NEW YORK — There appears to be a bit of carrot-and-stick motivation driving important changes in television advertising at the moment.
First the carrot: TV broadcasters are on the cusp of being able to offer brands and their agencies the opportunity to deliver targeted, personalized ads thanks to NextGen TV. As stations increasingly adopt ATSC 3.0, this is only likely to grow.
Now the stick: Digital advertising is a monster. In May 2021, Statista forecasted a 100 percent increase in ad spending on digital when comparing 2019 to its projected 2024 total—from $132.5 billion to $278.5 billion.
The “currency” of buyers and sellers in that market is based on impressions, not ratings. So it’s no surprise major broadcast groups, including ABC Owned Television Stations, NBC Universal, Sinclair Broadcast Group, Hearst Television and others, are shifting from traditional ratings to selling ads based on audience impressions.
I recently spoke with Dave Otten, CEO and founder of web video player software developer JW Player, about these developments and what they may mean for broadcasters. Otten traces his professional life to the digital world where impression-based advertising got its start. Now as CEO of JW Player, Otten is seeking growth in the Connected-TV/OTT world. His insights offer a fresh perspective to broadcasters.
(An edited transcript.)
TVTech: Television broadcasters will be moving one day to a direct measurement model for audience measurement as NextGen TV proliferates and Connected TV viewers have a back channel via the internet to reveal what they are watching. How do you see this playing out in the short term and long term for TV broadcasters?
Dave Otten: Things are going in that direction, which is fantastic for the industry. But there will be hurdles. I think the biggest thing will just be educating the world—the broader ecosystem. Advertisers for so many years have bought off things like Nielsen numbers in the linear world.
Now in the connected world, they’ll be able to have direct measurement. I just think there’s a tremendous amount of education that needs to happen. From an advertiser's perspective, I think it'll be pretty straightforward understanding how to buy and [finding] the audiences they're searching for in those environments.
I also think there’ll be companies that pop out that we’re not even thinking of today that will be built around direct measurement to help give more insights to content creators, to broadcasters and to all the folks creating video for the digital environment.
TVT: OK, but what about having the impartial third party that brands and agencies can rely upon for audience numbers. In other words, will they be satisfied to take the word of broadcasters about the audience numbers the broadcasters themselves are measuring?
DO: That’s the education part, right? Education in the sense of learning to trust. I think that might be another way of describing the education piece. Whether Nielsen can somehow continue to maintain their foothold [is the question]. Given their brand, which is a real thing for the last many decades, they’re best positioned to be a leader here as they’ve done in the past.
But overall it [buying based on direct measurement] is a step in the right direction for the broader industry. Innovation will happen, and I think there will be a lot more flexibility for buyers and advertisers. They’ll be able to be more thoughtful in their purchases, so I think that’s going to be a net benefit. But it will take time.
TVT: On a parallel track, many major broadcast groups and networks have announced they will be transitioning to an impression-based advertising model. I think this raises a lot of questions for broadcasters, but let’s start off at a high level. What’s your impression about the transition to buying and selling advertising based on impressions?
DO: I come from the digital world where impression-based advertising made its start. The digital influence [on this move by broadcasters to impressions as an ad currency] is definitely there. It makes sense given that most of the dollars are going to digital. That’s how people are buying.
TVT: Are all impressions equal?
DO: No. All impressions are not equal, and that’s the downside. In the early days of internet advertising, [there were concerns over] whether people were actually viewing a piece of content. How long is someone engaging with the actual video content? That matters. What’s the ad completion rate? How much content are people watching? Are they truly engaged?
That’s a really big thing now for broadcasters as they transition to impression-based buying increasingly as is done in OTT or Connected TV (CTV) environments.
You see things like viewability and similar factors being less of an issue in the connected world or in the OTT world than you do in the web world. So, there won’t be as many of those challenges, but nonetheless, there are aspects of that that are going to be different that broadcasters will have to get their arms around as part of impression-based buying. But all views are not created equal, for sure.
The other big part to it is that first-party data is going to matter a lot—to the extent that as part of any direct measurement you cannot simply measure whether the video is being watched but also who the user is on a permission-based basis. That’s going to be enormously valuable.
TVT: With your roots in the digital world, I was wondering about your perspective on the opportunity broadcasters increasingly will have to deliver personalized and targeted advertising as they rollout NextGen TV?
DO: I think it’s a fantastic thing. As JW Player—our background as sort of the backend technology that powers a lot of video delivery to mobile, web and increasingly connected TV environment—I think that’s a fantastic thing.
I think that part of it is really exciting for broadcaster to have that kind of detail that they can be very much more precise in how and when they want to reach people, whereas before you’d simply have a sense of what the content is. It’s a sporting event—a football game or soccer.
