Connected TV

Major advertisers plan to spend more on video in 2021, favoring the connected TV (CTV) options of established networks over streaming startups, according to a survey conducted by researcher Advertiser Perceptions. Most advertisers plan to keep their media allocations consistent, spending 40% for upfront and 60% for scatter, the survey found.

Concerns about advertising fraud, especially in programmatic auctions, are driving the biggest advertisers to favor linear TV and the growing CTV options of established networks. Those advertisers seek the same assurances from CTV that they receive from linear TV, demanding that ads appear on reputable sites (87%), pair with brand-safe content (80%) and run within professionally produced video content (79%), the survey found.

"Big TV networks have really beefed up their CTV opportunities at the right time," Justin Fromm, executive vice president of business intelligence at Advertiser Perceptions, said in a statement. "They're becoming safe harbors for the largest advertisers as fraud climbs in the medium. While the major internet platforms will lead in volume of streaming ads, TV network safety is keeping them the gold standard in video as the platforms evolve."

The research comes as the advertising industry prepares for upfront presentations by networks following significant turmoil in 2020 for the annual events that saw P&G announce plans to not return. As the video audience grows more fragmented, measurement has emerged as the biggest concern for advertisers. More than half (58%) said the more impressions they buy outside of linear TV, the harder it is for them to measure reach, frequency and effectiveness of their video advertising.

As millions of U.S. households connect their TVs directly to the internet, marketers are looking for ways to reach consumers who are spending more time streaming content directly from internet platform or watching via a OTT service as video consumption, overall, remains strong. About half (52%) of video advertisers plan to increase their video spend this year, while the remainder will keep it at the same level. Among the advertisers boosting spending, about three quarters (77%) said their video ad budgets are growing faster than for other media channels. Advertiser Perceptions surveyed 284 advertisers and agencies in November and December 2020, and asked 300 advertisers about their upfront buying plans in January 2021.

However, increased fragmentation in consumers' viewing opportunities is causing concerns for some advertisers, who want media partners they can trust — such as CTV services from established networks — amid concerns about online fraud. The finding indicates that advertisers and media agencies want the flexibility to allocate their spending among linear TV and digital video channels as viewers seek out their favorite programming among more choices of media outlets.

At the same time, advertisers want CTV to provide some of the same customization capabilities offered by online video. Seventy-five percent of advertisers want to learn more about how media companies plan to balance expanding reach with innovation in personalization and cross-screen measurement, the survey found.

While viewership of linear TV has declined as streaming has become more popular, 51% of advertisers said linear TV is their top priority, compared with 16% for social media and 15% for video sites. Advertisers that spend $25 million or more a year prefer linear TV, while marketers that spend less describe social media and video sites as more effective. That finding is consistent with the strategy of social media companies like Facebook to provide smaller businesses with more focused targeting by region, demographic group or personal interests.

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Chief among the consumer behaviors that evolved and accelerated during the first six months of the coronavirus pandemic was a shift in media consumption that presented both challenges and opportunities for marketers. As consumers spent more time at home in 2020, their time on connected TV (CTV) rose 50% and time on linear TV lifted 10% between March and September, Jack Bamberger, chief commercial officer at Amobee, said during a livestreamed Advertising Week conference session in October.

While the CTV ad market is dwarfed by the linear one, CTV can be effective for advertisers. Compared to linear TV viewers, ad-supported CTV users are 71% more likely to tell a friend about a brand, 53% more likely to search for a brand and 52% more likely to buy a product, according to a July survey by video advertising platform Unruly.

Statistics like these suggest CTV can offer marketers ways to answer such key questions as: Who are a brand's consumers and how have their behaviors changed?

CTV's opportunities

Nearly all advertisers had to change their plans due to the pandemic's onset, including MolsonCoors, whose Head of Precision and Digital Marketing Nicole Kane spoke on the panel.

"We're a brand where those moments of opportunity have greatly changed because stadiums are closed, bars are closed and people are drinking more when they're at home," Kane said. "Having solutions like CTV, where we really can be more targeted and precise, makes a big impact. It's really about being agile and following our consumers so we're there at the moments that are going to matter most."

CTV offers similar opportunities for other CPG marketers. L'Oréal, for example, aligns its brands around big moments like red carpet events that reach a wide set of customers, Shenan Reed, senior vice president and head of media at L'Oréal, said during the panel. From there, CTV provides an opportunity for incremental reach as the brand attempts to engage consumers during these moments across a variety of channels.

"I want to fluidly follow [the consumer] wherever she shows up in whatever medium she chooses, to be without constraints," Reed said.

CTV can help with such incremental reach, but it still requires nuance to utilize properly.

"I sometimes question, am I actually getting incremental reach, or just capturing people who have left linear to go into other channels? I don't know if it's necessarily incremental, or just trying to keep my audience whole," Reed said. "Then there's the opportunity to get specific. I don't think we've cracked that nut on the specificity of what CTV can do for us."

The growth of both CTV and linear, albeit at different rates, is likely to change priorities for marketers when negotiating upfront ad buys going forward as they seek flexibility, fluidity and more opportunities amid different content and inventory sources.

"We still see linear as driving so much of our business, so it's a matter of extending what is already working [on CTV]," said Danielle Gonzalez, president and chief client officer at Starcom Worldwide, who leads media for Kraft Heinz.

The pandemic has demonstrated how flexibility between marketers and media sellers is more important than ever, as COVID-19 has upended events, programming and consumer behaviors.

"The need for flexibility is going to be paramount in negotiations for next year. We need to be able to follow consumers, and we need to be flexible in moments like this," Kane said. "Who can predict when the next moment like this might happen?"

Flexibility and measurement ahead

Along with flexibility, marketers want better measurement tools to ensure their CTV ad buys are effective and efficient. Rather than the demographic and daypart segmentation of the past, layering in CTV allows for a more granular understanding of audiences. For Kane and MolsonCoors, this is key for engaging younger, 21+ audiences.

"In order to do that, you have to find the cord-cutters and cord-nevers, and [CTV] is another way we can get them in fold... as well as managing frequency so we're not hitting them so many times that we start to annoy them with our message," Kane said.

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"We have to remember the value and purpose of using CTV in the first place."

Shenan Reed

L'Oréal, SVP and head of media

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Amid the cord-cutters and cord-nevers, CTV is another way for marketers to reach consumers. But it is far from the only way, alongside linear, over-the-top, digital video and social video. Connecting all of these channels with data — and the better measurement and attribution this promises — is something marketers and their partners must work at to catch up to where consumers already are.

"As advertisers, we are craving for the industry to get there faster. The more we can push, the more we can beg, the more we can use our dollars to influence getting those pipes connected [the better]," Reed said.

Marketers and advertisers no longer invest dollars where they can't prove value. But true outcome-based measurement also requires a nuanced approached.

"It's a matter of defining what we mean by outcome. So many brands want to focus specifically on ROAS or ROI, and really get down to a sale, but the outcome isn't always the sale," Reed explained. "We have to remember the value and purpose of using CTV in the first place and attribution is such an important piece."

The growth of CTV during the pandemic points to where consumers are likely to be in the future. But the unique challenges of the health crisis and its wide-ranging effects on the economy also obscure what those customers will look like in the future. Reed noted there is still a large portion of the population that's unable to be consumers as they usually would, amid layoffs and other financial hardships.

"It's important to remember we're servicing customers that we have today, and also remember there's a whole customer base out there that we have to continue to help support until they get back on their feet," she said.

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Nielsen in October 2020 announced it would include the streaming TV inventory from both YouTube and YouTube TV apps on connected TVs (CTV) in the company's Digital and Total Ad ratings for the first time, per a press release.

The move expands Nielsen's YouTube measurement beyond computers and mobile. Measurement will be phased in the first half of 2021, beginning with YouTube TV and then expanding to the YouTube app.

As TV viewing evolves with the growth of CTV, Nielsen's measurement of YouTube's streaming TV ad inventory will help it form a more accurate picture of audiences for media buyers and sellers. According to Nielsen, more than 100 million people in the U.S. watch YouTube and YouTube TV on CTV every month.

With YouTube accounting for a fifth of all streaming in the U.S. and streaming accounting for a quarter of total TV usage, according to Nielsen, the need for accurate audience measurement is crucial. By including YouTube's connected TV products in its ad ratings, Nielsen can bring together viewer data that may be siloed across platforms, so advertisers can better measure campaign effectiveness.

Adding YouTube's CTV services expands Nielsen's Digital Ad Ratings offering and promises better metrics for buyers and sellers to make deals. Working with YouTube on connected audiences will also help buyers and sellers compare connected TV and addressable programming on linear TV.

"Advertisers are asking for third-party measurement partners like Nielsen to provide a complete view of YouTube and YouTube TV audiences, so they can understand the scale of the audience they're able to reach through CTV campaigns," Debbie Weinstein, vice president of global solutions for YouTube, said in the press release.

Google, which owns YouTube, expanded its CTV media buying services in September 2020, adding YouTube TV to its Display & Video 360 demand-side platform (DSP) and launching Unique Reach Audience reporting to help marketers measure the reach of CTV campaigns. The Nielsen measurement could help advertisers make better choices when using these services.

Streaming viewership has surged during the pandemic as consumers stay sequestered at home. Time on CTV rose 50% and time on linear TV lifted 10% from March to September 2020, Jack Bamberger, chief commercial officer at Amobee said at Advertising Week in October, leading brands including Kraft Heinz, MolsonCoors and L'Oréal to tap into CTV growth.

Likewise, eMarketer predicted CTV ad spending would grow 25% in 2020. Still, marketers may be wary of potential fraud. In January 2020, a bot network impersonated more than 2 million people and generated 1.9 billion ad requests on CTV programmatic platforms.

This latest move comes as Nielsen is being forced to drastically reorganize its operations due to the pandemic. In September 2020, the company virtually shut down its neuromarketing operations that measured how the brain reacts to media and advertising. The company is expected to split into two separate companies in 2021, with one focused on media measurement and the other focused on analytics and attribution.

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In early January 2021, iSpot.tv acquired Ace Metrix in a deal that combines the providers of complementary measurement services for TV advertising. The deal comes as marketers seek a more unified way to measure the effects of their advertising in the face of an increasingly fragmented media marketplace thanks to the proliferation of newer ad-supported streaming channels beyond traditional linear TV.

ISpot measures reach, conversion rates and brand lift for commercials on linear and streaming TV, while Ace Metrix surveys consumers for their reactions to ad creative, per an announcement. Financial terms of the deal weren't disclosed. The combined companies have yearly contracts with more than 500 brands, including 100 large advertisers that are Ace Metrix customers, and 96% of the TV networks in the U.S. Ace Metrix's service will be integrated into iSpot's platform.​

"We know that brands invest in TV and video advertising to drive sales and lasting brand equity with audiences, often in the same campaign and creatives," Sean Muller, founder and CEO of iSpot, said in a statement. "This acquisition represents an industry-first solution for measuring both business outcomes and brand impact together and in real time."

Ace Metrix and iSpot are a good fit for each other in providing more comprehensive, real-time measurement tools for marketers. Ace Metrix examines how viewers feel about what they see while iSpot helps to measure the reach and business outcomes for advertising. The complementary services can provide a more complete view of the effectiveness of TV advertising in real time so marketers can optimize their buys. Ace Metrix's measurements include brand recall, purchase intent and likeability, among other metrics.

The deal comes as the digitization of the TV media market has led to a gradual rise in sales of ad inventory through automated online auctions, making real-time measurement more critical for brands. Before the pandemic, programmatic buying had been forecast to grow steadily over the next few years. The health crisis sped up the shift in viewing habits to digital TV platforms as homebound viewers looked for fresh programming. Consumers streamed programming from ad-free subscription services like Disney+, HBO Max and Netflix, and from ad-supported platforms like Hulu, Pluto TV, the Roku Channel, Tubi and Xumo. The dearth of live sports in the second quarter of 2020 was another driver of the shift to streaming.

While iSpot didn't disclose the terms of the deal, it consisted mostly of cash and other sources of financing, AdExchanger reported. Ace Metrix's revenue is more than $10 million a year, and it has grown 30% a year, according to the report. Neustar, Oracle's Moat, The Trade Desk and OpenAp are among iSpot's ad measurement partners.

As part of the deal, Ace Metrix CEO Peter Daboll will join iSpot as chief strategy officer. Bellevue, Washington-based iSpot will hold on to the Ace Metrix headquarters in Los Angeles. With the addition of 45 Ace Metrix employees, iSpot will have a total of 240 people, per its announcement.

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The Trade Desk saw gross spending on its platforms rise 34% year-on-year to $4.2 billion in 2020, a new record driven by marketers' growing interest in data-driven marketing channels, according to earnings results released in February.

Revenue increased 48% YoY to $320 million in the fourth quarter, capping off a strong year for the ad-tech firm. Connected TV (CTV) was its fastest-growing channel, co-founder and chief executive Jeff Green said on a call discussing the results with analysts, reinforcing the shift away from traditional media.

Green referenced comments Procter & Gamble brand chief Marc Pritchard gave at the virtual Consumer Electronics Show (CES) in January 2021, agreeing with the CPG marketer's assessment that advertising's future will be "digital, programmatic data-driven and automatic."

Q4 brought another windfall for The Trade Desk, a demand-side platform provider that generally fared well in 2020 as marketers retooled their media strategies to account for the pandemic and new mandates around data.

"While 2020 was a uniquely challenging year, it was also a turning point for our industry and our company," Green said in a press statement. "[In] 2020 we saw several years of advertising disruption and innovation compressed into a few months. Marketers are being more deliberate and data-driven in everything they do, and as a result, they are gravitating to the advertising opportunities of the open internet."

After driving people indoors, the health crisis accelerated a cord-cutting trend that has been a boon for streaming services and CTV platforms. Green linked the change in media consumption habits to one in marketers' thinking, where executives like Pritchard are more frequently eschewing traditional advertising methods altogether. Green highlighted the appeal of CTV's measurement and data-driven capabilities, as well as its flexibility compared to linear.

"In a year when brands are challenged to adopt messaging, often on a highly local basis based on rapidly changing circumstances, all of these factors become compelling," Green said on the investor call.

Streaming video isn't free from its issues, with fraud being a top concern. And while linear TV ratings have dipped in tandem with streaming's ascent, more than half of advertisers report that linear TV is their top priority in 2021, according to a recent survey by Advertiser Perceptions.

Still, major changes are afoot. Pritchard in 2020 made a splash in shirking the traditional TV upfronts, a venue where marketers work on securing ad commitments and sponsorship deals for the months ahead. Instead, P&G — one of the largest advertisers by media spend in the world — made the unusual decision to negotiate directly with the networks, looking to avoid "legacy systems that have historically favored sellers," to quote Pritchard at CES.

On the call with analysts, Green cited internal research that found 60% of linear TV ad buyers intend to spend less at the upfronts in 2021 for similar reasons. Advertiser Perceptions found most advertisers intend to keep their 2021 media allocations in line with 2020's, allotting 40% for upfronts and 60% for the scatter market.

Green forecast that CTV will eventually command half of what he expects will be a $1 trillion ad market, with the channel acting as a "Trojan horse" for ushering in programmatic capabilities across the industry. Those are lofty targets, but it's clear that data-driven offerings will continue to see a high premium as marketers try to create more personalized campaigns and grapple with disruptions like the death of third-party cookies.

The Trade Desk has been a major player in developing a cookie alternative through an initiative dubbed Unified ID 2.0. In February 2021, the company relinquished control of the project to Prebid.org, a nonprofit focused on open-source programmatic advertising solutions that will now oversee Unified ID's technical infrastructure. Unified ID has secured endorsements from major advertising firms, ad-tech vendors and publishers, including Nielsen, Criteo, LiveRamp, Magnite and The Washington Post.

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In an effort to identify ads that capture consumer attention across digital channels, including social media and connected TV, Dentsu International is working with VidMob's Agile Creative Studio to take a closer look at how objects, shapes, words, sentiments, colors and logos appearing in video creative impact view duration, purchases and other consumer actions, per an announcement.

VidMob uses computer vision, optical character recognition and machine learning technologies to tag every visual attribute of video creative. It has tagged more than 1.3 billion part of ads that have been seen more than 1.9 trillion times. The partnership will enable Dentsu to expand the efforts of its Attention Ads Labs, which seeks to identify ads that capture consumer attention, by helping it better measure the effectiveness of video creative across social media, programmatic video, over-the-top (OTT) and connected TV (CTV) channels, per the announcement.

The deal underscores the importance of creative to effective digital video ads. With increased fragmentation of the media universe, advertisers have more ways to reach consumers among a wider variety of devices, including computers, connected TVs, smartphones, tablets and smart displays. While audience targeting and segmentation are important in reaching the right consumers at the right time, ad creative is essential in capturing their attention. Dentsu's expanded collaboration with VidMob aims to help marketers determine which parts of their video advertising are most effective at capturing attention and driving other outcomes.

Attention has become an important ad metric, per the Dentsu release. Digital platforms as varied as YouTube and Snapchat have developed six-second, non-skippable ads that challenge advertisers to compress a brand narrative in ways that aren't too intrusive while still grabbing attention. Facebook found in a study that six-second ads perform better than 30-second ads, though it's not clear how the ad creative affected that outcome. Per Dentsu, 70% of campaign performance is driven by creative.

Claims that the attention span of the average person is now shorter than a goldfish's have been disputed, but marketers still have a limited window of time to grab the attention of viewers. Emotions in video ads affect their performance within a few seconds, VidMob found in a study of how people reacted to ad creative during the pandemic. Its research showed that surprised emotions in the first three seconds led to a 360% jump in performance from start of the pandemic to lockdown and ads with happy emotions saw a decrease of 64% in conversions. Calm videos boosted purchases by 156% during lockdowns, while ads showing women drove a 325% increase in performance.

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The IAB's 2021 Marketplace Outlook Survey paints an optimistic picture for the advertising landscape in the new year as budgets start to rebound following a year marked by pandemic-related pullbacks. However, the months ahead still hold several concerns for marketers, primarily around data privacy, ad tracking and strategic plans as pandemic-spurred consumer behaviors calcify.

The good news for advertisers is that ad budgets are expected to increase 6% in 2021 compared to estimated actual spend in 2020. Unsurprisingly, that rise is driven by digital spend, which is expected to jump 14% while traditional media spend dips 5%. This continues a trend showcased in an earlier IAB survey that found advertising executives expect spending on digital ads in the U.S. will grow 6% this year, contrasting with an 8% decline for the broader ad market. In 2021, more than half of budgets will be made up of social media (16%), paid search (16%), digital display (14%) and digital video (13%), including OTT and CTV, eclipsing digital audio excluding podcasts (5%), podcasts (4%) and digital out-of-home (3%), per the IAB.

Digital video buyers are expected to shift 21% of their linear TV budgets to CTV, citing the format's targeting and efficiency (81%) and incremental reach (55%) as the top reasons for the shift, ahead of its capabilities around optimizing creative (27%), cost effective CPMs (24%), proven ROI (18%) and better consumer experience (16%). In kind, CTV/OTV was cited by digital video buyers shifting budgets as an improvement over linear TV for its ability to reach younger audiences (58%), fast optimization (52%), easier to cancel (48%), ability to measure ROI (46%) and efficiency (41%). CTV usage has surged as consumers have spent more time at home during the pandemic, leading brands including Kraft Heinz, Molson Coors and L'Oréal to tap into the growth.

Ad buyers have concerns about the end of third-party cookies, the loss of identifiers, and the need for first-party data and cross-platform measurement. Meanwhile, 41% of buyers don't know if their stakeholders understand the ramifications of third-party cookies' demise and the changes to identifiers, while more than one-third believe they need more first-party data.

Buyers also plan to shift strategies to better meet consumers as behaviors have changed due to "continuing societal, health and market challenges." Half plan to increase ad tactics to promote e-commerce options and drive e-commerce sales, 47% plan to increase creative testing, 41% plan to increase testing for incremental reach, and 41% plan to shift away from media that presents upsetting, controversial and inappropriate content from users.

While buyers feel reasonably prepared for the loss of third-party identifiers, they might not have a full understanding of what the loss means for their capabilities when it comes to retargeting, handling audience segmentation, implementing addressable marketing and creating cross-device, multitouch attribution models. Along with not knowing whether stakeholders understand the new landscape (41%), buyers also report not having enough first-party data (37%) and are concerned about burning through budgets as they navigate cross-platform management (28%).

With Google's plan to end support for third-party cookies by early 2022 and Apple's decision to require opt-in consent for its Identifier for Advertisers (IDFA), alternatives to current methods of consumer and ad tracking have become a focus of marketers. Verizon Media, demand-side platform The Trade Desk and data management platform Lotame are among the vendors that have recently rolled out cookieless tracking solutions. Meanwhile, CPG companies are trying a variety of approaches amid a scramble for first-party data.

While cause-related and mission-based advertising increased in the first half of 2020, performance marketing notched upward in Q3 and is expected to be a focus in the new year, with 64% of buyers planning to ramp up its use in 2021. Meanwhile, diversity and inclusion is a priority, with half of buyers looking to do more business with minority-owned media companies, though many (51%) don't know if their companies have a list of such businesses that they can utilize.

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Magnite, the sell-side platform formed after the merger of Rubicon Project and Telaria, is acquiring rival SpotX for $1.17 billion in cash and stock from RTL Group as the companies seek greater scale to compete in a quickly growing space.

Magnite and SpotX sell programmatic CTV and over-the-top (OTT) inventory for media owners including A+E Networks, Discovery, Disney/Hulu, Microsoft, Roku, Samsung, ViacomCBS and WarnerMedia. The planned acquisition will create the biggest independent connected TV and video advertising platform in the programmatic marketplace, Magnite said when the deal was announced in early 2021.

"Ad-supported CTV is just beginning to draw budgets from linear TV and we will be well-positioned to participate in the strongest segment of industry growth for the foreseeable future," Michael Barrett, president and CEO of Magnite, said in a statement.

Magnite and SpotX in 2020 saw combined net revenue of $350 million, 67% of which came from CTV and video advertising in the fourth quarter. The CTV business would have almost tripled from a year earlier to $42 million in the quarter, Magnite estimated. Now, the company is targeting cost savings of more than $35 million, with half of that coming in the first year after the merger, which is expected to close in the spring of 2021.

Magnite's acquisition of SpotX will help the SSPs to pool their resources as the market for CTV and streaming video advertising rapidly expands. With many U.S. households canceling cable and satellite TV service in favor of connecting their TVs directly to the internet, advertising video-on-demand (AVOD) services like Hulu, Pluto TV, Roku Channel and Xumo are providing a low-cost or free alternative to services like Netflix and Disney+ that don't carry advertising. These services are winning over audiences looking for fresh programming with many consumers spending more time at home during the pandemic.

As viewing habits change, advertisers are expected to shift their spending to platforms like those that Magnite and SpotX represent. Spending on U.S. programmatic CTV video ads is forecast to increase by more than 54% to $6.73 billion in 2021 and by 29% to $8.67 billion in 2022, researcher eMarketer estimated in October. Sixty percent of U.S. advertisers plan to shift ad dollars from linear TV to either CTV or over-the-top (OTT) streaming services in 2021, according to a survey by the Interactive Advertising Bureau (IAB). Audience-based reach among these video platforms is a priority. Among the advertisers planning to shift spending to CTV and OTT, 81% cited targeting and efficiency as a reason to do so, while 55% said incremental reach was important, per the survey.

The planned merger of Magnite and SpotX comes as the companies seek greater scale to compete with other SSPs in the programmatic marketplace. Those rivals include PubMatic, which went public in late 2020, Google, Comcast's FreeWheel, Index Exchange and OpenX. Magnite's revenue grew 12% from a year earlier to $61 million in its September 2020 quarter, including CTV revenue gains of 51% to $11.1 million, per its quarterly report. Political ad spending and the return of live sports helped to drive revenue, management said in a conference call.

Article top image credit: Al Ibrahim