To incorporate the shifts in online video and TV, agencies and advertisers are having to rapidly adapt to the fast moving media planning and buying landscape. Automated buying in the linear space has become market-demand and the pressure to retain the linear audience intensifies as people are increasingly consuming cross-device and on-demand. As a result, the importance of convergence of online video and TV inventory is paramount.
There’s a lot to wrap your wires around. MCN’s national digital sales director, Nick Young, says MCN talks a lot about how it can learn from what digital has been really successful at – dynamic trading, deep-reach targeting and data products, and then how it can apply those metrics and business practices to television.
“You’ve got these two colliding worlds – one trying to take capability from the other. You’ve got this parallel vision going on from Netflix and at the same time you’ve got Facebook and Instagram and YouTube talking about the death of television, while also at the same time dogmatically wanting to become television," Young says.
MCN’s national sales director, Mark Frain, says it’s about bringing “sexy” back to TV.
“We see that redefining television opportunity, and for want of a better term, to bring the sexy parts of television that would have been farmed out to digital for the past five years, back into television and redefining it beyond the typical $3 billion metro TV business it is,” he says.
Sifting for gold
“It’s probably more like a $4.5-5 billion industry of free-to-air, but also subscription television and premium online video - it’s a much bigger industry. If you actually look at it, television hasn’t changed, it’s the distribution of TV that’s changed," Frain adds.
When it comes to looking at inventory and what’s out there, senior director of programmatic TV at AOL platforms, Yasmin Sanders, says while we live in a supply constrained market for premium quality content, there’s a lot of content out there, but not necessarily the type brands would like to align themselves with.
“In addition to catch-up, utilising inventory whitelists and selecting large player and detected viewable are all types of buyer preferences and controls that regulate inventory quality. As ad tech evolves, we’re seeing more transparency around quality and delivery, particularly across mobile devices and specifically in app, which has proved problematic in the past,” Sanders says.
TubeMogul MD, Sam Smith, sees the dominant format in video as desktop pre-roll video, but says the business is seeing strong growth in mobile programmatic volumes. It also expects to see interactive pre-roll video come to the fore in the next year.
GroupM’s chief digital officer, John Miskelly, says quality online video is a little bit like “sifting for gold” as there is some inventory that appears before high quality TV-style content, but there is a high level of fake and fraudulent inventory available on open exchanges. He believes smart buyers understand the dynamic between price, quality and viewability and that quality means ticking all three boxes.
Starcom MediaVest Group (SMG) national investment director Andrew Taylor agrees that quality inventory is relatively sparse, but says there is a big difference between catch-up and reach online video trading.
“The quality and availability varies enormously,” he says. “In theory there is an infinite amount, however, when you apply brand safety constraints the marketplace starts to become a lot smaller.”
Head of product strategy APAC at Videology, Chris Mooney, says given quality inventory is constrained, especially in ad exchanges, clients are increasingly trading upfront with premium Australian publishers. He says there are around 43 million broadcast quality streams a month in Australia, and in particular, the platform is seeing significant growth in mobile video too.
Carat’s head of investment in Melbourne, Paul Wilkinson, adds that while capacity of the ‘top tier’ video providers is limited and ultimately needs to increase – currently the long tail of online publishers is helping to fill the void left - the overall reach of these sites is somewhat hindered by their very nature.
On the subject of real-time bidding (RTB) with video, following conversations across media agencies, ad tech vendors and publishers, it seems as there is such limited inventory, an auction environment is just not warranted.
Channel neutral reach
Former GroupM investment officer, Danny Bass (soon to be CEO of IPG Mediabrands), caused a stir earlier this year as the group was entering its annual upfront negotiations with TV networks, saying this was the year “the model breaks” for FTA networks as clients and agencies shift money from TV budgets into digital. As to shifting TV budgets into video, Mooney says Videology is seeing it as less of a shift and more of a centring around agencies planning for channel neutral reach.
“It’s about reaching audiences wherever and however they are consuming TV content.
It is less a case of agencies looking to video to add incremental reach and more a natural evolution in response to consumer behaviour,” he says. “While broadcast quality content is still constrained, this is changing and agencies are trading to create a portfolio of premium inventory to meet the needs of their campaigns.”
Sanders says an additional $40 million from TV into the market would see increased upward pressures on CPMs for true premium, brand-safe environments, but the space is definitely supply restricted. Since mobile is where consumers spend the most time, it can expect ad revenue to follow.
“While the measurement of success metrics are still siloed, we’ll continue to run into this issue [of inventory capacity]. However, the goal is to be able to buy across audiences regardless of mediums, thus removing the issue of capacity,” she says.
If agencies or clients even wanted to shift 10% of TV budgets into online video, is there the capacity? Carat’s Wilkinson says the simple answer is “yes”. “I believe there is capacity – we already spend the equivalent of 8% of TV monies.
Looking at SMI spend data, and with overall media spends plateauing over the last three to five years, you would have to assume that the monies allocated to online video have come from print media rather than traditional TV.”
Taylor says it is a vital offering, but many things need to be considered. “The next 18 months will be game changing. Never has there been a more exciting time for consumers, advertisers, media agencies, creative agencies or content publishers in the screen space.”
Turf wars
On the inventory planning side of things, agencies are both wrestling with where to spend client budgets, but also which teams are responsible for planning it; does online video fall to the digital teams; or is it an extension of TV buying teams’ remit? All agencies are at very different stages of their evolution and all are attacking it very differently.
Sanders says initially they were seeing online video planned and bought alongside digital display and often this was where budgets were taken from. Now, they are starting to see it planned alongside TV.
“It feels like we’re still some way from an all-screen planning strategy across most agencies,” she says.
Carat’s Sam Hegg says all agencies and clients have had a legacy on some level of planning TV to the point of diminishing returns then ‘adding’ online video on top to gain a couple of percentage points of incremental reach.
“We have shifted to a consumer-first perspective by using our proprietary tools to understand consumer consumption, engagement and reaction to different screens, formats and platforms to determine the most effective mix across screens to deliver the marketing objective,” Hegg says.
Frain says MCN is of the view that ultimately one system, where an agency or person can go into that platform and buy all parts of television, FTA, subscription TV and online video, all through one interface, could be the way forward. A not so subtle insight into MCN’s tie-up with Foxtel and Ten.
On the subject of all screen media planning and buying across multi-screens and the issue of converged TV and digital video planning, TubeMogul’s Smith says some agencies are moving quickly, especially those which have expertise in programmatic digital video trading.
“The reality is TV networks and content owners will push the agency trading desks forward, along with the brand advertisers, as they will lean on the trading desks to provide data and software expertise,” Smith says.
Mooney adds that TV traders are becoming screen traders, trading desks are being upskilled in the lexicon of TV, and software used by TV departments is being used to power converged TV planning and buying.
Wilkinson says that while some agencies are ahead of the curve with this convergence, “those that resist change will likely be left behind”.
SMG claims all planning and buying is focused on screen convergence and its screen division sets it apart from the competition. It claims to have a “fluid investment model” and works towards a flat trading operation.
At GroupM, a lot of online video campaigns are executed by what were the traditional TV buyers, something Miskelly says allows for a consistent conversation around measurement and campaign performance.
Warning over walled gardens
Miskelly says we are at an interesting crossroads in regard to automated (not programmatic) TV and we could see the single greatest efficiency play in the history of media buying.
“However, we have the potential to get it all wrong with buyers and sellers executing through multiple walled gardened platforms and using multiple measurement methodologies to verify audiences.
This would create extreme market inefficiencies and confusion,” he says.
He adds that programmatic video in Australia is fairly sophisticated as all publishers (with the exception of Google) have made their inventory open source and accessible via any video DSP.
“When done properly, this gives agencies the opportunity to take forward positions on highly sought, scarce inventory and allows them to portfolio manage brands through realtime allocation. The impact will be delivering higher campaign performance and greater operational efficiencies.”
The publishers' view:
Head of digital sales strategy at News Corp Australia, Cameron King, says about 80% of its video inventory focuses around short-form video and is largely consumed around its news and information hubs/titles. However, plans are in the works to branch out from this and explore various other verticals. News has also acquired video ad tech company Unruly as it looks to boost its offering in the growing digital video advertising space.
The publisher is also utilising News Corp Studios - its content and marketing unit announced during its July upfronts - to create brand-led bespoke video content.
King says video offers a “phenomenal” opportunity for advertisers, but looking at the challenges ahead, adds that latency, relating to how quickly ads can be pulled up alongside online video after shooting them through the ad tech pipes, needs
to be improved.
Conversly, managing director of digital at Nine Entertainment Co., Alex Parsons, says Nine’s focus is very much about getting all of its TV and catch-up services fully online. Currently it’s thought only 40% of its linear TV shows are available via catchup online, something Parsons says is all set to change later this year or early in 2016.
This first appeared in AdNews' print edition and follows part one: The golden age of video or the death of TV? and part two: TV and online video measurement: the new world yardstick.
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