Over the past decade, the TV industry has seen mounting changes, arriving in the form of shrinking cable subscribers, a rapid increase of connected TV (CTV) options, and as of late, a decline in media companies’ profits. Together, these conditions have pushed the ecosystem to a point where media companies must adapt or risk their own futures.
Cord cutters, cord-nevers, acquisitions, and bundles all signal that the rise in CTV is here to stay. For the first time ever, viewership across CTV environments surpassed broadcast and cable last year. However, while consumers subscribe to over-the-top video services in record numbers, the media companies behind them have failed to keep pace in monetizing the content subscribers are tuning in to.
Even as subscriber counts rose, media companies exposed operating losses in their streaming segments. Without the appropriate advertising revenue, average revenue per user is too low to compensate for the high recurring expenses of creating content and/or purchasing the rights to it.
When the industry’s long-time streaming leader recently pivoted from a pure subscription video-on-demand offering to include an ad-supported video-on-demand tier, it missed its viewership targets for the launch quarter and subsequently released unspent advertising dollars back to brands and agencies.
If even the streaming giants are experiencing growing pains when it comes to monetizing content, what does the roadmap look like for the rest of the ecosystem?
Digital disrupting legacy with media company
The TV ecosystem now finds itself at the same crossroads the publishing industry stood at years ago. As publishers adapted to digital advertising, media companies must now adapt to CTV advertising. With it, they must find a way to deliver on the advanced capabilities advertisers have come to expect from digital media.
In this new era of CTV, the age, demo, and rating system on which linear TV was built is no longer sustainable. As measurement for TV has advanced, the industry has uncovered more about the efficacy (or lack thereof) when it comes to selling ad placements based on this data. Selling campaigns based on third-party age and demo data can’t deliver the campaign results that can be achieved with first-party data around context and intent.
As advertisers continue to see firsthand the value of CTV ad capabilities, they’re shifting their media mix away from linear buys. Media companies who are using first-party data and contextual affinity for building audiences will be well equipped to deliver results to advertisers – and therefore revenue to their bottom lines.
Succeeding with first-party data
To succeed as a modern media company, it’s necessary to bring CTV platforms into the digital age. Media companies that continue to operate their CTV environments in silos are actively hindering their own campaign sales, measurement, and most importantly, success. When advertisers have to endure cumbersome processes to set up campaigns or campaigns under-deliver because they’re missing valuable audience members, those advertisers are more likely to reallocate at least some spend into other channels as they seek the best ROI.
Publishing is already reacting to the reality of user consent and opt-out affecting their targeting capabilities and reachability, and signals indicate that the TV industry isn’t far behind, In fact, only about 18% of CTV users report knowingly opting in to targeted advertising. Fortunately, media companies have access to rich, valuable first-party data at scale that they can use to create coveted targeted audiences for advertisers.
Original programming on owned and operated platforms has highly engaged viewers who have specifically chosen to subscribe to and view exclusive content. Some of these programs even draw a fandom culture bolstered by social media platforms. With the nature of second-screen viewing today, CTV media driven by first-party data is more akin to modern digital advertising – and highly effective at driving conversions.
Digital converged audiences built on first-party data provide a holistic campaign solution that drives value for both media companies and advertisers. For example, last year, a media company was able to move from zero targeting visibility on their CTV environments to up to 96 percent targetable inventory. As targetable inventory demands higher CPMs, the company was also able to start selling those placements at higher costs while providing value to its advertisers.
Looking ahead
More than ever, advertisers are looking to spend places where their ad dollars work harder, campaigns deliver against goals, and waste is minimized – all without needing to navigate a complicated and fragmented supply path.
This also comes at a time when respect for user privacy is becoming non-negotiable with interventions from regulatory agencies, tech platforms, and customers themselves. In order to succeed as a modern media company, organizations must prioritize comprehensive campaign experiences via partnerships built on first-party data. By focusing on addressability and the viewer experience, media companies can elevate profitability across entire portfolios.
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