Why Streaming's Rise Means the Death of DSPs
TV has been one of advertisers’ favorite channels because of its unique ability to drive mass awareness for a brand’s product or service. In linear TV’s heyday, metrics like reach were essential for advertisers looking to find new audiences and generate demand.
Then along came streaming TV or CTV. Ad-supported streaming TV arrived with the promise of audience targeting, offering advertisers digital-like precision with TV-like engagement. This was not only welcomed, but also needed because in the early days of CTV, there were simply not enough viewing households to make reach matter much. With this focus on targeting, digital practices and technologies like DSPs ruled.
Streaming Becomes King
Even as streaming’s audience grew, advertisers continued to turn to linear for its unmatched reach; after all that was the beauty of TV, being able to execute large-scale brand campaigns. This has run its course as we have hit the tipping point where the streaming audience is comparable to the total linear audience.
Streaming has already surpassed cable and broadcast TV in total viewership, and its rapid evolution shows no signs of slowing down. Last year, 73% of adults reported streaming as their primary method of TV and video consumption, a significant jump from 42% the year before. U.S. adults also spent an average of 123 minutes watching streaming daily—second only to mobile devices.
Changing Viewership Demands a Change in Strategy and Technology
Going forward, streaming is the best way to capture mass audiences. For example, we’re already seeing brands leaning into streaming sponsorships and even buying streaming-only ads for the Super Bowl (the poster child of linear brand building). In the world of TV advertising, CTV has fully grown up and it’s time to move on from basic digital tactics.
For bigger brands and old school agencies, that’s easier said than done. In an effort to move away from relying on streaming TV as a targeting play, they need to divorce themselves from the technical (and digital) tools that they've become so reliant on--especially DSPs.
DSPs Won’t Help You Scale Streaming
DSP technology was born out of the digital world; an essential tool for deploying smaller budgets across millions of publishers in a targeted fashion. The use of DSP technology in TV advertising was appropriate when targeting was the only name of the game; but as we have seen above, the streaming landscape has changed. Deploying DSP technology is the worst approach to buying reach.
There are numerous reasons for this, the most obvious ones being the ad tech tax (i.e. the use of expensive but unnecessary DSP tech to buy streaming inventory). Paying a tax (and a premium) for deeply targeted impressions can be justified, but not when the goal is broad reach at scale. Furthermore, as DSP tech seeks impressions across the entire open web, advertisers become prone to fraud and brand safety issues since it’s hard to know or control where exactly a brand’s creative will run.
Worse, some DSPs will not even allow you to access premium inventory. And to top it off, with the “spray and pray” method being applied to TV across (too many?) small publishers, managing frequency becomes difficult, if not impossible. This is a problem since a successful brand campaign is not only defined by its reach, but also achieving the optimal frequency.
The DSP space at large is also undergoing a paradigm shift. Microsoft’s recent decision to shut down Xandr Invest portends big changes coming to the space. It’s expensive to operate a DSP, and expensive for brands to use them. Many of the smaller players are likely going to be sold off or shut down in the coming years.
The solution to buying streaming at scale is to do so directly. With a high concentration of the most valuable or premium impressions in 10 to 15 publishers (think Hulu, Peacock, Netflix, etc.), brand and tech vendors should implement direct integrations (and direct inventory buys). It solves the shortcomings from DSP tech, but above all else, allows brands to cost-effectively land tens of millions of households in one fell swoop, while simultaneously addressing the challenges around fraud, brand safety and frequency management..
To be clear and direct, we are not talking Supply Path Optimization or Curation. Those are merely commercial optimization of the same ill-fit digital technology. We are starting direct buys with the networks and publishers. As for linear TV, there are still some tentpole events for unlocking reach and brand building, but with time, they are becoming diamonds in the rough.
[Editor's note: This is a contributed article from Tatari. Streaming Media accepts vendor bylines based solely on their value to our readers.]
Related Articles
CTV advertising will dominate most brands' media plans in the next 2-3 years, yet major challenges persist. Suvadip Choudhury of Alliant talks about achieving scale, precision targeting, and the lack of overall education holding buyers back, but he also argues that there is light at the end of the tunnel.
10 Mar 2025
Philip Inghelbrecht, CEO and founder of Tatari, has closely watched the carriage deals in the cable space and the disruption that streaming continues to cause. Despite the momentum for so-called "skinny bundles," which may placate streaming subscribers and stop the loss of cable subscribers, he discusses why advertisers need to track this evolution and carefully adjust their strategies.
24 Oct 2024