Rapid changes in the way people view TV programming and the proliferation of streaming services has roiled the ad market in recent years. It has opened up new opportunities as companies shifted ad dollars to digital and connected TV but also created some major headaches for large content producers who complain about the accuracy of traditional measurement services, and marketers who struggle to reach their target audiences, particularly younger consumers that have embraced ad-free SVOD services.
TiVo, which is a subsidiary of tech company Xperi, sits squarely in the middle of those issues. Not only does it provide DVRs, set top boxes and streaming devices that are used by many consumers and pay TV operators, it also has a rapidly growing CTV advertising and data analytics businesses that draws on viewing data it collects from over 20 pay TV operators, TiVo devices and other sources.
In this interview, Walt Horstman, senior vice president and general manager of advanced media and advertising at TiVo talks about the rapid changes in the ad business, his predictions for the future of measurement services, TiVo’s push into CTV advertising and the prognosis for advertising on SVOD services.
TV Tech: Just to set the stage, talk a little about your role at TiVo and what the company is doing in terms of audience measurement data?
Walt Horstman: My role is to lead the monetization business across TiVo. Our monetization business really has two fundamental components.
One is an advertising business where we have our range of advertising products, including in-guide promotional advertising for content and content discovery. What we've been focused very heavily on is to launch our CTV advertising business, where we now have CTV inventory across the platform and with partners.
Related to that is the data that we collect. So we've got our TiVo TV viewership data, where we have a very large footprint of viewership data that we're collecting from across 20 different cable operators as well as our TiVo devices.
So it gives us this first party deterministic data on linear viewership and it is very representative across the United States because of the fact that it is multi sourced. It's not a walled garden, it's not limited to one particular cable operator or TV manufacturer, for example. It's this rich representative data set.
We've been licensing that data out to measurement companies for the last few years, but what we're doing now is we're using that data as a foundation to power the targeting and the measurement of our connected TV advertising offering. So we're bringing to market this great perspective on linear TV viewership and advertising exposure, and then we’re using that data to bridge into the CTV world.
So, we are maximizing incremental reach on CTV and driving incremental tune in for a marketer to linear television because we've got this world now where there are people who are viewing in the traditional TV world, but then they're also spending time in the streaming world.
Marketers need to reach as broad an audience as they want, especially entertainment marketers. So, we've kind of put together this whole suite of assets I believe, that very nicely bridges the world of between the history of legacy TV, and then CTV.
TV Tech: Based on the data you have, what are some of the big viewing trends at the moment and what do those trends mean for the ad market and the upfronts this year?
WH: We have seen cord cutting, and we see that trend continuing, which has a material impact on total aggregate linear viewership and continues to drive scarcity in the linear TV market.
Where that has an impact on the upfront, is that there is now a merging of inventory, whether it's linear TV or whether it's CTV, or what have you. I think we're starting to see the silos starting to come down between what is traditional linear versus digital. Now we're in this world of CTV we’re starting to hear people just talking about their video investment holistically. So that, I think, is a driving force within these year’s upfronts.
TV Tech: That highlights some of the complexities of measurement these days and the fact that we seem to be in a period where there is a lot of uncertainty about where measurement is going. It may be the period of greatest uncertainty about measurement I’ve seen in the last few decades. How do you see some of this shaking out? Are content providers and marketers going to have to continue to cobble together cross-platform measurement from a bunch of sources or might we get back to the point where there will be a single dominant currency or measurement system?
WH: It's hard to predict if we're ever going to get back to a standard syndicated measurement system. I think what we’ll see is a little bit of a dual track for the foreseeable future where we will have Nielsen operating as a currency.
I think there are a whole host of reasons for how that legacy continues: it is embedded within the agency buying environment, it is embedded in stewardship systems; it's embedded in incentive systems for agencies.
As much as people say, yes, there's a whole lot of flaws to it, it has been a standard for so many years and there's a lot of history tied to that standard. So it is pretty challenging to say all right, we're just gonna toss that out and we're gonna have a quick change to something new.
So I think that we'll see a period, what I'm calling dual track, where we'll have a currency and then we’ll have, let’s call it “advanced measurement,” which involves using lots of rich data that determines the performance of the advertising campaign, based on whatever the business outcome is.
And that has become incredibly sophisticated. Our data set, for example, is used by a host of these major advanced measurement companies who are using it to get answers about the impact of the advertising campaign on business outcomes.
What's interesting is that it creates some very interesting asymmetries of information between buyers and sellers.
In many ways, the buying community will start to have an asymmetrical advantage, because they will be able to measure the currency of the inventory based on existing currency and the effectiveness of it, and then identify opportunities of under or undervalued inventory. Often, that’s more than the sell side because the advanced measurement is providing that data on behalf of the buying community.
Conversely, you've got some kind of walled gardens on the publisher side, who are holding back some information from the buy side.
So everyone's trying to get an edge on intelligence, on the value of the inventory and it’s a question of how that asymmetry gets resolved.
TV Tech: In light of those trends, what have you been doing to improve your offering in terms of this advanced measurement?
WH: We're excited about the new sources of data that we are adding into our TV data sample. Historically, it's been from predominantly traditional QAM based set-top boxes. We've had a very big initiative within TiVo to launch an IPTV user experience and we are now starting to collect data from IP TV delivered video. So it will be interesting to see the differences and patterns of viewership behavior from that.
The other area where we're making quite a bit of investment and improvement is just the ability to do full measurement of the incremental reach of a CTV campaign based on linear exposure to an ad campaign. Being able to quickly predict the households who have not been exposed to the linear TV campaign, means we can maximize that incremental reach and then pull lots of data together from various sources to measure the effectiveness for the campaign. For example, we can see how a campaign is driving traffic to a website or purchase behavior on a website is doing and then we can refresh the campaign for the second iteration to reach those people who visited but didn't purchase and we can then create that audience segment. So it's a continuous optimization of the campaign using the data.
TV Tech: How do you see addressable advertising for TV at this point? I know that there has been a lot of improvement in this area and a lot of work being done but I have to say on a personal level I’m not really seeing a lot of ads that seem targeted to me.
WH: We’ve had this cycle where we had national linear television, and we started to do addressable advertising within the two minutes per hour for the MVPDs. There were a series of verticals who have adopted it quite nicely. Auto being one and political being another one.
What’s interesting is that now we're in this interesting phase where the whole industry is focused on streaming and CTV.
We do a lot of advertising with the entertainment companies and it’s interesting that there's not a monolithic strategy here. For some of the entertainment companies, it's very important to continue to drive viewership to their linear offerings. They want to keep the linear business going. It's the core foundation of their business and they want to keep that going. They are using all these other channels to drive activity on linear.
Then, there are others who are saying we're making the pivot and we're now driving viewership to our streaming offering. That is the future. So we're just going to put all of our marketing and promotion investment into that streaming offerings.
The reason I bring this up is because it has implications about investment or focus on linear addressable television. How long does that keep going before the world just migrates all into streaming, which inherently has all the targeting capabilities that everybody has been dreaming of?
All of the data and rich targeting that you can do on digital, you can now do on CTV. You can do all of the campaign optimization and the measurement that I was talking about.
So, I think the question is: at what point does the focus just shift towards CTV and away from what I will call it traditional addressable?
TV Tech: Obviously ad supported streaming and fast channels are a very hot topic. Everybody's jumping into that, even next Netflix. What’s your take on that trend and how are you working to help people take advantage of the advertising opportunities?
WH: My perspective on ad supported streaming channels is that it's a good thing. Looking at traditional television and the economic model of traditional television, It has to be ad supported to ensure that you've got ongoing sustainable investment in the programming. And it’s also important for the U.S. economy, which is consumer-based. So you have to have a robust video ad supported ecosystem that has broad full scale reach.
So, if you are looking at the health of the American consumer economy, if you've got such a large population of people who are basically in non ad-supported streaming video services, and have basically opted out of the video advertising ecosystem, that's a problem. It’s a problem for marketers to get their messages out to consumers.
We could have a spirited debate about the role of advertising in society, but in a consumer based economy, you need to have a vigorous ad supported video ecosystem. It's the most effective medium to build a brand and that's critically important.
In terms of what we are doing at TiVo within the FAST channel world, we are continuously integrating many of the fast channels into the TiVo user experience and we have a whole content team that's out striking new deals for distribution within the user experience.
One of our areas of expertise as a company is also content discovery and metadata. We are integrating those fast channels into the linear experience, and then making recommendations on what content we think is most relevant for the user. Because the world continues to be fragmented and consumers need that data driven recommendation to help them get to the content quickly, that drives this holistic linear and streaming recommendation engine across the board.
