By: Mitch Oscar, TV Board for Monday, Aug. 5, 2013
Will real-time bidding ever come to TV?
Headlines, bylines, and sidelines – when not scrambling to conjecture on The Cards That House Built (Netflix), or Google’s, Apple’s, Microsoft’s and Intel’s triumph as they approach entering the kingdom of the living room – have consistently focused on the diatribes between those in the digital realm that assure the TV community that programmatic is not problematic, and those in the TV realm, who in their finite wisdom, refuse to be looked upon condescendingly and handled as just another video impression.
I’m a TV guy. A televisualist. One who is evolving with the concept of the transmission of video images across multiple platforms and the opportunities, then afforded to the marketing community, for its exploitation.
First and foremost: connection to the consumer through technology. Built right into the broadband ecosystem: cookies for all. Only a matter of speed. Presently, 81+ million people are addressed at high speeds.
Unfortunately, not the case in the TV realm. Implementation of addressable pipelines has been a slow arduous task. Status:
*Not deployed for commercial usage – yet
Also, in the last year, BlackArrow and Canoe Ventures have, and will continue to, optimistically inject their dynamic ad delivery technology into pay TV operators’ ad supported VOD offerings.
Which provides a natural segue way to ad supported video on demand and a possible scenario for the acceptance by TV networks and pay TV operators of allowing a portion of their finite video inventory to be included in RTB:TV.
The first inflection point in terms of advertising exploitation and curiosity of ad supported video on demand was 2002. Codified within each of the cable networks’ contracts with cable systems operators was, among other things (local advertising and license fees), the ability to launch an ad supported VOD channel whose content would be limited to programming that had already aired live or linearly on the cable network. Turner Broadcasting’s CNN and Adult Swim, and Discovery Communications took the content lead, Rentrak its measurement (set top box transactions), and some advertising media people, including myself, commercialization. As a community, we followed the digital lead. Ad models: possibly pre-roll, mid-roll and post-roll at 15 to 120 seconds each – even multiple commercials within a pod. CPM’s in the range of broadband video’s $20.00- $40.00.
Unimaginatively, the ad community concentrated on pre and post (upwards of 3+ minutes) with commercial integration 4 weeks prior to the beginning of the month during which the advertiser wished its spots to be available for consumption. Distribution in 20 million digital cable households. Lots of pre-launch press coverage.
Then dissipation: scale (lack of), technology (interminable integration length), measurement (limited), content (limited), and, most meaningful, revenue (not discernible).
Slow forward a decade.
Headline: Ad Supported VOD Gains Considerable Traction.
Ad community arousal – the second inflection point:
Scale (reasonably ubiquitous)
Ad supported video on demand is available in all digital cable households, which is roughly 50 million.
Technology (terminable integration)
BlackArrow and Canoe Ventures have deployed dynamic ad insertion technology that allows cable operators to integrate commercials within days of air.
Measurement (more robust)
The media companies have expended energy into exploitation of C3, which counts all commercial viewership in the first three days of a program as long as the commercial load is the same throughout airings. Also, the cable networks and Rentrak, the dominant provider of VOD measurement, are working together to provide more usage transparency.
Content (very robust)
All of the major and minor TV networks have a presence in the ad supported VOD realm and refresh a high percentage of their programming monthly.
All participants glean more revenue at little extra “doing business” cost:
— Cable and broadcast networks are able to count viewership of ad supported VOD programs in C3 and therefore hang on to more revenue from advertisers. Also, after the 3rd day of airing, the cable and broadcast networks are able to strip out original advertisers and re-sell inventory to different advertisers for incremental dollars.
— Cable system operators are given an inventory split in ad supported VOD programming, which provides incremental revenue. Also, they are able to promote the VOD concept to current and potential subscribers as a benefit for not cord-cutting and/or choosing them over a rival service.
If the adoption of ad-supported VOD by the media community be a scenario for the support and optimism for the evolution of RTB:TV, as I propose, then:
Programmatic buying requires a technology distribution platform that ties into individual households. There are 95 million pay TV subscribers in the U.S. A little over 20% can now receive addressable advertisements. At some point in the near future, addressable technology will be deployed to enough households to provide meaningful scale for the ad community, as Comcast and cable operators other than Cablevision light up and Verizon commercializes the technology.
From a technological point of view, some may argue that the deployment of addressable technology is limited to only the commercial time allocated to the pay TV operators by the cable networks from their licensing deals and not applicable to national cable network inventory. In this regard, Canoe Ventures proved that cable networks would be willing to allow their national inventory to be addressed and interactive.
In terms of privacy protection, guidelines have been in place that have thus far protected an individual’s personally identifiable information (PII) but allowed addressable campaigns on Dish, DirecTV and Cablevision to meld third party data and marketer customer lists with addressable inventory purchases to the satisfaction of all involved.
Which leaves the RTB:TV/programmatic discussion to hinge on incremental revenue generation. Will the media companies that own and distribute TV programming allow a portion of their inventory to be represented within trading decks. As long as the price is right. Based upon the evolution of ad supported VOD and the growing number of re-selling inventory arrangements (remnant) brokered between pay TV operators, contextual audience networks, and Rentrak only cable and satellite rated networks, the answer would be affirmative. As long as the sale of impressions raises the value of inventory – most probably in the remnant realm in the beginning – and allows trading desks to bid for it under stringent rules and practices, everyone benefits. Media organizations and marketers will become more comfortable with the process and Darwin’s progeny evolve.
It’s a matter of the alignment of scale, technology, measurement and revenue. And of course, arousal.
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