Manufacturers Want a Cut of Publishers’ CTV Monetization. Have They Earned It?
The expansive growth of the connected TV (CTV) landscape brought with it an explosion of new video content – and by extension, new opportunities for publishers to monetize. And yet, the landscape has been evolving in a direction where publishers don’t have full monetization of their video content. So who else is vying for control? Increasingly, it’s the CTV device makers – the original equipment manufacturers (OEMs) – and the streaming platforms. Those businesses believe that because they’re necessary parts of the ad delivery process, they deserve a share of ad revenue.
And publishers are pushing back – in part because they don’t want this practice to spread to in-content monetization. They’re adopting new ad formats and deals with advertisers to monetize outside of the ad break itself. They risk losing monetization in these areas where OEMs and platforms have a much shakier case to argue.
The open web wasn’t built for these kinds of revenue shares
Realistically, OEMs and streaming platforms are going against established precedent in digital advertising by demanding a revenue share from publishers. On the web, in the browser, the consumer visits a site where they’re served an ad. Then, the advertiser pays the publisher for the impression. Everyone agrees this is an even exchange. The publisher’s content, after all, is what draws the audience.
CTV is another story. In CTV, the publisher produces the video content, which is delivered to the consumer through an app. The publisher may own the app, or the app may be owned by a third-party platform. Then there’s the connected device’s operating system, which in turn is running on hardware made by a device manufacturer. We would consider it absurd if web browsers were to expect a share, but the industry has somehow normalized an analogous practice in CTV.
CTV monetization goes beyond ad breaks and into publishers’ content
It’s high time for industry leaders to seriously ask why OEMs and third-party platforms deserve a revenue share from the publishers’ video content. There are some real answers: unlike the web, the CTV landscape is not an open ecosystem. App and hardware providers have some control in deciding which buyers are allowed into the ad breaks. But the argument that they deserve a share starts to fall away when we consider how publishers are monetizing within the content itself, rather than within ad pods.
Publishers are increasingly leaning into sponsorships, product placements, and in-content ad formats that support dynamic creative and allow for precise targeting. In many cases, in-content monetization comes from the publisher and the brand making a direct deal. Third-party CTV platforms and OEMs are now trying to control that in-content monetization as well – even though it’s hard to make a solid case that they’re responsible for the viewer’s in-content ad experience.
Publishers are now struggling to manage ad experiences and monetization on a platform-by-platform basis. Some have been told by CTV platforms and OEMs to either disable formats such as overlays or cut a revenue share. It’s inefficient and operationally taxing for publishers, and it leaves revenue on the table. To have an intermediary blocking in-content monetization simply because that intermediary doesn’t stand to gain revenue isn’t just limiting to publishers, it stifles innovation.
Of course, we also need to consider the possibility that OEMs and platforms might make moves toward stifling unique ad formats and in-content ad product innovation so they can develop and launch their own. If that were to happen, publishers would lose control of those monetization channels – not only ceding the monetization itself, but also the audience’s overall experience with ads and content, to third parties. We have to keep in mind OEMs’ and CTV platforms’ current share in monetization is the end result of years of CTV evolution. Publishers and tech vendors can’t let this evolution continue toward further and further loss of control.
Time for a new normal for contracts and negotiations
Publishers and their adtech partners need to advocate for their businesses, to draw clear boundaries around their monetization channels, and to codify how in-content monetization works in CTV. First: Where should those boundaries be drawn? Publishers should draw a line protecting their full monetization of any ads inserted during filming or production. These are ads that are not dynamic – every viewer sees the same ad at the same point in the content’s flow – and not in the ad pod. By the same logic, it would make sense for OEMs and platforms to retain monetization from their home screen ads, screensaver ads, and pause ads. Publishers’ task right now is to assert control over monetization in any perceived gray areas. These are programmatic ads in addressable environments, and they’re dynamic – so they would include any dynamic product placements and dynamic non-linear ads, in addition to programmatically served linear ads.
Publishers will then need to start baking suitable and sustainable guidelines into their contracts with publishers, CTV platforms, and OEMs. The most meaningful and controllable approach is for publishers to own these relationships contractually, rather than relying on adtech vendors to negotiate the specific terms. This is where the opportunity arises to clear up that perception of a gray area, and to specify what counts as a sponsorship and what counts as a programmatic ad.
In these negotiations and deals, publishers will need to consider not only the ad executions and monetization strategies they’re using now, but those that may be coming in the future. The contractual language needs to address and provide sensible guidelines for future innovation. The language needs to be written in a way that preserves publishers’ ability to fully monetize new and innovative in-content formats, before they lose their chance to stake that claim. And platforms need to be more open to ad experiences and formats that provide optimal user experience, rather than fixating on what they know and dismissing true innovation.
CTV ad revenue will only continue to grow into the foreseeable future, and it’s forecast to grow at a rate of 6.9% per year through 2029. What percentage of that revenue growth will go into the pockets of the publishers, who produce the content and earn the audience’s engagement? To support innovation in CTV monetization strategy – and to continue funding the production of new, high-quality content that keeps the audience growing – publishers need to envision and advocate for a future where they have control over in-content monetization.
[Editor's note: This is a contributed article from GumGum. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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