While the video advertising world loves to talk about the convergence of TV and video, only a handful of companies have actually invested in technology capable of delivering TV advertising. Extreme Reach, who acquired DG’s (now Sizmek) TV ad technology assets, are one of them. The company paid DG $485 million in cash in February of this year, making the deal one of the larger ad tech acquisitions of 2014.
John Roland, CEO at Extreme Reach, explained to VAN the rationale behind the acquisition. “The reason we bought the DG assets is that nine times out of ten video campaigns use a TV creative. The reason for that is that the average TV commercial costs $300,000 to create a professionally produced commercial, so advertisers don’t want to triple their creative costs by creating new commercials for online and mobile. Then there has been a number of studies done that demonstrate that viewer engagement increases by a hundred percent if the viewer sees the same commercial on multiple devices. So if we have an 85 percent share of TV – where all of those commercials are being ingested into our platform – then we can easily hit the digital market from that position.”
Restructuring Still Required
However, while it’s all very well having a unified technology offering, Roland concedes that most agencies and advertisers still aren’t set up to get the best out of integrated buying. “We have 9,000 advertisers and agency customers and I’d say about five percent of them have unified their digital and TV teams, meaning that 95 percent of them don’t. So many advertisers are using a different vendor for their TV campaign, another for their online campaign and yet another for their mobile campaign — and they’re all using the same commercial. So it’s still a very difficult and fragmented process.”
Roland also says the convergence of TV and digital is also going to cause friction in other areas such as talent rights. “The issue of talent rights is going to come to the digital realm, but at this point the digital world most people aren’t even aware of what talent rights are. In a TV commercial you might have actors and actresses, music and someone doing a voiceover, and all of those people need to get paid when the commercial is shown. This is something the TV industry manages every day and the digital world need to get on top of it,” he said.
When asked if we’ll still have companies that specialise only in video ad technology in five years time (as opposed to them being incorporated into multichannel stacks), Roland is bullish about the future of the companies that focus on specific areas. “I think you’ll get a different answer depending on who you speak to,” he says. “If you ask Doubleclick or Sizmek, they’ll say you need a stack, and if you ask Extreme Reach we’ll tell you that a video point solution works just fine. I think that video point solutions work well as approximately 75 percent of a campaign budget is spent on the TV and video portion, so you want a best of breed product when it comes to video. I think that multichannel stacks can’t possibly be best of breed in mobile, rich media, display, email marketing and video. Not to mention the fact that they still don’t do TV.”: