This text is based on a talk Cameron Church gave at the Future of TV Advertising Global event in December 2022.
Read the full article below, but first, here’s the video:
Surviving CTV’s Awkward Adolescent Phase
The past two years have witnessed an explosion of ad funded streaming services. Viewers are inundated with choice from FAST (Free Ad Support TV platforms) on the one end of the spectrum to hybrid [HVOD] offerings – that mix lighter ad loads and lower monthly subscription pricing – on the other.
To help us navigate this rapid expansion, let’s look at this through the lens of what it was like being a teenager.
Most of us will remember the highs and lows of growing up: the sudden (and sometimes severe) physical changes to our bodies; the onset of more advanced, often overwhelming, emotions; new social arenas and constructs leaving us with identity crisis’, and existential challenges. All of which one must endure and complete before reaching the promised land of adulthood.
It’s a tough age indeed.
These same challenges, in their own way, are on show in the streaming industry as it endures its own adolescence.
The growth spurt
Kicked off primarily by the COVID pandemic, streaming video’s growth spurt has tripped up many players in the industry, with a substantial and unexpected rate and size of change.
CTV is forecast to take over one third ($38 Billion) of ad spend by 2026. This is double the growth from 2022.
With a Compounded Annual Growth Rate of nearly 20%, this is gold rush stuff. Very few in the industry would have predicted this prior to the pandemic.
But, much like a teenager’s gangly limbs, it’s far from a uniform expansion. Growth is coming not from new households spread out evenly across the country, but from adoption of new devices – and younger demographics. This introduces significant technological and operational complexities.
So it’s not just a matter of needing to be ‘in it to win it’. Publishers and advertisers alike need to join the dots, and discover ways to connect their audiences and their goals.
They need to work smarter.
Relevancy, context, and attention are all new words entering the trading lexicon. Growth will require adoption of automation in all manner of workflows, moving humans from the operating seat to the supervisor’s chair.
One way this could manifest is programmatic trading. Contrary to what you might have heard, data from our platform tells us that programmatic deals still make up only a fraction of CTV ad sales. Much like pre-teen children, there is promise in programmatic, but it’s yet to live up to its potential.
Audiences for streaming channels are fickle. They are easily influenced by online icons, and more loyal to the content they like than the provider of that content. As increased subscriber churn has shown, lose viewers and it’s unlikely that they will come back anytime soon.
Talk about trying to be part of the ‘in-crowd’ at school.
Publishers are not only competing with their usual contemporaries and suffering costs that are ‘shooting through the roof’, but also a new wave of streaming natives that produce content from ‘inside their platforms, out.’ They are attracting larger and larger audiences that, while watching their content, are not watching yours.
Everyone wants to be their friend. Everyone wants to be invited to their party.
One advantage the big streamers have had to date has been extraordinary production values. But with a squeeze coming for commissioning budgets, it looks like even that is under threat.
And just as things couldn’t become more challenging, many publishers and advertisers have to answer to their helicopter parents – their shareholders.
Playing out in a dystopian ‘Mother-and-Father know best’ style, shareholder activism (like that underway with Disney) further destabilize businesses. It casts doubt, distracts and introduces second guessing across their business while they try to grapple with new regulatory, technological, and operational paradigms.
For the next two to three years the industry will continue to grow before reaching adulthood. During this time it will likely be a bumpy and tumultuous road. We’ll trip over our own feet a few more times, and experience growing pains as we adapt to new formats, behaviour and technology.
Publishers and advertisers will both need to continuously evolve all aspects of their business to fully capitalize on the potential wins, and become fully functioning adults.