In an era when ad blockers threaten the revenue streams of online media companies, technology has risen to the challenge with innovative solutions. Server-side ad insertion (SSAI) is one such technology that offers a way to seamlessly integrate ads into content streams while bypassing ad blockers. This not only ensures that ad revenue is protected but also provides consumers with a high-quality, non-interruptive viewing experience. In this article, we will explore how SSAI is changing the advertising landscape, its benefits, recent developments, and what the future holds for this technology.
The Rise of Ad Blockers
Advertising is a reliable source of revenue for many online media companies, but the rise of ad blockers could have a significant negative impact. According to PageFair’s 2017 Ad Blocking Report, consumers used ad blockers on as many as 615 million devices globally, and more than half of these were mobile — that’s a 30 percent increase from PageFair’s 2015 report. Additionally, research firm Forrester estimates that in 2016 alone, $20.3 billion in ad spending was blocked. Ad blocking is only expected to increase, and as this trend continues, content providers need a reliable solution to deliver a high quality experience for consumers, while still protecting ad revenue. Enter server-side ad insertion (SSAI), a technology that stitches ads directly into a content stream prior to delivery rather than through the app or browser on a consumer’s device. This technique doesn’t simply bypass ad blockers but also reduces the reason for using them, by ensuring ads are delivered seamlessly. In order to maximize the benefits of SSAI, media companies should think about ads in a new way – as a part of their overall content strategy rather than as an interruption to the viewer experience. Read on for an overview of SSAI and its benefits; the latest developments around this innovative technology, including reduced latency; and what the future holds for SSAI.
How SSAI removes the need for ad blockers
In a conventional system without SSAI, premium video content is delivered via one path, while ads are often “decisioned” and inserted via an independent second path. The two are combined at the consumer end of the delivery chain, where users watch video content. Because the content and advertising are joined at the “client,” viewers often experience interruptions while the app or website orchestrates all the moving pieces. Viewers can experience drops in video quality, black screens, additional video buffering and slower load times. More viewers are bypassing this entire inconvenience with ad blockers, which block that second ad delivery path, while still permitting publisher content to arrive through the primary path. It’s important to remember, however, that consumers don’t necessarily dislike ads, but everyone dislikes a negative experience. In fact, in a recent Moz consumer survey, 42 percent of consumers said traditional advertising, like television or radio spots, had a positive effect on their purchase decisions. That’s a clear indicator that the same consumers who are using ad blockers to quiet disruptive ads aren’t bothered by similar messages through other channels. This is where SSAI comes in. Also called “ad stitching,” SSAI integrates ad content with video content upstream at the server, rather than at the client. It bypasses ad blockers by serving both pieces of content in one package, making it difficult to distinguish between the two. Additionally, because the ad insertion is seamless and part of the overall video stream, consumers are far less likely to have negative experiences as a result of the advertising. Our Verizon Digital Media Services 2016 Quality Matters survey found that 86 percent of viewers say it is very or extremely important to experience TV-like quality every time they watch, on every screen they use. We also found that the average viewing session across all devices falls by 77 percent when there is a significant drop in video quality. SSAI brings increased quality and speed, meeting viewers’ ever-rising expectations. Viewers have responded positively. According to a report from ad tech company Free- Wheel, viewers complete 98 percent of SSAI ads served on OTT platforms.
Greater potential for personalization
SSAI does more than just bypass ad blockers — it also helps advertisers offer more relevant, targeted ads. This is partly thanks to the ability for server-side ads to be dynamically “decisioned” and inserted uniquely and per consumer stream.
For example, an SSAI-based session management tool like our Sigma DAI/SSAI creates a unique session that represents a single user on a specific device. This provides advertisers and publishers with better data — for example, geographic location, device type or historical activity – allowing them to deliver personalization that ensures the right message reaches the right user at the right time. In this way, dynamic ad insertion (DAI) has the potential to help create more personal experiences through enhanced consumer knowledge and targeting. Consumers today expect advertising to be both tailored to their interests and compelling, and the session-based approach lets advertisers meet and exceed those expectations. With both DAI and SSAI, a true one-to-one and seamless video ad experience is possible. Improved content delivery increases engagement for the client, mitigates ad blocking, and ultimately, creates a more valuable relationship between advertisers, publishers and consumers.
Future proofing: What’s next for SSAI
As the technology that makes it possible continues to advance, SSAI is evolving too. For one, it’s becoming simpler to implement. Across the board, SSAI-savvy publishers are migrating to VAST 4.1, which supports advertisers’ growing demand for third party measurement solutions in addition to higher quality user experiences when ads are playing. This is accomplished through a new industry standard for separating the video ad creative from the measurement, verification, and interactivity components that advertisers rely on today to achieve their digital marketing goals. The new standard also enables these capabilities across a variety of platforms, including desktop, mobile, and OTT devices. Using a single video format across all devices, as we do at Thudo Multimedia, greatly simplifies the insertion, delivery, tracking, and reporting of both content and ads.
Another recent innovation in SSAI technology is decreased latency. As RAM storage becomes cheaper year after year, content delivery networks (CDNs) are able to deliver media – including server-side ads – to users more quickly and efficiently. This is especially noticeable when a content creator is relying on one end-to-end CDN to oversee media and ads from start to finish. That means there’s no buffering as the content changes hands, either. We’re also working on facilitating low latency video streaming, complete with full session-based server-side ad insertion. That means delivering content with low latency – 40 percent closer to real time and encoding up to 60 frames per second — all with the full functionality of SSAI.
SSAI isn’t simply the latest innovation; it’s quickly becoming mandatory. As more viewers come to expect the seamless delivery of content and ads, advertisers and publishers that don’t get on board are certain to get left behind.
The Over-the-Top (OTT) market is growing rapidly, with global revenue expected to reach $434.5 billion by 2027. OTT services deliver video, audio, and other media content over the internet directly to users, bypassing traditional distribution channels such as cable and satellite television.
The growth of the OTT market is being driven by a number of factors, including:
The increasing popularity of streaming devices: Smart TVs, streaming sticks, and game consoles are making it easier and more convenient for consumers to watch OTT content.
The rise of original content: OTT providers are investing heavily in original content, which is attracting new subscribers and keeping existing subscribers engaged.
The affordability of OTT subscriptions: OTT subscriptions are typically much more affordable than traditional cable and satellite TV subscriptions.
The OTT market is highly competitive, with a wide range of providers offering a variety of services. Some of the leading OTT providers include Netflix, Amazon Prime Video, Hulu, Disney+, and HBO Max.
Growth Trends in the Over-the-Top Market
A number of growth trends are emerging in the OTT market, including:
The shift to mobile: Consumers are increasingly watching OTT content on their mobile devices. In fact, mobile devices are now the most popular platform for OTT viewing.
The rise of live streaming: Live streaming is becoming increasingly popular, with consumers using OTT services to watch live events such as sports, concerts, and news.
The growth of ad-supported OTT: Ad-supported OTT services are becoming more popular, as they offer consumers a way to watch OTT content for free.
Opportunities in the OTT Market
Content production: OTT providers are constantly looking for new and original content to attract and retain subscribers. This presents an opportunity for content producers to create and sell content to OTT providers.
The OTT market offers a number of opportunities for businesses, including:
Advertising: OTT services offer a number of advertising opportunities for businesses. For example, businesses can advertise on OTT services through pre-roll ads, mid-roll ads, and product placement.
Technology development: The OTT market is constantly evolving, and there is a need for new and innovative technologies. For example, businesses can develop technologies to improve the streaming experience for consumers, or to develop new ways for OTT providers to monetize their content.
Conclusion
The OTT market is a growing and dynamic market, with a number of opportunities for businesses. By understanding the growth trends and opportunities in the OTT market, businesses can position themselves to succeed in this exciting market.
How do you insert ads into your content if you’re streaming video in a VoD environment? The answer is dynamic ad insertion, which lets you serve different ads to different audiences. How does dynamic ad insertion work for VoD? It’s a simple concept that relies on some sophisticated technology.
Quick Takeaways:
Dynamic ad insertion enables the insertion of different ads for different users into streaming video content.
Dynamic ad insertion uses server-side ad insertion (SSAI) technology to inject ads into existing streaming content.
Dynamic ad insertion lets advertisers target personalized ads to specific viewers.
Viewers benefit from seeing more relevant ads in VoD programming and experience a “seamless” stream akin to broadcast viewing.
Advertisers benefit from a more targeted audience and more efficient ad spending.
What Is Dynamic Ad Insertion?
Advertisers have long been able to insert ads into streaming video content, both live streams and video on demand (VoD). Dynamic Ad Insertion (DAI) expands on that concept by enabling advertisers to insert different ads for different viewers.
Lower revenue, poor advertiser quality, and lack of standardized measurement are top advertising concerns today.
Dynamic ad insertion in VOD content.
With the continuing growth of advertising-based video on demand (AVoD) services, advertising has become a critical part of the streaming video landscape. By using DAI, advertisers can target specific types of viewers based on viewer insights and their own campaign goals. DAI even lets OTT services deliver more ads to specific viewers of VOD content or different ads based on the viewing device. It’s all about delivering seamless insertion and personalization of the ad experience for each viewer.
The primary benefit of DAI is that, unlike traditional broadcast advertising, it doesn’t serve the same ads to everybody. DAI allows the microtargeting and mass personalization that viewers demand and that advertisers benefit from. Viewers get ads targeted to their interests and behaviors, while advertisers don’t waste their ad dollars on consumers who have little or no interest in what they’re selling.
How Does Dynamic Ad Insertion in VoD Work?
To deliver microtargeted ads in OTT programming, DAI uses server-side ad insertion (SSAI) technology. Unlike client-side ad insertion (CSAI), which embeds ads at the device and requires two players (an ad player and content player), SSAI intercepts content from the OTT provider and inserts selected ads into the existing stream. This provides a seamless transition between content and advertising and enables the insertion of dynamically selected ads. (in 2020, Pixelate estimated that 40% of streaming ads are delivered via SSAI. Today that number is significantly larger.)
This all works because streaming video assets aren’t usually single files, but rather a flood of small chunks of video. The chunks are sent over the internet from the OTT provider and then reassembled on the viewer’s computer, phone, or media streaming device. A streaming manifest describes the correct sequence for these video chunks, which also plays a key role in dynamic ad insertion.
Dynamically inserting streaming ads with SSAI is a multi-step process that involves several different entities. It looks like this:
How server-side ad insertion works.
The viewer selects a VoD program to watch.
The viewer’s media player sends a request for the VoD program to the OTT service’s content distribution network (CDN). The request includes information about the viewer to enable advertising targeting.
The CDN is configured to use an ad insertion service for its manifests rather than the content originator. It relays the viewer request to the ad insertion service.
The ad insertion service pulls the template manifest, including ad markers, from the content origin server. The ad markers tell the ad insertion service where to insert ads in the program.
The ad insertion service sends a request to the ad decision server. This request includes information about the viewer such as the viewer’s player, the number and length of each ad break, available demographic info, and so on.
The ad decision server uses the provided information to determine what ad(s) to serve for each ad break, then transmits the URLs for those ads to the ad insertion service.
The ad insertion service adds the URLs for the ads to the manifest and sends what is now a complete manifest (content + advertising) to the viewer’s player via the CDN. At this point, every viewer receives a unique manifest.
Playback begins on the viewer’s device.
The viewer sees the ad(s) as inserted into the VoD programming.
The ad insertion service or the viewer’s player generates data about the ad viewership. This data is then transmitted to the ad service for reporting purposes.
How Does a DAI System Decide What Ads to Serve?
One of the key attributes of dynamic ad insertion is the ability to serve personalized ads to individual viewers. It’s this ad personalization that offers value to all parties involved.
How does a DAI system know what ads to serve to what viewers? Ad targeting is part of the overall DAI process, based on information about the viewer provided by the publisher’s viewer’s subscription services on their devices. The OTT provider may know that viewers of a specific gender, age group, income level, and location want to watch a given program. That information enables advertisers, to attach highly personalized ads to programming that matches their viewer targets.
Bidding on specific ad slots is handled via programmatic advertising. Programmatic advertising uses machine learning and other technologies to automate ad buying and serve targeted ads to individual viewers. The State of Connected TV/OTT: Ad Supply Trends Report from Pixelate reveals that programmatic video advertising now reaches 72% of U.S. households.
The entire programmatic advertising process involves OTT providers, supply-side platforms (SSPs), demand-side platforms (DSPs), and advertisers. An SSP is an automated service that lets OTT providers sell their ad blocks to multiple DSPs. A DSP is an automated service that lets advertisers place ads with multiple OTTs via their SSPs. The OTT provider deals with one or more SSP, whereas advertisers deal with one or more DSPs.
The OTT provider tells the SSP what ad blocks are available and information about the program content and viewer demographics. The SSP transmits that information to one or more DSPs. The DSPs use that information to match available ad blocks to relevant advertisers, who’ve targeted the audiences that match what the OTT is transmitting. Advertisers can buy based on pre-determined pricing (Programmatic Guaranteed, DealID based) or, depending on the OTT provider, bid on available ad blocks via the DSP. In either case, the DSP will choose one or more advertisers to send to the SSP for consideration of inclusion in the ad break.
The result is that viewers see personally relevant ads seamlessly inserted into their VoD programming. They get an enhanced viewing experience while advertisers reach a targeted audience and get better value from their ad spend. This also benefits OTT providers, who generate greater ad revenues and keep their viewers more engaged during commercial breaks.
Contact us today to learn more about dynamic ad insertion and SSAI.
The future of television advertising is headed toward addressable marketing. Discover how to leverage these seven essential strategies to harness the advantages of targeted TV advertising.
In the wake of the 2020 pandemic-induced downturn, TV ad spending has not only rebounded but is still on a growth trajectory. Furthermore, the share of investments allocated to targeted TV advertising campaigns within the overall landscape continues to expand. For instance, according to statistics from eMarketer, the total post-pandemic TV ad spending in the United States is projected to rise by 17.7% to reach $93.33 billion between 2021 and 2025. Notably, a substantial portion of this growth is attributed to Connected TV (CTV) campaigns.
The percentage of funds allocated to CTV advertising is anticipated to increase from 16.9% to 29.4%, ultimately reaching $27.47 billion by 2025. It’s important to note that this figure does not include network-sold inventory in addressable advertising, so the actual total is likely higher.
When we extend these figures on a global scale, the potential is staggering. Targeted TV advertising is one of those rare scenarios where all stakeholders stand to benefit. I recently delivered a presentation on this subject at NAB, titled “The Pillars for Building a Successful IPTV and OTT TV Advertising Business,” and our presentation slide aptly illustrates this concept.
From advertisers to broadcasters, service providers, and viewers, Targeted Advertising brings benefits all throughout the chain. But to do that effectively it has to be set up in the right way. Here are seven key attributes you need to consider when it comes to launching your own targeted advertising solution.
7 keys to unlock the future of TV advertising
1. Everything everywhere all at once
You also require a solution that has the capability to accommodate the entire spectrum of advertising formats that can be displayed in the modern broadcast ecosystem. Even if you do not have immediate plans to use all of these formats, you want the flexibility to offer pre-roll, mid-roll, display banners, event-driven banners, content overlays, and more.
In essence, what you’re seeking is a solution that empowers you to facilitate any kind of advertising display on any platform, any service, and on any screen. The television audience has become increasingly diversified over the past decade, and television advertising not only needs to be compatible with a wide array of screens and devices but also adaptable to various viewing modes. From traditional live linear TV to time-shifted viewing and Video on Demand, viewers mix and match different options to suit their preferences and moods. Neglecting any of these options can result in missed revenue and opportunities.
2. Give viewers the choice
One highly effective strategy in the market is to provide viewers with the option to select from different tiers of monthly subscription costs, each associated with a specific ad load. Here’s an example of how these tiers can be structured:
Free Tier: This tier doesn’t require a monthly payment and is supported by multiple pre-roll and event-based ads, along with scheduled mid-roll ads.
Economy Tier: Priced at, for instance, $5 per month, this tier offers a reduced ad load, including a single pre-roll and event-based ads.
Premium Tier: For those willing to pay more, let’s say $9 a month, this tier offers an ad-free experience with no ads.
The free tier essentially serves as a customer acquisition funnel, attracting users who can later be targeted for upselling to the paid tiers. Additionally, it’s possible to introduce exclusive content or features as an incentive for users to upgrade their subscription. This tiered approach provides viewers with choices and allows the service to cater to a broader range of preferences and budgets, enhancing user engagement and revenue potential.
3. Gain meaningful insights
Legislation like the EU’s GDPR has had a profound impact on the ad tech ecosystem, pushing it to rely more heavily on first-party data. First-party data refers to the information a company has about its customers and their usage of its services. The level of detail in this data largely depends on the information collected during the sign-up process. Importantly, it’s crucial to recognize that the data you possess can be leveraged to create even more detailed segments through AI-based data analytics.
By analyzing first-party data, which includes viewing patterns and user profiles, a progressively more granular and insightful picture can be constructed, covering household composition, demographics, and even life events such as the arrival of a new baby or the potential for retirement. This data-driven approach allows for highly targeted advertising and personalized content, enhancing the effectiveness of ad campaigns while still complying with privacy regulations. It underscores the importance of not just collecting data but also harnessing its full potential through advanced analytics to better understand and engage with the audience.
4. Engage!
Data is just numbers until it is use properly, and you want to make sure you have access to the tools that will help you take all this AI-based insight into you audience and use it to boost engagement and grow stickiness with fully optimised and personalised user experiences.
Greater understanding of your audience has twin benefits. From an advertising point of view, optimised audience segmentation leads to more effective advertising and premium ad-tech rates. From an end-user perspective, increased engagement leads to extended viewing time and additional advertising market opportunities. With lead to revenue growth.
5. Don’t limit yourself to a single demand source
One of the big trends in the way that ad-tech is evolving is that the large players are looking to establish walled garden approaches that try to lock service providers into their own end-to-end ecosystem. While there are potentially some short-term revenue gains that can be realised from this, in the long-term it dramatically limits your room for manoeuvre in what is a dynamically changing system and potentially minimises your revenue potential. The best way of maximising your CPM is by combining competing ad sources, making sure you get the best price for your inventory at all times.
6. Mind the gap
TV 2 Digital is a new framework that is just starting to be deployed in the digital advertising arena by companies such as AT&T that unites the TV world with digital platforms to provide a holistic campaign that stretches across them. More than that it also allows brands to produce sequenced campaigns that target customers with new messaging as they progress along the customer journey.
For example, say in Week 1 a viewer watches an ad on a TV screen. We know they have watched the ad, so on week 2 we can serve a follow up ad to them, also on the big screen. Then, in week 3 we implement second screen activation, and follow the first two ads with a new one that appears while viewing on their smartphone.
7. Stay lean and scalable
TV 2 Digital represents an innovative framework now emerging in the digital advertising landscape, with companies like AT&T leading the way. It effectively bridges the gap between traditional TV and digital platforms, creating a comprehensive advertising strategy that seamlessly extends across both domains. What’s even more exciting is its capacity to enable brands to orchestrate sequential campaigns that adapt to customers as they journey through the advertising experience.
For instance, consider a scenario: In Week 1, a viewer watches an advertisement on their TV screen. With confirmation that they’ve viewed the initial ad, in Week 2, we can deliver a follow-up ad to them, once again on the TV screen. Then, in Week 3, we introduce second-screen activation and follow up with a fresh ad that appears while they’re using their smartphone. This dynamic, multi-platform approach empowers advertisers to engage customers at various points along their journey, enhancing the overall effectiveness of their campaigns.
7 keys, 1 action
The time to get involved in targeted TV Advertising is very much now. Technological development in the video industry as a whole is accelerating rapidly, and the ad tech technology stack is perhaps evolving even faster. Both also have to cope with dynamically changing consumer demand, which leads to not one but several sets of shifting goalposts.
Keeping these 7 keys to success in mind though will help ensure that you are not just getting ahead of the curve, you are hitting it at just the right moment with just the right tech stack. Wait too much longer, and the chances are high that the opportunity will start to diminish at the same time as the expense of playing catch up starts to increase.
Industry Insights: New research shows that there is still plenty of headroom for OTT growth even in saturated markets, while we now have a better understanding of the composition of European OTT content libraries, and The DPP sets the industry mood music for the year.
Aggregation helps drive OTT subscriber numbers
While it is often tempting to think of OTT markets rapidly becoming saturated, study after study constantly finds headroom in even the most crowded marketplace.
As Rapid TV News reports, a new study from Parks Associates has found that 60% of Pay-TV subscribers, accounting for nearly half of US broadband households, are interested in streaming films and TV shows from an online video service as part of their Pay-TV subscription. What’s more, Pay-TV providers are responding to this demand, as the number of pay-TV consumers who receive online video services jumped nearly 50% in a year.
The average number of OTT services among households that have any OTT service was found to be 3.8, while the data shows households with Pay-TV services plus at least one OTT service subscribe to 4.2 OTT services on average.
“Parks suggested that pay-TV providers must keep offering their most valuable content, which includes live sporting and cultural events,” writes the website. “Additionally, it advised operators that they must offer access to streaming, target new services to their interested customers, and perhaps be willing to take a hit on pricing until this [current] chaotic market stabilizes.”
Meanwhile, and not unrelated, data presented by stocks analyst Trading Platforms shows that Netflix still has potential for growth in the US (and, by implication, elsewhere in the world).
The SVOD giant currently has 66m subscribers in the US, approximately one-third of its global total. Trading Platforms extrapolates that to 168.9m unique viewers per month and reckons that will grow to 182.2 by 2024, an 8% increase. Subs will grow in turn to 71% by 2025.
Amazon is currently the second-largest SVOD provider in the US and will remain so, increasing its subscriber numbers to 59.8m. Hulu’s growth is impressive too as the chart below shows, rising to 49.5 million.
But it is Disney that produces the most arresting figures, with Disney+ going from a standing start to 49.8 million subscribers by 2025. That is up 118% over its 2019 already impressive debut. By the end of 2020, 72.4 million people were already tuning in at least once a month.
And while we are talking about markets and subscribers, it is worth mentioning new research that shows insights into the behavior of SVOD subscribers through the lens of what sort of moviegoers they are.
“Cinema power users are subscribed to 50% more SVOD services than infrequent goers, rent twice as many new movie releases, purchase three times as many new releases, and are around three times as likely to pirate content from unauthorized sources,” writes Digital TV Europe.
That said, it’s worth noting the YoY change across the categories for piracy in particular. It is down for the power users but up 28% YoY to just under 24% of all cinema goers, a much larger number of users, and an indication that the problem of content piracy in lockdown has not gone away.
Mapping the European OTT industry’s content libraries
The European Audiovisual Observatory has just launched its latest round of figures and, for the first time, is including television content — both series and TV films — in its LUMIERE VOD database.
As its headline for its announcement of this says, it has uncovered the fact that 44,000 European films and over 12,650 European TV seasons are currently available on a total of 462 VOD services in Europe (138 TVOD and 324 SVOD catalogs). This is a lot of locally produced content, especially given the perception of US dominance in the OTT market. But it arguably gets even more interesting when you dig down into some of the details.
Here are our key takeaways from the figures.
The UK still dominates European TV
The European market has four main content producers, the UK, Germany, France, and Spain. However, the presence of UK-produced content is highly disproportionate to its size. The United Kingdom leads the pack with 44% of all content, followed by Germany (17%), France (9%), and Spain (6%). Together these four provide three-quarters of all available European TV titles on VOD.
A surprising lack of TV co-pros
While the film market featured 30% co-productions with other countries, only 12% of all European content was produced this way. The main secondary co-production countries are the United States and Canada.
Children’s content dominates
9 out of 20 of the Top 20 European TV titles present in catalogs were children’s animated series. Peppa Pig dominates, found in 69 separate catalogs in 20 countries, with the rather more adult-themed live-action Irish/Canadian co-pro of Vikings not far behind. The cultural phenomenon that is Lego enabled Denmark to snag four positions in the Top 20 with its Ninjago: Masters of Spinjitzu.
Age is no barrier
The average year of production for the Top 20 library content was 2011, though catalogs tended to trend much older than that and the average year of production of all TV seasons found on VOD in Europe was 1987. However, it’s worth noting that 60% of TV content was less than 10 years old, and it is largely outliers such as David Attenborough’s landmark BBC Zoo Quest series (1954) dragging the average down.
Assessing the mood of the industry
Some interesting insights into the year ahead come from the industry body, The DPP. Each year it considers five overarching themes, which it dubs the mood music of the year, that it thinks will inform media businesses in the year ahead.
In previous years when it has done this, you can detect a slow and steady evolution from one year to the next. Unsurprisingly, 2021 is a bit different, and the mood music selected for this year is in places wholly new.
Values
The articulation of business values, and the need to act upon them, is becoming increasingly necessary to attract, maintain and motivate employees on the one hand, and to stay relevant to customers on the other. Sustainability was the value that first broke through at the board level, but this is being joined by diversity and inclusion, wellbeing, trust, and social responsibility.
Data
Understanding the way the pandemic has reshaped the industry needs careful analysis, and companies are increasingly looking at data to provide far more nuanced views of business matters than before and inform the changes they need two make in the future.
Innovation
“Innovation is no longer a choice,” says The DPP, arguing that companies have to innovate if they are to maximize the opportunities that exist in the current slowly post-Covid market.
Adaptability
The DPP’s thoughts on this are worth quoting directly to pick out the subtleties over previous years.
“Over the years, we have seen the mood music theme of speed give way to one about agility. This refinement noted that going faster wasn’t always the appropriate response; sometimes the need is more to be highly responsive.
“That notion has been refined again this year. Many wanted to capture the widespread need for flexibility which has come with both difficult economic circumstances and the need to innovate. The notion applies both internally and externally.
Resilience
The ability to simply maintain business operations despite everything else currently going on.
The organization has also made some more straightforward predictions too, including the increased use of AI and automation and the growing importance of cybersecurity, and we’ll probably have a look at them in detail next time.
The rise of Targeted Advertising (TA) in 2023, with solutions like Sigma’s Targeted TV Advertising, offers a ray of hope amid the challenges faced by broadcasters and operators. While the industry witnessed record-high viewership during lockdowns, the revenue from advertising, a crucial part of the sector, took a hit.
Nevertheless, there’s a sense of optimism in the industry. TA solutions, which deliver ads tailored to consumers’ individual interests, even down to the household or individual level, are gaining mainstream acceptance. While TA’s share of the overall ad spending remains relatively small, its growth trajectory continues upward, despite the impact of the COVID-19 pandemic. Notably, eMarketer predicts that Connected TV (CTV) ad spending in the US will surge from $8.11 billion in the previous year to $18.29 billion by 2024.
2023 Vision — Targeted Ads come of age
While the United States is undeniably a significant hub for the growth of Targeted Advertising (TA), recent months have witnessed a surge in TA activity on a global scale, encompassing Europe, APAC, Latin America, and various other regions.
In the final months of 2023, Europe alone witnessed a flurry of developments: UK commercial broadcaster ITV unveiled its Planet V platform, FranceTV Publicité and Orange launched pioneering linear campaigns in France using TA, Molotov, a French OTT live and catch-up TV platform, introduced the new AVOD service Mango, and Movistar rolled out a TA service on channel #0 in Spain, with plans for expansion in 2021. Notably, similar initiatives were initiated by Mediaset in Italy, Proximus in Belgium, RTL in Germany, and a host of other projects globally.
Broadcasters across the world are either introducing standalone solutions or forging strategic alliances, such as the collaboration between rival Pay-TV companies Sky and Virgin in the UK. Simultaneously, ad tech companies are experiencing a comparable surge in activity. Samsung, for instance, made its Connected TV (CTV) inventory programmatically available through SpotX ahead of schedule in response to increased viewership during the Covid pandemic. LG, on the other hand, invested $80 million to acquire a controlling stake in TV ad data firm Alphonso, with the objective of establishing a first-screen, cross-device advertising platform complete with integrated analytics.
As previously mentioned, the interest in Ad-Supported Video on Demand (AVOD) has seen a substantial upswing as audiences seek fresh content without incurring premium costs. Projections from Digital TV Research indicate that the AVOD market is set to grow by 120% from 2019 to 2025, jumping from $24.3 billion to $53.5 billion, and contributing 32% of total OTT revenues.
With an ever-increasing number of viewers turning to Connected TVs (CTV), exceeding 50% in select countries, and a surging demand for AVOD-driven content, the structural dynamics of the broadcast industry are shifting towards streaming as the dominant mode of consumption. Consequently, advertisers are increasingly keen on replicating the successes they’ve achieved on digital platforms within the realm of television.
SpotX, a prominent player in the evolving ad tech industry, highlights in its Global Video Advertising Trends 2021 survey that ad spend is aligning with evolving consumer behavior, and it’s gravitating toward OTT and CTV at a pace faster than previously anticipated.
The challenge of complexity
The rich opportunity of Targeted Advertising
One of the limitations that operators face when looking to enter the market, however, is complexity. A research study in 2019 discovered that marketers have an average of 28 different technologies in their ad tech stack, with 70% believing that number would grow over the following three years due to the complexity of the advertising ecosystem. It would be hard to argue they are wrong.
Even narrowing the discussion down to the television space, there are a large number of competing technologies, standards, and solutions that operators can choose from. In most territories, there isn’t a clear market leader and the choices become complex.
An illustration of the difficulties here is offered by the efforts at industry standardization with at least one high profile project moving into a key phase. The DVB and HbbTV have been working together to build the forthcoming DVB-TA specification, and indeed we have been a part of these efforts at VO (you can see our recent presentation at the DVB Demos day in November last year here).
Currently, work on the DVB-TA specifications ecosystem continues within the DVB Project. This includes the implementation of SoME (Signalling on Media Essence), where audio and video watermarking are used to signal targeted advertising replacement opportunities present in supported legacy STBs via a broadband connection.
The operator opportunity in the ATV market
If that complexity can be addressed, and it can, targeted advertising provides multiple new revenue opportunities. The headline is of course the possibility of ad replacement in linear primetime, which allows operators to increase the number of ad slots without increasing ad load; charge premium rates for them; and decrease churn as viewers have been shown to respond more favorably to targeted ads.
But there are other significant opportunities as well, especially when you consider that, with their first-party data, operators have everything they need to start making money now.
Additional opportunities include:
Leverage the UI – Operators can increase inventory still further by serving ads within the UI of their apps. This can be further explored when the user is actively interacting with the UI, such as when browsing content.
Catch-up content – As we wrote in Time is Money: the hidden revenue potential of time-shifted viewing, operators can use TA technology to serve ads attached to catch-up content. With more viewers watching more minutes of catch-u every year this is a powerful proposition
Self-promotion – With many companies in the OTT sector offering triple-play services and more, TA provides a valuable route to increasing the efficiency of their own promotions, both for additional services and for specific content
Freemium to premium- Operators can offer free (or almost free) content access, backing it up with significant ad revenues, to increase their market penetration and OTT migration, and create leads that will become premium customers in the future
It’s also worth pointing out that there are solutions on the market, such as ours, that do not require the latest equipment to be installed in viewer’s homes to make this happen. 50% or more of viewers worldwide are watching television on legacy devices that do not necessarily support OTT services, and this is an audience that needs to be reached for maximum benefit.
Targeted advertising works both with and without inventory. Operators with existing inventory can offer creative monetization options enabling them to optimize between their different monetization channels and on top of that use AI-based insights to increase the efficiency and scope of their segmentation. This boosts reach and revenues as a result. For operators without inventory, an off-the-shelf smart infrastructure enables them to connect with various TV channels and support multi-ad servers. This allows them to leverage their existing first-party usage data to offer attractive segmentation to advertisers, while also supporting and measuring ad-insertion.
And with Sigma SSAI, in particular, providing a rich opportunity for the launch of new services to capture audiences hungry for increasing amounts of content, it seems there is no better time to adopt a technology that satisfies both advertisers and audiences alike.
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