While the industry has been talking about programmatic TV for a few years now, the reality is that it still in very much in the formative stages. The technical side is one barrier, but it’s actually far more complicated than that. Here James Grant, who looks after partner management and the Fourfronts marketplace at FreeWheel, explains how trading currencies, and the industry’s approach to compliance and regulation, will all have to evolve to make programmatic TV a reality.
Despite the multitude of challenges and rapid changes the TV ad industry is facing, it remains healthy and flourishing, with figures from Warc showing that UK advertising spend reached £4.7bn in the first three months of the year, driven by strong TV spend which grew 11.5 percent year-on-year.
In our latest Video Monetization Report (VMR), we found that ad and video views are seeing significant, double-digit growth every year. This growth is being witnessed across all types of content – short-form, long-form but particularly in live simulcast or DAI (dynamic ad insertion) ad inventory (+113 percent). While live broadcast content is still fairly nascent in Europe, its significant growth in the US means that it represents perhaps one of the greatest opportunities for advertisers in the EU region.
Interestingly, our analysis has shown that set-top boxes (STBs) generated 18 percent of all viewings for enabled clients in Q3 2015, indicating the medium’s strong potential. The rapid growth of OTT viewing is a clear sign of acceptance from the consumers that this is now another form of TV content delivery and an adopted way to access programmes. Noticeably, the long-form authenticated volume (where users have signed in) has continued to rise at a dizzying pace, with 242 percent growth compared to Q3 last year. Whether content is viewed through traditional TV or via IP, the audience is seemingly indifferent as consumers embrace the multiscreen universe and the line between linear and digital blurs. This has lead to a continual change in advertising models and increasing noise around programmatic TV. What, then, are the key challenges that face programmatic TV and the adoption of new ad models?
The challenges begin with a fundamental change to the industry. Whereas the TV ad model was once relatively straightforward – a unified audience, viewing on a single platform that allowed advertisers to use a single currency and make unified transactions – it is now far more complex, with the proliferation of available content on different platforms resulting in audience fragmentation, the use of multiple currencies and therefore transactional fragmentation.
With consumers’ acceptance of digital in the living room, new linear/digital currencies are now emerging, and evolving currencies can cause huge complications, requiring improved analytics to understand how they work across metrics and “translation layers” to process them into a single interface, and the all important ‘holistic viewpoint’.
In order to address this, these nuanced currencies must be incorporated across the industry if they are to be used successfully. Its our view that multiple trading and measurement currencies are here to stay and as an industry we must find a way to enable multi-currency transactions.
All of which pushes the case for programmatic TV. But we shouldn’t get ahead of ourselves, as one of the leading UK broadcasters called out at the New Video Frontiers event in London in October – ‘Programmatic TV in TV does not exist yet’. There are multiple reasons, and challenges, as to why we at FreeWheel are in agreement with this statement, but one of the biggest that we want to discuss is compliance and regulation. Whilst IP TV/Video is not yet regulated to the same extent as Linear TV, most broadcast companies represent the regulations across all their viewers screens, including IP TV/Video, be that significant regulation from Ofcom, or self-imposed but no less important regulation such as frequency capping.
However, done properly programmatic will be possible across digital and traditional TV in a way that will offer tremendous new opportunities for both the buy- and sell-side. FreeWheel’s FourFronts premium marketplace, is just one example of some of the steps that have been taken to move the industry forward and help the sell and buy-sides to transact in an automated, but crucially also in a TV compliant manner, while protecting the value of inventory and data. Most of the discussions in market today focus on trading platforms and opportunities, very rarely do they focus on creative management, advertiser separation, frequency capping or proprietary data protection.
There is still much to do but as digital and linear technology continue to mix, in turn we gain more understanding of how to unify audiences, and can enable IP-delivery to co-exist with broadcast television environments, then automated trading will improve efficiency with less errors, optimal placement, lower cost and higher revenue gain for both the sell and buy sides. The industry will no longer have to pick a side, and instead embrace both worlds for the benefits of all, and primarily the consumers.