CONNECTED TV ADVERTISING’S GROWING POTENTIAL

8/12/2019 CONNECTED TV ADVERTISINGS GROWING POTENTIAL

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A FierceCableeBriefCONNECTED TV ADVERTISINGS GROWING POTENTIAL

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Tats the challenge a fragmented authoringenvironment, said Sachin Sathaye, vice president ofstrategy and product management at ActiveVideo.Tere are no standards. A websites interactive ads arewritten in HML5. Its fairly standard. When you tryto bring that to television, whether its a set-top box or

a directly connected television, there is a vast array ofoperating standards.

Te lack of standards means placing a media buy can bechallenging for advertisers and their agencies.

If you want to use interactive V ads, you have tokeep changing these ads to work on a cable networkand then an IP network, Sathaye said. Tey have tochange content and the creative. Te third challenge isthe lack of consistent metrics. If you go to a website,everything is standard. Who clicked where? Which

web page did they click? How long did they stay on thepage? Tats not so for connected V ads.

Revenue potential is increasingoday, connected V ad revenue is a tiny fraction oftraditional Vs $74 billion.

Ad revenue for these IP-connected platforms is lowcompared to overall television advertising, said BrettSappington, director of research at Parks Associates.However, these revenues are increasing and ad rates areincreasing as advertisers and ad sellers become better at

valuing ad inventory on these connected platforms.PricewaterhouseCoopers is projecting that advertisersthis year will spend $4.4 billion in the U.S. onmultichannel systems, which includes connectedVs but also pay-V providers and digital terrestrialtelevision.

Te Carmel Groups Jimmy Schaeffler estimatesthat advertisers are spending close to $5 billion onconnected Vs and other IP-connected platforms.

Youll see single-digit billion-dollar growth for the

next three to five years, Schaeffler said. It will takea long time to get to the point that it will challengetraditional V.

TV manufacturers poised for opportunityOnce connected V ad revenue takes off, analystsexpect the revenue to be split among pay-V providers,smart V manufacturers and third-party platforms.

Lots of folks are trying to get their foot into the doorof the V business through hardware or software:

Roku, Google V, Apple V, Amazon Fire, Xbox,said Dave Morgan, CEO of Simulmedia, an audience-targeted V advertising company. However, in ourmind, the only hardware certain in the future of V isthe V. Tus, the V manufacturers are in a very goodspot if they are smart in creating a robust and open

developer ecosystem, not unlike what Apple has donewith iOS and Google with Android.

Despite challenges to connected V advertising

reaching its full potential, it will eventually get there.Te size of the ad market is getting bigger as moreconsumers buy connected Vs for their homes.

In 2014, an estimated 113 million people are usingconnected Vs, up 107 percent from just two yearsago, according to research firm eMarketer. Moreover, aprojected 191.4 million people will use connected Vsin 2018 a 69 percent increase over 2014. At that time,58 percent of people in the United States will haveconnected Vs.

Tere are a couple of factors happening in parallelthat explain [this], said David Hallerman, principalanalyst at eMarketer. Tere are more and moredevices for connected V, whether its smart Vsfrom manufacturers, set-top boxes like Roku, or gameplayers from Microsoft or Sony or even computers withHMI output that you put into the V.

Second, consumers are attracted to Internet-basedservices such as Netflix that are creating originalprogramming like Orange is the New Blackthat theycan get on connected Vs, he added.l

millions, % of population and % of internet usersUS Connected TV Users, 2012-2018

2012

54.7

17.4%

23.0%

2013

83.6

26.4%

34.0%

2014

113.2

35.5%

45.0%

2015

138.8

43.2%

54.1%

2016

160.9

49.7%

61.7%

2017

177.2

54.3%

67.0%

2018

191.4

58.2%

71.4%

Connected TV users % of population % of internet use

Note: individuals of any age who use the internet through a connected Tat least once per monthSource: eMarketer, June 2014

174380 www.eMarketer.c


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placemedia is creating value for advertisers and

media providers by leveraging technology and data todeliver audience based targeting on linear television.Te placemedia platform helps media companiesmonetize long-tail and undersold inventory throughtargeted audience reach and aggregation. In addition,placemedia helps advertisers effectively target theiraudiences on linear V at a higher index and lower costper targeted impression.

Why Does Linear TV Need a Programmatic

Solution?

Audience fragmentation on linear V has been achallenge for advertisers and media providers since theearly 1980s. Hundreds of cable network choices and alegacy media measurement system that benefits highly-rated cable networks, has made it challenging foradvertisers to find and engage their audience on long-tail cable networks and difficult for media providers toprove value outside the top 30 cable networks.

Even with all of the opportunities on linear V,advertisers are still spending 85% of their televisionbudgets on the top 20 cable networks, while leaving

millions of valuable impressions on the table with thebottom 180 cable networks.

placemedias programmatic solution solves the puzzleof audience fragmentation with automation, inventoryaggregation, better audience targeting and sound logic.

How Does placemedia Work?placemedia has partnered with Rentrak to analyze andmatch actual consumer viewing behavior in 14 millionhomes. Tat data is overlaid with several third-partydatabases to utilize audience based targeting across allcable networks. Te results are extremely compelling.

Better Audience TargetingOne persistent challenge with linear V ismeasurement and reporting. When planningadvertising based on the traditional method (spots,GRPs and content context), it is difficult to findaudiences outside the top 30 cable networks.placemedia has changed the currency of television fromGRPs and spots to audiences and impressions. Tis,combined with the Rentrak data, lets placemedia find

audiences much deeper in the cable network set than

traditional planning methodology. Te result is highlytargeted impressions at a much lower cost per targetedimpression.

End-to-End AutomationLinear V is also challenged by legacy systems andprocesses that make true end-to-end automationdifficult - if not impossible. Trough its uniquepartnership with Viamedia, placemedia is pioneeringa fully automated solution for both national and localadvertisers. Te placemedia platform includes a front-

end desktop solution that enables advertisers andagencies to develop programmatic plans. Once an orderis ingested into the trafficking system, insertion ordersare generated and copy is delivered to cable, satelliteand cable network partners instantaneously. Dailyas-run information is automatically ingested in theplatform, giving advertisers near real-time reporting onthe status of their campaigns.

AggregationBecause no single cable provider or cable network canefficiently reach a targeted audience on the national or

local level, placemedia aggregates advertising inventoryfrom multiple sources to ensure the most efficient andeffective ad delivery.

Sound LogicTe placemedia solution is also designed to get smarterand more efficient with every order. Visibility intomedia partner advertising inventory and analysisof historic clearance rates drive a logic engine thatbuilds future campaigns. Te goal is to provide mediacompanies with an optimal rate for inventory, while

ensuring that advertisers are able to efficiently andeffectively reach their target.

Te programmatic future for linear V is bright andexciting. As technology and big data continue toemerge, advertisers and media providers will continueto benefit from placemedia.

HOW PLACEMEDIA IS USING BIG DATA TO DELIVER AUDIENCE BASEDTARGETING ON LINEAR TELEVISION


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Within the next ew years connected V ads willstart chipping away at the $74 billion traditional

V ad market, according to industry experts. Butto do that, content networks and advertisers willneed ad solutions that make it easier than it istoday to place ads onto connected Vs.

Companies like Canoe, Google/DFP, ActiveVideoand dozens o other companies are developingsolutions that place ads onto connected Vs andtailor those ads to the individuals who see them.Tese solutions also take a multitude o differentstandards, reconfigure them in the cloud, and thenstream them back to IP-connected platorms.

Engaging viewers with targeted adsTe sofware company Canoe, or instance, hasbeen placing ads on cable set-top-box VODsystems or several years. But, now, it is expandingits VOD ad-insertion technology to IP-connecteddevices such as smart Vs, set-top-boxes andgaming consoles. Canoe is a consortium opay-V providers Brighthouse Networks, Cox

Communications, Comcast and ime WarnerCable.

With the same workflow and process were usingtoday with the classic set-top box, when our cableoperators have an IP-delivered product in the homewith that same VOD service on it, we can alsodeliver an ad to that device, said Chris Pizzurro,head o products, sales and marketing at Canoe.We have the IP capability ready to go. Well testit this summer with some o our operators. We

expect to deploy it in ourth quarter.

Canoes IP workflow system will work with admonetization systems Black Arrow and ComcastsFreewheel.

Black Arrow delivers targeted ads to IP devices tosome 30 million users.

We get a connection rom a video player and weusually [find out] which asset was requested, whichstation was tuned in and we get a time stamp,said Chris Hock, senior vice president, productmanagement and marketing at Black Arrow. Tenwe figure out which ad to deploy.

Tat happens in real time and the ads are tailoredto individual viewers.

With our Black Arrow product, we take the cookieinormation off the device and put it up in theserver, Hock said. When [a content distributors]user connects and goes to an ad, we get a device ID.We check that against the Black Arrow audience the broadcasters subscriber base, which gives usinormation or targeting.

Te targeted ads do a better job o engagingviewers, said Hock, who expects content networksto charge higher CPMs or these ads than ortraditional V spots.

ime-Warner Cable began using the Black Arrowlast year.

Meantime, automatic content recognition (ACR)sofware helps to identiy the programs that

SOLVING THE CONNECTED TV AD CONUNDRUM By Kevin DowneyCompanies are developing new solutions that will overcome many of the hurdles associated with connectedV advertising

We get a connectionfrom a video player

and we usually [find

out] which asset was

requested, which station was tuned

in and we get a time stamp.

Chris Hock, senior vice president, product

management and marketing at Black Arrow


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connected V viewers are watching. A projected2.5 billion devices will be equipped with ACRtechnology by 2017, according to NextMarket

Insights.

Te Holy Grail o all this is targeted advertising,said Jimmy Schaeffler, principal analyst at TeCarmel Group. Tats tomorrows advertisingenvironment. Te idea is that, i you can put aviable advertising mechanism in place, then IP-Vthrives.

Solving standards issuesStill, there are obstacles to getting rom wherewe are today to a time when a good chunk otraditional V ad revenue shifs to connected V.Perhaps the biggest obstacle is a lack o standards.

Unlike web ads, connected V ads are notuniormly written in one language. Instead, thereare many, which means media buyers have to buymultiple connected V ads, not just one ad buy.

And its tough or advertisers to create ads thatllrun on traditional V and various IP-connecteddevices.

But ad solutions are being deployed to make the

lack o standards less o a headache.

I you write an interactive ad or DirecV, youhave to write the interactive ad specifically orthat, said Sachin Sathaye, vice president o strategyand product management at ActiveVideo. I thesame brand wants to bring that ad to A& set-top boxes, they have to now create it in a differentwriting. I you go to cable, you have to change itagain.

In January, at CES, ActiveVideo in partnership withBrightLine launched CloudV AdCast. It enablespay-V providers to deliver targeted, interactiveads to connected Vs.

We render this application in the cloud onHML 5, Sathaye said. We convert that as aninteractive video stream. Tat allows a consistentexperience across devices. Suddenly, the devicebecomes agnostic.

Building a better experienceTe companies take it a ew steps urther, to helpadvertisers get their ads in ront o connected Vviewers and to gather inormation about who theyare and what they are watching.

BrightLine would build something like a HomeDepot connected-V microsite, said Mike Fisher,director o strategy and innovation at BrightLine.

We would go to our client with a list o all theplaces they should make a media buy. We might say,What we built or you is supported in Samsungsbanner inventory. It is supported inside a publishersapp. Its supported in a publishers pre-roll video.Its supported on the legacy side on DirecV. Weprovide rollup analytics o how they got to it, whogoes to it and what they do afer they go to it. l

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CONNECTED TV ADVERTISING’S GROWING POTENTIAL