CTV Ad Tech Needs a Makeover: Here’s How to Fix It
Connected TV (CTV) ad tech needs to change. As a whole, the industry remains inefficient, both on the publisher side, where we can drive more revenue, and on the advertiser side, where we can drive more effective ROI, increase placement transparency, and reduce costs. How? CTV needs to be more like TV. Let me explain.
How Did We Get Here? The Web
CTV advertising is a $7 billion industry for the more than 200 million homes in the U.S. who use those devices. Growth across the industry is skyrocketing, but much of the ad tech in place uses legacy ad tech infrastructure built for the web, not TV. This is impeding publisher yield, making unpleasant viewer experiences, and creating a ton of advertiser waste.
The 1.0 ad tech currently used was designed for desktop and mobile environments where a single pre-roll video creative is generally delivered for one piece of content, like on a web page. This type of system deploys a stateless model based on RTB, meaning no information from one request is used to inform a given auction of another request in an ad break.
For CTV, this stateless ad tech infrastructure delivers "dumb" ad pods on CTV—which is why we see the same (stale) advertising presented during programs over and over again, or sometimes the dreaded "your program will begin momentarily." For CTV inventory to be as valuable as linear TV, users have to see no real difference between the two. With repetitive and/or low-quality ads during a single viewing session, that’s not possible today.
How can this be corrected? CTV advertising needs "stateful ad podding." As an analogy, you can change your faucets, but until you change the plumbing, you’re not going to get the higher water pressure you desire. In CTV, we first have to look at the plumbing before we can produce a high-flow output.
Moving to Stateful Ad Podding
Stateless ad podding doesn’t work in CTV because audiences watch a continuous stream of episodic content with multiple ad breaks, instead of browsing individual pages. It’s important for brands and C-level executives to be asking questions about the user experience, and how their brand is being seen from the perspective of CTV. What are the controls being placed on the likes of frequency capping, ad adjacency, ad sequencing, and competitive separation? What is the content and the context in which it’s being delivered?
Using a stateless system in CTV, as much of the industry is doing today, means that individual slots within ad pods are sold without accounting for creatives in adjacent slots, giving rise to frequency issues and poor viewer experiences. And that's hurting the industry. There is over-requesting for individual stateless slots, and marketers don’t know if they’re going up against a competitor or an advertiser they may not want to be next to.
The programmatic auction needs to change to address this—mainly, the major infrastructural transition from slot-by-slot to pod-by-pod auctioning, called stateful ad podding. This introduces an element of cohesiveness among ads in a CTV ad break, which is key for supporting decisioning like ad adjacency, competitive separation, and deduplication.
With a stateful ad podding system, programmatic auctions leverage more info for decisioning, including details on the ads to be delivered in adjacent slots. Advertising becomes much more effective, with brands able to optimize based on pod position and what produces the best ROI.
Auctioning entire pods through a stateful system is better for publishers as well. Pods versus slots creates a mix of advertisers with better bid diversity, thus driving more revenue for ad breaks. DSPs can increase the number of advertisers bidding in the slots within the inventory as opposed to a slot-based that usually yields repetitive advertisers.
From a user perspective, the advertising experience becomes greatly improved, as the ad breaks and even the user session delivers an experience with less redundancy and more relevance.
For ad tech, the request/response system becomes much more efficient, delivering a lower QPS and higher Use Rate, which reduces costs dramatically and enables more efficient bidding.
Delivering on the Promise of CTV
The promise of CTV is that we can now advertise on TV, but in a much more targeted manner. This promise is at our fingertips. Let’s relook at our 10-plus-year-old ad tech plumbing and deliver on stateful ad podding. The effectiveness of CTV advertising and the state of the user—and advertising—experience depends on it.
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