Beachfront Media, a video ad platform, has been working on connecting the programmatic pipes to set-top boxes’ video on demand (VOD) inventory. Now, the company has entered the market with Amobee as its first demand-side partner, buying set-top box VOD inventory for addressable campaigns.
While the ad industry continues to invest in the $9 billion connected TV (CTV) market that it hopes will bridge the best of television and digital advertising, opening up set-top box VOD inventory provides an inroad into monetizing the $70 billion traditional TV marketplace.
Philip Smolin, chief strategy officer of Amobee, said bringing VOD inventory online essentially allows buyers to apply their targeting and measurement strategies the same way to both VOD and CTV.
“[VOD] has been out of the programmatic loop, and out of the upfront buying loop as well, because it’s been much harder to predict volumes against it,” Smolin said. “So it’s this big missing link in the industry that’s now getting connected together.”
There are plenty of ad opportunities in VOD. Impressions in cable VOD programming reached 27.3 billion in 2019, a 4% increase from the year prior, according to Canoe, a television ad-tech company. However, growth in VOD impressions has slowed in recent years, rising by 30% to 23.2 billion in 2017 but only 12% to 26 billion in 2018.
Daniel Church, director of programmatic at Beachfront Media, said advertisers have more transparency in programmatic VOD compared to CTV, where they don’t often know what shows their ads are running against.
“We’re able to provide that show-level data which is lacking in CTV, and it’s also directly coming to us from the MVPD [multichannel video programming distributor] so there’s no chance of bot fraud. It’s all click-to-play, so [users] are sitting in front of their TV ready to engage,” Church said.
Despite these promising developments, there is the issue of scale. Beachfront Media’s current MVPD partner is Frontier, which services less than 1 million U.S. homes. However, Church said the company hopes to up that number to between 5 million and 20 million by the end of the year.
Ampersand, an ad sales consortium of Comcast, Cox and Charter, is also involved, but as a buyer. For example, if Ampersand wanted to extend the reach of a campaign from one of its clients, the company would buy VOD inventory through Amobee’s platform, and Beachfront Media would serve that campaign across its footprint.
There’s also the issue of the acceleration of cord-cutting, leading to a dwindling number of set-top boxes through which to serve VOD inventory. However, eMarketer projects there will still be more pay-TV households than non-pay-TV households by 2023.
Church said Beachfront Media is betting that the decline in linear TV subscriptions will level off, and that operating in both linear and connected TV is complementary.
“It’s kind of like peanut butter and jelly. We can get the cord cutters on the connected TV stuff we run, and we can get the cord keepers on the VOD,” said Church.
Another potential hurdle could be one of semantics, especially as agencies move to bring buying teams together.
Programmatic has different definitions in digital and TV. The former centers around instant data and functions in real time, while the latter still runs on a schedule and involves a more stringent creative vetting process.
“Agencies are focused on how they break down the silo walls between the TV investment teams and the programmatic trading desks. And it’s not a question of ‘if’ for them, it’s only a question of ‘when,'” Smolin said.
In this instance, the auction for VOD inventory happens once a particular show begins; the ads are then served as each break comes, and the results are measured upon completion of the program.
Ameet Shah, global vice president of publisher operations and tech strategy at Prohaska Consulting, said one of the biggest hurdles in VOD is the ability to fulfill impressions in real time, but the partnership between Beachfront Media and Amobee is a good step forward.
“While not technically programmatic TV in the sense of linear and scheduled content, this represents the realization of more than a decade of work by many pioneers in the industry and, quite frankly, was overdue,” Shah said.
Church said the issue of whose-sales-team-sells-what-inventory is different among each partner, but that Beachfront Media doesn’t want to cannibalize its clients’ direct sales efforts.
“In our platform, clients are able to blacklist direct competition that they’re running with to make sure that anything that’s coming to them directly can’t be bought programmatically. We’re only bringing new revenue channels to them and protecting their existing sales relationships,” Church said.