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Solving the Ad Tech Mystery

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Why isn't the advertising experience in OTT better? The technical capabilities are there, and streaming services are fighting for viewers. We now have the ability to use shorter ad breaks, fewer ads, interactive ads, sponsored content, and targeted ads. Viewers are now actually seeing reduced ad loads on some OTT services, proving that the traditional viewing model of watching broadcast TV with 32 ads per hour is outdated. But there are both technical and business challenges to designing a better experience, because specific technology choices can ultimately make consumers happier and make media companies more money.

The reason this is especially important is that the future OTT landscape will be heavy on ad-supported services. A recent Hollywood Reporter/Morning Consult poll found that the acceptable range of fees consumers would like to pay for all their streaming services is $17–$27, which means that ad-supported content should become an even more important part of content delivery going forward. Let's unpack this.

Understanding Ad Tech

The first issue is to determine who has control of the ad experience. The question of who owns the advertising technology experience in media companies brought forth many unique responses. "Video engineering owns getting the bits to the viewer. They are great at ensuring quality of service: that the videos play, buffering is limited, content drops are prevented," says Chris Hock, head of business strategy and development for Adobe Primetime. "Ad operations is great at managing ad campaigns, data and programmatic platforms to get the maximum yield from the ad inventory. They work with video engineering to ensure the ads are properly formatted to slot into the video streams."

One media contact says they have a media enablement team, a strategic platforms group (R&D), an ad platform team, and an ad strategy team. A technology vendor says purchasing decisions are made with ad sales, ad operations, IT, accounts receivable, and finance. How do you get all of these people, with varying needs and technical understanding, on the same page?

"Traditionally, [none] of these groups have been chartered with looking holistically at the service with an eye towards optimizing the revenue and viewing experience," says Hock. "We believe this is an important new function that's needed in media companies as they increasingly start to look and act more like software companies. Some of the savvier companies are starting to address this need."

"What companies are bad at is determining truly what their business needs are. They're bad at saying, 'We need this thing' and more importantly they're equally bad at saying 'We need this thing to be red instead of blue,' for example," says Joe Friend, VP of ad technology systems at The Walt Disney Co.

Ad tech ecosystem

The OTT advertising ecosystem, according to Adobe.


To put it bluntly, ad tech is a very confusing field. One debate often brought up is the use of client-side ad insertion (CSAI) versus server-side ad insertion (SSAI), the latter of which is frequently described as more TV-like. SSAI stitches ads into the stream, replacing the need to go out and get them from a different location. Igor Oreper, VP of solutions at Bitmovin, said in our March "State of Server-Side Ad Insertion 2019" article that 30%–40% of his company's customers use SSAI, and those customers are seeing 40%–50% more ad impressions after enabling SSAI. SSAI also avoids ad blockers since the stream has both content and ads together.

The biggest challenge in SSAI implementations is usually tracking and measurement, because some companies still trust CSAI more in this area. But since each client-side implementation runs its own software development kits (SDKs), every server ping creates undesirable latency. Client-side solutions use two players, one for content and the other for ads. Client-side integration requires development engineering time, because each platform (iOS, Android, desktop, connected TV, etc.) needs to have specific software written for it. For some companies, this can stretch to 10 or more platforms and becomes very unwieldy to manage.

"Client-side advertising is often clunky, with issues like buffering caused by switching players between programme content and ads. Users are exposed to black screens and spinning wheels while waiting for ad playback to start," says Tim Armstrong, general manager of AdEase for Switch Media. And the same problems happen going from ads back to content. So if SSAI means better ad delivery and CSAI means potentially lost revenue and more development work per platform, SSAI starts to look like the winner.

The Ad Tech Workflow

"How can the industry continue growing ad revenue if ad inventory is being reduced? The most obvious way is via addressable advertising," says Hock. Addressability, or the ability to personalize advertising to viewers based on known data, has been trending in the past few years. Anyone involved in delivering on connected TVs has now jumped on this bandwagon, but digital has been focusing on it for a while. "Addressability makes advertising more relevant, raising CPMs and inventory yield. As a result, TV providers can reduce the ad loads and still maintain healthy ad revenue and margin," says Hock. "The goal is to deliver a creative [video ad] with the right messaging to the right person, at the right time." This requires the following: 

  • A video ad server, which decides which ad or creative to deliver to each viewer
  • A dynamic ad insertion solution that stitches that ad into the video/TV programming
  • A video player to playback that stream
  • Ad beaconing or other technology to report back that the ad was watched, along with other important measurements factors, such as viewability

"However, when it comes to video advertising, 1-to-1 is sort of a misnomer. As much as I would like to think advertisers have regular meetings with their agencies to strategize on the perfect campaign and creative to deliver a unique ad to me, that's not happening," says Hock. "Advertisers more likely create a campaign for an 'audience.' A sample audience could be anyone who bought their product in the last 3 months and has household income over $75,000." 

The industry jargon for this audience is "segments." Creating user segments for personalization can be based on viewer data, including content interests, web analytics, clickstream data, feedback and reactions, third-party data from social media, retail purchases, and consumer intent data, according to Diana Horowitz, regional sales director of media and entertainment at Tavant.

"The data collected then needs to be cleansed, connected, and analyzed. Usually, this is done by building a data management platform that contains integrated data from [some of the sources above]," says Horowitz. "(In the video field), data management platforms like BlueKai and Krux provide customer segments which describe user profile and interest. These segments are then configured in the campaign management systems of platforms like Google Ad Manager, FreeWheel, etc."

Once the ad call is made, the user segments are matched with segments in campaigns that are eligible to serve. If it matches, personalized campaigns will be served; otherwise, default settings are used. "Publishers/programmers can choose to further personalize by providing additional information in the ad call to the ad server. This additional information is based on data [first- or third-party] that the publisher/programmer has regarding the content or the user," says Horowitz. 

This data can provide deep insights. But on Jan. 1, 2020, California will be the first state in the U.S. to enact consumer privacy legislation. Like the General Data Protection Regulation (GDPR) did in Europe, this law will give consumers the ability to request what data is collected on them, so anonymizing data will become much more important. One common complaint is that while personalization is technically possible, it's still not being used. "It's not a technical issue, [but] more about privacy and how ads are sold," says Magnus Svensson, media solution consultant at Eyevinn Technology.

Going SSAI

Crunchyroll's audience for anime content is one that demographic brands are trying to reach, especially since these cord-cutting viewers may be absent in the traditional world of TV. The service has both a subscription and an ad-supported distribution model. "The Crunchyroll experience is on 12+ platforms across web, mobile, and connected TV. A significant challenge around video ad monetization is maintaining a consistent user experience and compliance with ad business logic across these platforms," says Michael Dale, VP of engineering at Ellation, which owns Crunchyroll.

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