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For a Lucrative Future, CTV Advertising Must Look to the Past

Dave Morgan
Dave Morgan  |  Executive Chairman
Published: May. 25, 2022

Connected TV (CTV) advertising is booming. It promises the best of both TV and digital: sight, sound and motion with big reach on a big screen, and dynamic, data-driven targeting with closed-loop measurement and attribution. That's why analysts predict CTV will attract more than $20 billion in U.S. ad spend this year, and eventually capture and drive a good portion of the $65 billion annual TV ad market as well.

On top of that, ad-free Netflix and Disney+ have announced that they’re going to get in the CTV ad game, and Microsoft's head of sales is focused on bringing ads to video gaming on CTV.

As you would expect with this kind of momentum, every digital ad platform or business ever built or imagined now wants a piece of the CTV gravy train, particularly all the programmatic acronym-laden entities: the DSPs (demand-side platforms), SSPs (sell-side platforms), DMPs (data management platforms), CDPs (customer data platforms) and PMPs (private marketplaces).

These platforms were built over the past decade or so to enable the real-time-bidded, programmatic world that now rules ad banners, digital video and much of social media. And each and every day now, we awaken to ad trades chock-full of stories about how the new hot one is tailor-made to solve all of CTV advertising’s emerging challenges and create opportunities.

But I don’t think programmatic, banner-built ad tech is going to win the CTV market.

Rather, I suspect the winning solutions will operate much more like the ad-tech platforms that built our industry in the mid and late 1990s: sell-side ad servers and transparent ad networks. Here are my reasons why:

Banners and CTV are different. In CTV, the ad unit is an audience member’s attention over time -- not space on a page. Space on a page on the open web is infinite, and at scale its value trends to zero. Conversely, peoples’ attention on a primary entertainment screen is quite scarce, and its value is quite precious to relevant advertisers.

Brand-driven buying models trump direct response when it comes to attention. Banner systems were built to maximize last-second bid capacity to capture a penny-higher bid from the next direct marketer. When buying attention, brands care most about predictable exposure to target audiences -- ideally, right before they have a purchase opportunity -- to maximize memorability. Thus, CTV systems will need to optimize for future market audience guarantees, relevance, frequency control and publisher yield.

What’s old is new again. Optimizing for future market guarantees, relevance, frequency control (who isn't tired of seeing the same ad over and over on streaming channels?) and publisher yield read like one-pagers for NetGravity, OpenAdstream and Accipiter, sell-side ad servers of the early days. Doing it across companies and publishers reads like the transparent ad networks of the same era.

Wall-Street-like trading gives rise to smart media platforms. Yep, just when you thought Wall Street traders were going to dominate the future of advertising, the power is going to shift back to smart business systems working for principals in the market -- the media owners and the marketers. And the tech that drives it will look more like enterprise resource planning (ERP) and sales force automation (SFA) systems, and less like high velocity trading platforms.

Find out how Simulmedia’s unique TV+® platform for truly cross-channel TV advertising provides unified access to premium linear and CTV inventory across all networks and publishers, with full audience reach guaranteed and no wasteful duplication. Request a demo or email us at advertise@simulmedia.com.