Inventory is Up and CPMs are Down: Connected TV Advertising’s Time has Finally Come

Connected TVProgress on connected TV advertising has been painfully slow. Even when the infrastructure – things like broadband penetration, over-the-top (OTT) platforms and apps – have all been in place and ready to go, consumer adoption of connected TV devices has lagged far behind. So thus far connected TV has been regarded as an experimental novelty for scale-hungry TV advertisers. However, a few different pieces of recent industry research suggest that connected TV is finally starting to scale.

Decipher, a TV research company based in London, recently found that the adoption of devices that enable OTT video streaming(such as Apple TV, NOW TV box, Chromecast, Roku and the Amazon Fire TV stick) have been all showed increased ownership since Q3, 2015. In the UK, the fastest growing device was the by the relatively new Amazon Fire TV Stick, which saw claimed ownership increase from 2 percent to 6 percent of online consumers – representing roughly 1.4M homes. The larger (but more expensive) Amazon Fire Box (similar in size and shape to Apple TV) sold 450K devices over the same period.

Consumer adoption is of course boosting the supply of connected TV inventory available. Yesterday TubeMogul put out some interesting numbers:

  • Connected TV CPMs pricing dropped 20 percent, responding to what what they say has been a ‘surge in supply’, but they say that despite this the medium remains largely untapped amongst UK marketers.
  • While desktop video still dominates, its share of video impressions is rapidly declining, falling from 85 percent to 66 percent quarter over quarter.

Decipher identified a similar decline in desktop inventory, as have a number of the quarterly reports produced by FreeWheel, the Comcast-owned ad tech company. All attribute the decline to the growth of connected TV. While many column inches have been devoted to connected TV’s impact on the TV industry, the ad tech and digital world won’t emerge unscathed either.

For example, the shift away from desktop is going to make it harder to identify individual users. While we’ve seen a significant rise in authenticated viewing (i.e. viewing where a user logs in) over the last year or so, many OTT apps still don’t require the user to confirm who they are when viewed on a TV. This is going to have to change if data-driven TV advertising is going to succeed.

Secondly, as OTT viewing is leading to a very rapid decline in desktop consumption, it’s going to reduce the need for viewability vendors in video. Viewability isn’t an issue for TV advertising, or at least not in the same way it is for desktop. So, coupled with the difficulties associated with time when vendors are struggling to measure in-app viewability, many of these companies are going to have to pivot if they are to continue to be relevant for video advertisers.

Finally, if they haven’t done so already, web publishers need to reflect on their OTT strategy. Will their web content engage audiences on TV? Or should they be producing long-form content, be simulcasting, or be simulating linear experiences using technologies such as those provided by Should they heavily invest in developing an app or make use of the various app templates that are now available?

Put simply, connected TV advertising is no longer far off on the horizon. The infrastructure is in place, the audiences are there, and there are still a huge number of greenfield opportunities that are waiting to be exploited.

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