One of the most important annual events in the television industry takes place in New York. But it isn't an awards show. Network Upfronts is where major TV networks show off their shiny new content to advertisers who then purchase ad slots in advance.
A recent and massive difference at this year's Upfronts was the dominance of the programmatic ad deal, where algorithms serve up ads to the right user at the right time across their digital devices in a process called Real-time bidding (RTB). Programmatic ad buying was once an afterthought at Upfronts but no more. This was signalled by Netflix presenting at the Upfronts for the first time ever.
Sea change
Some are theorising that the shift to programmatical deals will lead to marketers adopting an ‘always on' model in which steady streams of ads are delivered to consumers and bought on the fly as opposed to being bought in bulk at an earlier date.
Marketers seem to be becoming more and more comfortable with this form of ad buying in general, as fewer of them are doing one-off purchases and more are beginning to set up recurring executions of programmatic ad buys. Many traditional linear ad buyers bought less at the Upfronts this year, giving them room to increase their programmatic spend.
Device wars
It's highly probably that linear ad buys will survive this transformation in one shape or another but it's clear that digital is becoming the dominant ad buy. With that shift in spend comes the new battleground: the device wars. Which devices will attract the biggest advertising spend?
Right now, the clear winner is the mobile phone. Mobile ad spending accounts for two-thirds of total digital ad spending in the USA, and it is expected that both the dollar amount and the percentage will grow steadily in the coming years. [1]
The mobile smart phone offers the greatest penetration of users that advertisers have ever seen. Plus, engagement seems to grow year on year with many adults spending four or more hours a day on their device and advances in targeting technology provide advertisers with succinct placement opportunities in front of their desired target market, no matter how niche. There is also a growing awareness of people ‘second screening' or browsing on their phone while they are watching TV.
Challenging mobile phones
While its dominance today is untouched, going forward the mobile phone will face steeper competition than ever. While the tablet has failed to present a meaningful threat with average usage appearing to decline year on year, there is a hunger among advertisers for a more ‘premium' form of digital ad. The answer has emerged in the form of CTV (Connected TV). Much sought after for many years, this ad format promises to be the fastest growing of any available currently.
Connected TV is a more costly video placement that plays on a smart TV via your streaming service. It currently holds a relatively low market share. It averages less than 10% of total US ad spend but it is set to skyrocket in the coming years as there is a growing desire among marketers for it. [2]
The high CPM (cost per thousand ads served) is a clear indicator of this with advertisers fighting tooth and nail for the relatively low amount of inventory that is available. Streaming giants are happy to comply. When Netflix reversed its long-held policy not to offer ads, marketers began frothing at the possibility of buying this inventory. That inevitably led to the exorbitant price tag of $55 CPM. This is especially the case as the major media conglomerates attempt to extract more profit from the streaming model.
It's uncertain to what extent this emerging format will carve out from mobile devices. There may be less excitement for CTV as some of the sheen and freshness begins to settle but it's clear that will not be happening anytime soon.
Likely future
While understanding the strengths and weaknesses of each device you are advertising on is important, I think most marketers will favour the age-old principle of spreading their ad spend across different devices. What the desire for CTV does signal is that marketers want to advertise on the latest much-hyped high-budget TV shows without sacrificing the flexibility that comes with digital, programmatic buys and the advanced targeting.
By Ross Flynn, Mobile Ecosystem Forum
ABOUT THE AUTHOR
Ross Flynn is Project Manager at MEF (Mobile Ecosystem Forum) a global trade body established in 2000 and headquartered in the UK with members across the world. As the voice of the mobile ecosystem, it focuses on cross-industry best practices, anti-fraud and monetisation. The Forum provides its members with global and cross-sector platforms for networking, collaboration and advancing industry solutions.
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[1] https://basis.com/blog/mobile-advertising-trends-and-technology-adoption-by-the-numbers
[2] https://www.thecurrent.com/programmatic-upfronts-streaming-ctv