The Future of Connected TV

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It wouldn’t be an AppNexus Summit without a session on video, and our most recent Summit on the Future of Trading was no exception. Our video experts, Eric Hoffert, SVP Video Technology, and Michelle Smith, Senior Director of Product Management, were joined on stage by comScore, Tru Optik, and others as we demoed new capabilities and made several exciting announcements.

The focus of the session? Connected TV (CTV): what you can do today, what’s on our roadmap, and what the future might hold.

 

Get the scoop on CTV

 

It’s an especially exciting time for this emerging channel, as penetration continues to deepen – for instance, more than half of the U.S. population now owns at least one CTV device.

As the audience grows, we’re seeing a major rise in OTT (Over The Top) content. OTT content refers to anything that can be streamed without a cable or satellite TV box and represents most of the video content that is streamed to CTV devices. In 2015, advertisers spent $8.4 billion on OTT. By 2018, that number is expected to jump to $31.5 billion – a 275% increase. Over the same period, broadcast TV ad spend is expected to reduce by 20%.

Broadcast TV has long been the preferred way for brands to reach engaged audiences at scale with high-quality video content. But these data points suggest that’s changing; in fact, they suggest we’re approaching a crucial tipping point. While more and more cord-cutters swap broadcast for CTV, we’re also beginning to see the emergence of “cord-nevers” – younger consumers who never had broadcast TV to begin with. This audience growth, combined with CTV’s ability to deliver ads programmatically, has advertisers excited.

But we need to solve three key issues before advertisers can completely take advantage of this key new channel:

 

  • Premium Supply: Advertisers need easy access to premium publishers on CTV at scale.
  • Audience Targeting: They need ways to leverage data to target specific audiences and measure results reliably – as a digital channel, this should be a key advantage for CTV over broadcast.
  • High Definition Creatives: They need the ability to display high-quality, HD ads with low latency.

 

During our Summit session on CTV, we made announcements on how we’re addressing each of those topics.

 

Premium supply access

 

Advertising isn’t just about reaching the right audience with the right message. It’s also about reaching people in the right context next to high-quality content produced by well-known, respected publishers.

CTV is no different in this regard – advertisers need access to premium supply in order for the channel to take off. Until recently, that’s been difficult to achieve programmatically on CTV. While direct sold deals will continue, the opportunity to buy inventory programmatically in private marketplaces is becoming more common. We’ve seen some CTV publishers leverage programmatic to monetize as much as 80% of their inventory.

Given this demand for quality CTV publisher supply, we announced programmatic access to several premium CTV publishers. This includes broadcasters with TV network-specific apps like A&E Networks and Discovery (available on AppNexus via Freewheel), ad-supported OTT streaming services like Sling TV (via Telaria), and specialized CTV apps that provide free ad supported movies, TV shows, and news, such as TubiTV, PlutoTV, and Newsy (all direct integrations with AppNexus). Inventory for these publishers and many others is now readily available programmatically on the AppNexus platform.

 

Audience data and targeting

 

A key advantage of digital advertising is that it makes it easy for advertisers to leverage data to target their audiences — that advantage holds true for CTV when compared to broadcast. Targeting on broadcast typically entails looking at the viewership demographics for different programs, while CTV promises the opportunity to tailor ads to each individual watching. Not only that, but CTV also gives advertisers the ability to harness data and granularly measure the effectiveness of those ads.

Until now, these capabilities have been theoretical benefits of CTV that we didn’t yet have the means to realize. But that programmatic promise is becoming reality through our partnership with Tru Optik, the leading data management platform for OTT TV.

More specifically, we’re integrating with Tru Optik’s OTT Marketing Cloud, which makes over 10,000 CTV audience segments available for targeting on the AppNexus platform. To mark the occasion, Tru Optik CEO Andre Swanston joined us on stage to talk about the different CTV targeting, attribution, measurement, and data management capabilities coming to the AppNexus platform thanks to this partnership. Highlights from Andre’s session include an explanation of the Tru Optik household graph, which assigns a unique OTT user identifier to every household in the country that accounts for all possible devices including mobile phones, gaming consoles, and CTV devices. Andre next invited Aaron Fetters, comScore’s SVP of National Agencies and CPG Business to talk about comScore’s Total Household Panel, a method for measuring OTT usage by consumers, and how it is integrated with Tru Optik to support in-demo targeting on Connected TV (i.e., age and gender audience matches).

 

High-quality video advertisements

 

Finally, in order for CTV to take the torch from broadcast as the primary medium for video advertising, we need to ensure that ad content looks great across all CTV devices.

This is considered table stakes for TV advertisers – after all, when’s the last time you saw an ad on broadcast TV that didn’t fit your screen or took a noticeably long time to load? You may not yet see that degree of consistency for programmatic CTV ads, where technical hurdles are still being addressed for advertisers to match the quality of their broadcast ads. But the gaps are closing quickly.

We’re focusing on this topic with several new product updates, including:

 

  • AppNexus Apple TV SDK. Publishers on Apple TV – one of the more popular CTV devices worldwide – can now use an AppNexus SDK to monetize with high quality pre-roll ads via VAST creatives and podded ad slots resembling traditional commercial breaks via the IAB VMAP standard.
  • Targeting Ads in Commercial Breaks. APP clients can now target ad slots during commercial breaks in long form content from AppNexus publishers – be it the first slot, last slot, or any slot in between.
  • Support for HD video files on CTV. Advertisers often repurpose their desktop video ads for CTV, even though they’re likely to be viewed on an HDTV or similarly equipped screen. With our latest update, advertisers can make use of an API to include large file size HD video in VAST creatives, so ad content looks great on high definition screens.

 

These updates are another step toward making CTV ads just as engaging as the broadcast TV ads consumers already know and love. You can see Michelle Smith discuss each of these developments here and here.

 

Step into the future of video advertising

 

Video has always been considered a powerful way to tell a story as an advertiser, and we don’t anticipate that changing any time soon. The key difference is that CTV is starting to become a viable way for video advertisers to reach consumers on the big screen in the living room, and we expect these announcements to help accelerate that change.

Filed under AppNexus Updates, Technology.

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