked: “If you saw certain ads on TV – addressable ads on TV –  a little bit later you could come to your PC environment and see a follow up ad.

“We don’t do this today, but as a telco we are really rich with traffic data. We know all the websites which you [visit]. Unlocking all that traffic data would mean consumers could go to a website about house renovations and we could link that on TV with an addressable spot for a new refrigerator or something for the bathroom.”

Marien believes merging the linear and digital worlds will come with a learning curve due to differences between the two domains – such as the CPM on digital being significantly lower than for the TV world. But he noted that Proximus has already begun the work of linking the two, establishing a joint venture called Ads and Data, to explore how addressable campaigns can be coordinated across linear and digital.

A significant challenge involved in targeting ads across these domains is consent gathering and privacy, according to Marien. He commented: “We are the tech provider but we are also the data provider. We gather our data and we create different segments of the data which are available to broadcasters. This is not just our data but also third-party data that we integrate in an anonymous way through a sort of bunker system, where we can create even larger segments or have data from advertisers in there. Everything has to be privacy, privacy, privacy.”

To tackle consent gathering, Marien said that Proximus built a very large, GDPR-compliant consent engine which the company uses, not only for advertisers, but at other points where people should give their consent.

He noted that Proximus was the first IP TV operator worldwide to introduce addressable: “At a certain moment, we saw the tech became available to do addressability, we saw that broadcaster and advertisers were willing and starting to adopt it. So, we started a project – not on the big screen at first – but on smart phones and tablets because there the tech integration was much easier. We learned a lot and did a lot of trials. We then moved that implementation to set-top-boxes (STB) because we work with STB.”

Household addressable TV advertising is established in the U.S. but until now the only inventory available via Pay TV operator set-top boxes was the two minutes of ads per hour that the distributor is entitled to sell (an arrangement that does not exist in European markets or in Canada, for example). But this is only a fraction (albeit a meaningful one) of total advertising inventory across ‘traditional’ networks.

“What we are talking about here, and what Canoe is enabling, is the 14 minutes per hour of programmer inventory, so we are opening up a whole new set of inventory,” Porter emphasises. This enablement covers linear [broadcast TV] but also VOD, which has been available with dynamic advertising insertion via Canoe for around eight years but not with full addressability.

“Because VOD is already DAI-ready, enabling it [for full addressability] only really requires the audience segmentation data. I consider VOD to be addressable TV’s best kept secret,” Porter told the live [online] conference audience.

Both the buy-side and sell-side support the roll out of national addressable TV in the U.S., making execution the key challenge. This is complicated by the fact that each individual MVPD (Pay TV operator) footprint has its own unique characteristics and requirements that programmers would have to conform to if they approached the distributors individually.

One of the key purposes of Canoe is to engage at a technical level with the MVPDs, take care of these architectural complexities, and present programmers with a simplified, aggregated multi-MVPD footprint – in effect a one-stop-shop through which they can execute a national addressable campaign that the programmer has sold to an advertiser.

Canoe is not the only company looking to build such a footprint, as you can read later, but it has built on its existing relationships to provide a footprint covering the cable giants Comcast, Charter and Cox to provide 25.5 million linear addressable enabled homes and 34m homes that can support addressable VOD.

Other MVPDs will be added to this list over time and, importantly, this is not intended as a cable-only initiative nor even a Pay TV-only initiative: Canoe is already talking to Smart TV manufacturers about making them part of the same unified national addressable TV footprint. “Wherever a national programmer wants to make their inventory addressable, we can help – that is part of the vision,” Porter confirmed.

The discussions with the Smart TV providers are going “quite well,” he reported. “This infrastructure is primarily IP-based and in some cases it is a little easier for them to execute addressable TV, but what Canoe can do is aggregate [the footprints] so there is a single place to purchase inventory from [the programmer] and a single system to leverage.” Porter admits it is early days for these Smart TV discussions but believes interoperability and simplification will benefit the Smart TV market as much as the Pay TV world.

Canoe has been running a pilot of programmer national addressable TV since Q4 last year with several media owners, two of which have been named publicly: Discovery and AMC. The results have been positive, with advertisers running repeat campaigns and making use of both linear addressable and VOD addressable in the same campaign. The pilot will scale at the end of this year as more inventory is released, more programmers join and there is more automation (e.g., for triggering and signaling). Porter declared: “Q4 is when we really press the pedal to the metal.”

More than one route to market

Another programmer heavily involved in national addressable TV is ViacomCBS, which has already worked with DISH Media (the sales house for the DISH Pay TV platform and Sling TV virtual MVPD) to deliver addressable impressions within a live national broadcast via DISH set-top boxes – a landmark achievement that was announced in January. Addressable ad replacement was successfully executed on a select number of live campaigns across DISH’s 9 million household footprint in certain CBS markets. Seamless integration between programmer and distributor infrastructure and signaling processes was one of the key technical achievements.

Mike Dean, Senior Vice President of Advanced Advertising at ViacomCBS, declared at the time: “This breakthrough allows ViacomCBS to deliver the most powerful solution for our advertisers by combining the reach of national broadcast with the targeted relevance of household addressable. While cable networks have been addressable for years, addressable national broadcast has remained technically unreachable until now, making this a tremendous milestone for the industry and the future of television.”

When revealing the national addressable implementation with ViacomCBS in January, Tim Myers, DISH Media’s GM of Strategy and Products, declared that, “Implementing national broadcast enablement is a first for the industry, and a critical achievement in continuing to drive scale for addressable TV advertising.” Larger, national advertising budgets are the prize, as he noted.

Speaking at The Future of TV Advertising U.S, Seema Patel, Vice President, Partnership Development at ViacomCBS, described the insertion of targeted ads into CBS broadcast feeds served via MVPD set-top boxes as a big step forward and a historic moment. But MVPDs are not the only people that can support addressability on national programming feeds and Patel made it clear that her company views this Pay TV footprint as one part of the distribution chain for addressable advertising.

The company, which already serves advanced advertising to linear and VOD touchpoints across the streaming space, including in its owned-and-operated apps, is also part of the INVIZIO-led Project OAR (Open Addressable Ready) that is intended to ultimately support a large-scale addressable TV footprint via Smart TVs, partly by creating a direct dynamic ad management pathway between content owners and the TV devices.

The OAR consortium works on open standards and has a long list of programmer members that also includes WarnerMedia, Scripps, Hearst, Fox, Disney, Discovery Networks, Comcast/NBCUniversal and AMC Networks.

Emphasising how her studio/programming group is agnostic when it comes to the technology enablers that support national addressable TV, Patel said: “Our vision is to extend addressability across as many footprints as possible, so we have a unified offering across apps, OTT and broadcast networks. We want a comprehensive set of addressable options to reach viewers regardless of the end-point or where they are watching our content.”

Another of those footprints could grow courtesy of Roku, the company that started life as a connected TV streaming device maker, became an aggregation platform and content curator, and is now a major ad-tech presence. Roku recently acquired Nielsen’s Advanced Video Advertising (AVA) business, which includes Nielsen’s video automatic content recognition (ACR) and dynamic ad insertion (DAI) technologies. AVA is another initiative that was born with the Smart TV world in mind and its acquisition was designed to accelerate Roku’s launch of an end-to-end DAI solution with TV programmers.

Roku wants to be an enabler for large-scale DAI and addressable TV advertising and believes streaming and connected TV is going to play an increasingly important role in that. Julie Anson, Head of Addressable at Roku, was reluctant to say that Roku wants to capitalise on the decline of linear TV so re-stated the opportunity as “shifting consumption trends” and declared: “We don’t talk enough about the fact that there is a new version of TV.

“We need to find consumers where they are consuming TV-like content and that includes streaming.” She said that “addressable TV combined with streaming is a home run.”

Collaboration across all stakeholders

Viacom’s Patel acknowledged the need for collaboration and partnership, saying nobody can do national addressable TV alone. “We are collaborating with our peers to push standards and ultimately automation because that is what will drive scale and growth.” She believes the national addressable market has reached an inflection point, with encouraging progress and momentum, including the work with MVPD partners.

Huda Kazi, VP, Ad Technology and Operations at Discovery, is also encouraged by the degree of collaboration across all stakeholders, including the programmers, MVPDs and data providers. She highlighted the need for interoperability [for planning and campaign management purposes] between linear, addressable and streaming, and the challenge of finding audiences across different footprints, connecting the data and feeding that into a reliable forecast. Discovery itself is going to (eventually) create one large inventory pool from all its assets including the linear channels and discovery+ (its D2C streaming service).

As one of the publicly named programmers working with Canoe and a member of Project OAR, Discovery, too, is looking for multiple routes to market for national addressable inventory. Noting that it is still early days for this concept, Kazi added: “It is very fast moving and there is going to be growth in the next year.”

Kevin Arrix, SVP at DISH Media, made it clear that his company is trying to link arms with other stakeholders to ease the workflow and so help scale the addressable business. “We are starting to see pockets of this [workflow collaboration],” he reported.

Unified omnichannel TV marketing

He provided the ultimate vision that distributors, while acting independently of each other commercially, will be aligned around common workflows and targets (audience segments), working against the same KPIs and using the same measurement. “You want to be able to offer the buyside one point of entry,” he added.

He also discussed what will become one of the biggest challenges once national addressable scales: holistic campaign planning and management, which includes optimising the parallel use of addressable, linear TV and connected TV. Arrix said linear TV still works but the reach curve starts to plateau a little earlier now. DISH Media can look back at the first two weeks of a campaign and see which homes are under-exposed and create targeting segments to redirect the advertising to those consumers.

“We have to understand the proportion of dollars that should go into three different lanes: linear, addressable and CTV, and everyone needs to understand the strengths of those lanes and lean into those strengths,” he added.

Unified omnichannel TV marketing is the order of the day and one company that is working hard to make it happen is Finecast, GroupM’s multiplatform addressable TV planning and execution specialists. Marissa Jimenez, Managing Director at Finecast, gave a progress check.

“We know what addressable is going to do to our overall media plan and we know the point at which addressable should be included and how much of it to include. We know how to create custom audiences and apply them, and know the measurement that people expect. We have made tremendous strides in the overall planning process but until now that has all been done in a silo, and now we need to figure out how to integrate it into a holistic media plan.”

Jakob Nielsen, CEO at Finecast, added that the company can optimise reach and frequency management across all the addressable TV inventory partners the company works with – and the company claims to have the largest pool of linear and connected TV inventory available. Finecast provides a single point of access to this inventory pool, which includes broadcasters– although the company is agnostic to the platforms or media owners used (beyond the obvious caveats of TV quality and brand safety, etc.).

Jimenez emphasised the need for multiplatform, omnichannel thinking. “There is a need to integrate the different channels so that they complement each other, and to unify the addressable part of the marketplace…We are using data to find the audience target regardless of how or where they are consuming video.”

Anson at Roku, who thinks streaming is the future-proofed version of TV, alluded to the need for integrated planning when suggesting that addressable growth relies on good agency-level understanding of how much to invest in addressable versus other tactics. Discovery’s Kazi was explicit that advanced TV is a toolbox that includes national and local, data-driven linear (which the company also provides), streaming and addressable.

“Addressable is an extension of the planner’s portfolio,” she declared. “We consider it a premium product but part of a broader set of tools and something we look at as part of a full sales offering.”

Melanie Hamilton, Head of Enterprise Sales, Effectv at Comcast, echoed this approach, saying addressable (including now, national addressable) is one tactic alongside data-driven linear and regular linear TV. “We want to make sure that advertisers are not simply cherry-picking addressable TV,” she said.

She also believes the addressable value proposition needs to be simplified for the C-Suite, including for CMOs, with an emphasis on proof of performance. “We need this to go mainstream and it will, once the C-Suite is onboard.”

Maureen Bossetti, Chief Partnerships Officer at Initiative, an agency under the IPG Mediabrands umbrella, also made it clear that addressable (and national addressable) will be one of many tactics to deliver ‘growth audiences’ for clients and pointed to the declining power of linear TV as an incentive to move into this and other spaces.

The tipping point for linear reach

She declared that we have reached the tipping point when the audience supply via linear TV cannot match her agency’s reach needs on its own, and Initiative is making a much more significant shift into other channels, including digital video. “We are much more focused on connected TV and OTT,” she declared. “This year, more than ever, we have been pushed to go and find the [audience] supply opportunities across the marketplace.”

She added: “Clients that are really heavily into DR [direct response TV] are not seeing the same results anymore, because we were not really finding incremental reach – we were building a lot of frequency instead. When we started to move into new territory like connected TV and OTT the clients started to see the [positive] results, using different pockets within the video environment.

“We are still spending in [linear] television but obviously we have to spend less and we are seeing what that full video view looks like. We are expanding our purview to other video sources.”

Initiative is taking a more aggressive approach to audience buying in general and Bossetti said overall audience buying is close to 20% of TV budget today, “and that could definitely go to 30-40% in the coming year or two.” This includes optimised linear, and also addressable, which she described as one tactic that can drive incremental reach (and incremental frequency) against a growth audience.

“The way to build incremental reach is to start adding more audience buying, more household addressability and moving into other video channels based on client need,” she concluded.

Initiative is embracing the arrival of addressable TV on programmer inventory, and is involved in tests. “We want to understand what the right scale is,” Bossetti said, noting that addressable TV is moving from test-and-learn to an always-on channel.

She outlined an important challenge as national addressable scales: the need to demonstrate the fidelity of custom data matches and measure the outcomes, so that if you buy 8 million allergy sufferers, you know you got them and that it was more efficient to target this group than to take a national (standard linear) buy.

You can read our Future of TV Advertising U.S. 2021 event report here.

And you can find out about this year’s event, which is in New York in June, here.