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When CTV Supply Outstrips Demand: How to Thrive in a Competitive Market?

Unlike many ad channels suffering due to COVID-19, connected TV remains on the rise. Specifically, 2020 has marked the beginning of the end of linear TV, with CTV becoming the #1 place where viewers go for video content. And they’ve brought advertisers with them: according to Pixalate, global OTT/CTV programmatic ad spend grew up 70% over 2020 and up 119% vs Q3 in 2019.

These figures may sound heart-warming for CTV video publishers, watching their audience arrive and attract more interest from advertisers. But they face stiff competition from other publishers as supply outpaces demand. That’s just one of the pain points facing publishers this year, along with a lack of supply path transparency and limited revenue opportunities. In turn, advertisers who are ready to pour their ad dollars into CTV are also facing their own difficulties. What specific challenges do both programmatic sides have to meet to fully embrace the benefits of the CTV environment? 

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Advertisers’ pain scale

According to eMarketer, CTV ad spend will reach almost $11 billion by 2021. Advertisers who have already embraced the power of CTV appreciate its flexibility, targeting, and reach. Yet advertisers also face a list of hurdles. Here are some of the most crucial ones:

  • CTV inventory is not easy to buy, which is one of the biggest challenges advertisers face due to inventory fragmentation. To purchase CTV inventory, media buyers turn to numerous sources and platforms, like streaming device manufacturers, smart TV providers, DSPs, and others, each of which comes with their unique propositions, like access to the 1st-party data, a brand safety toolkit or premium demand.
  • The risk of ad fraud. As advertising interest and spend on CTV inventory grows, so is the attention of ad fraudsters following the money. According to Pixalate, programmatic OTT/CTV ad fraud is hovering around 20% this year. Bad actors selling fake inventory are attracted by the increasing supply, and the lack of CTV ecosystem transparency. 
  • Lack of unified measurement. Connected TV provides advertisers with advanced targeting opportunities, letting them effectively implement their omnichannel campaigns. However, since CTV is a relatively new channel, it still needs work to establish better measurement unification and metrics standardization to help advertisers unify inventory sources, define their audiences, and the impact they have across CTV. 
  • Brand safety issues. Brand safety has been a concern for advertisers for a long time, as buying CTV inventory through programmatic channels often means low-to-no awareness of the content and context the ads are running against. This is mainly because publishers don’t pass this information through the bid stream for privacy reasons.
  • The scale of CTV inventory available through DSPs. DSPs may not have access to all available CTV inventory, since media owners can provide only what they consider most valuable for their advantage. 

Hurdles that keep publishers up at night

Publishers have their own list of pain points that relate to selling CTV inventory.

  • Supply outstrips demand. CTV publishers are up against increasingly stiff competition, especially as industry titans like Google, Amazon, Facebook, and Apple look for ways to consolidate the ad tech landscape, build closed ecosystems, and expand their market dominance.
  • Lack of supply chain transparency. With numerous mediators standing in the way of advertisers and publishers while nibbling on ad budgets, up to 50% of ad buys vanish before even reaching publishers. Thus, instead of promised clarity and maximum yield, publishers pay numerous hidden fees. Sometimes, they even remain completely unaware of the fact they just paid some middleman’s commission.
  • Limited revenue opportunities. One factor contributing to  supply chain opaqueness are indirect deals, leaving publishers with crumbs of revenues and the inability to make the most out of their CTV inventory potential.

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A cure for what ails advertisers and publishers

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Ad tech participants from both sides should join forces to combat the challenges they face with CTV, and to contribute to the development of this channel. And while some of these measures will take time, there are several ways advertisers and publishers can make their CTV ad buying and selling experience better today.

Pain relief for advertisers

To start with, it’s essential to focus on direct deals. Buying inventory directly from platforms, device makers, and CTV publishers may cause some inconveniences, but it empowers advertisers not only with better transparency, brand safety, and ad spend control, but also lets them access valuable first-party user data. 

Also, leveraging Automatic Content Recognition (ACR) data serves as the way to better measurement unification. With this identification technology, advertisers can truly measure their CTV ad performance and get insights into viewing behavior. 

Immediate solutions for publishers

Today IAB provides a whole set of solutions, like ads.txt, ads.cert, and more, aimed at bringing more transparency, brand safety, and awareness of ad spends. Publishers are among the first to embrace these standards and encourage advertisers to interact only with authorized partners. 

It’s equally essential for publishers to establish direct partnerships. By eliminating numerous intermediaries, they can eventually raise their total revenues and reach fair collaboration with the buy-side.

Moving towards thriving on competition

Connected TV, as a growing channel, still requires more transparency and standardization. By consolidating efforts, embracing best practices, and focusing on building a transparent environment, both advertisers and publishers can get the most out of CTV advertising in the short term, and contribute to making the whole ad tech industry a better place in future. 

Advertisers can leverage direct partnership models and other measures aimed to improve transparency to better know where their ad spends flow. And in turn, publishers will receive their well-deserved revenue for their inventory, without paying any opaque fees.

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