Programmatic Players Lunge Toward Connected TV in 2022

Almost every programmatic player has cast a line in the CTV ocean, hoping to reel in a piece of the $65 billion in linear media spend that many view as up for grabs in the new streaming reality. Their hooks carry the same bait that provoked earlier waves of programmatic adoption: identity, automation, perfect measurement. Those efforts have begun to pay off. The Trade Desk’s CTV revenue grew 100% in the third quarter of 2021. Magnite reported CTV revenue growth of 50% during the same period. At Xandr, which AT&T is selling to Microsoft, CTV revenue grew 180% in the second quarter. Actual revenue figures are harder to come by since companies tend to phrase their CTV growth in percentages rather than real numbers, but the growth pattern is clear. And yet, despite the early growth, TV has shown itself to be a different beast from desktop and mobile media. Despite a new influx of ad-tech investment, many familiar pain points got worse, not better, in 2021. CTV audiences today are more fragmented, network-quality inventory is scarcer and measurement is more broken now than at this time last year. Can technology solve all this in 2022? The industry is sure hoping to figure that out—but it's going to be anything but easy. Interoperability is a mirage The fragmentation of viewing behavior is the single biggest issue requiring industry attention in 2022 and the one most kvetched-about at conferences. Fragmentation applies to audience behavior both across streaming services—like identifying (or not identifying) a person on both Disney’s Hulu and NBCU’s Peacock—and across connected TV and linear. The biggest problem with fragmentation is duplicated reach, which translates to wasted budgets, which media agencies and brands have been beating the drum on for years to little avail. “Agencies have yet to figure out where the duplication is between a CTV play and a linear play,” says Scott Schiller, global chief commercial officer at Engine and adjunct assistant professor at NYU Stern. “They're invested in these very large annual deals with the linear players where you get some streaming, but then you’re not sure where the duplication is.” With new billions flowing to CTV, buyer frustration is understandable. The percentage of TV upfront spending that goes to digital video and streaming channels in 2022 will be $8.8 billion, according to Insider Intelligence. That's about 43% of the $20.2 billion advertisers will commit to the upfronts across both linear and digital this year, representing an increase of 27.5 percentage points in digital upfront spending compared with 2021. Bringing buying [back] together Agencies are well-positioned to lead the way on unified media planning across both linear TV and streaming TV modalities, but many still struggle with legacy team structures that separate those channels into siloes. In 2022, this is unconscionable. Take it from an agency that’s made real progress. “The thing that's exciting me most in 2022 is the idea of converged budgets,” says Mike Fisher, vp, advanced TV and video at Essence Global. “There's not a TV budget and a digital budget anymore. There's an audience budget.” Essence begins by defining an audience and then understanding the content they’re watching, regardless of the distribution platform. It then layers in household-level targeting where possible. This converged model requires some client education, but many of Essence’s customers successfully deployed it during the 2021 upfronts. “By the next upfront cycle, my guess is that more of our clients are adopting a unified budgeting and implementation approach,” Fisher says. While the networks are clearly under pressure to interoperate, they have not caved, primarily because they haven’t had to. The change in distribution models and consumer adoption of ad-free streaming means that even as streaming spikes, ad space remains limited. This overflowing demand has insulated sellers from having to accede to buyers clamoring for better measurement. “In my opinion, there’s not going to be a solution that unites the industry from a measurement perspective,” Schiller says. “As long as technology continues to drive disparate consumer behavior and fragmented audiences, this idea of interoperability to me is a dream. It’s not going to happen.” Green shoots Others are somewhat more optimistic that positive change is on the horizon. In 2021, we saw the beginning of a siege against Nielsen as the industry’s monolithic blunt instrument for TV measurement. After Nielsen had its Media Rating Council (MRC) accreditation revoked, more than 50 metrics providers joined an NBCUniversal RFP seeking proposals to replace Nielsen’s singular dominance in measuring audiences. The goal was not to replace Nielsen with a different player, but rather to adopt a “multicurrency” approach. This approach would deploy a range of research tools—such as panels, census-based methods and eye-tracking technology—from various providers, potentially including Nielsen. Other networks, including ViacomCBS, are also exploring alternatives to Nielsen. These experiments will play out in the first half of 2022, after which a new field of currency providers will be anointed. This process could help break the deadlock between publishers and buyers as more data becomes available not only about viewership across CTV and linear modalities, but also about audience engagement within specific programming blocks and specific ads. “This is going to be a significant year for guarantees outside of the traditional currency,” says David Levy, CEO of OpenAP, a planning and measurement company that’s owned by the biggest broadcast networks. “That doesn’t necessarily mean just the brand name of who the currency provider is, but the way the measurement is happening. We’re going to see in this upfront more commitments that are based on emerging alternative currencies that are really promising.” How much do you expect your strategy around marketing on connected TV platforms to change in 2022? “Our CTV strategy will be fairly straightforward: buy where we have confidence in what we are getting, which means spending more with those partners that are ready to engage on our transparency and measurement initiatives.” —Kelly Metz, managing director, linear and advanced TV, Omnicom Media Group North America OpenAP itself has just released a measurement framework that will support de-duplicated reach and frequency metrics at the campaign level. The company’s ultimate goal is to enable audience planning across networks, a much larger challenge. Levy believes the networks will inevitably lock elbows to support cross-platform measurement. “If they keep getting these siloed views, it starts to actually look like their inventory is contracting,” he says. Meanwhile, a host of ad-tech players are charging ahead with their own enhancements that enable holistic ad planning and management across publisher environments in a more automated way. “The fragmented nature of CTV supply requires a scaled, non-conflicted technology infrastructure that brings many parties together,” says Sean Buckley, Magnite’s chief revenue officer, CTV. Redefining premium Another solution to network intransigence is to look elsewhere and source audiences outside the networks. Many advertisers, including large brands, are showing more willingness to procure TV ad space outside of what we traditionally think of as “premium” TV network inventory. The ever-increasing popularity of YouTube has familiarized buyers with the idea that there are great swaths of non-broadcast video inventory that deserve to be on media plans, and 2022 will see more advertisers swing their budgets to include what was once seen as the grittier neighborhoods in TV town. “What we want from our clients is flexibility and fluidity to control their spending across television touch points and television-like objects,” says Mike Fisher, vp, advanced TV and video at Essence Global. “I don't know who [YouTube creator] MrBeast is. I don't care who the hell MrBeast is. But here's the large portion of my client’s audience who looks at MrBeast as premium.” With more than 200 streaming services out there, there’s a big opportunity to expand the supply pool in advanced TV, argues NYU’s Schiller. “When we say there's a shortage of premium inventory, what the industry is saying is there's a shortage of professionally produced, expensive inventory.” Of course, there’s a risk. Making a scarcity-driven, tightly regulated marketplace like TV more inclusive could open the door to fraud and poor-quality ad experiences. As always, it’ll be up to brands, agencies and their measurement partners to make sure that doesn’t happen. Check out all of our Outlook 2022 coverage here.