Live event viewing is still a powerful differentiator for the broadcast industry but there is growing concern that international online giants like Amazon, Google and Facebook want to buy sports rights that would enable them to gatecrash this market. As a result, broadcasters must focus on maximising the value they get from their own content online – at the same time making themselves more useful to advertisers who want to reach large audiences in a small amount of time. One of the ways they can increase monetisation of online content and pave the way for data-optimised ad buying and better targeting is the use of dynamic ad insertion.
These are some of the findings in a report published by consulting firm MTM and sponsored by Yospace, whose DAI solutions are deployed with multiple tier one broadcasters for use with linear content on their online streaming services. The paper stems from a research programme that included a round-table seminar of 20 of Europe’s leading TV executives and a series of one-on-one interviews.
The report notes that live event programming has incredible power to attract concurrent audiences at scale, accounting for around 10-15% of total linear viewing on TV sets and approximately 70% of simulcast viewing on broadcasters’ OTT video services in the UK. “Many European TV executives believe that live and linear TV still provide unique value in the advertising market – concurrent mass reach without duplication of audiences. Internet video services find it difficult to replicate this due to audience fragmentation,” the report found.
“Sports is an important driver of these audiences,” it is noted. “As a result, many industry participants expect sports rights to be a focus for future competition in the live and linear TV market…Many TV executives expect major Internet media companies to dramatically scale up their acquisition of rights to premium live events.” The Internet media companies want to use live events to drive customer acquisition for pay services and attract large-scale audiences for advertising-funded services, it is suggested.
The research paper predicts that whatever the scale of their future live video content offerings, Internet media companies are likely to develop data-driven advertising offers around the content. “Given the rich first-party data these platforms hold about their users, they would be able to offer highly granular targeting capabilities, creating attractive propositions for advertisers.”
Despite the threat of increased competition for rights, most of the TV executives interviewed were optimistic about the commercial prospects for linear and live IP-delivered TV – but there is a very important caveat. “This is providing that broadcasters and Pay TV platforms can develop advanced TV advertising capabilities, such as DAI, that leverage first-party data in order to grow their businesses and defend against the online competition.”
It is imperative that broadcasters and TV platforms develop their online simulcast TV services, the research participants agreed. “European TV executives believe that dynamic ad insertion into linear IP streams provides a strong growth opportunity. DAI enables broadcasters to sell previously unmeasured and unsold advertising inventory, creating an immediate new source of revenue.
“Once DAI is in place, industry executives see opportunities to strengthen their data-driven advertising offers on linear IP streams,” the report notes. Audience targeting and frequency control are two of the likely benefits cited. “These capabilities will increase the competitiveness of their IP ad products against Internet media companies.”
One major European broadcaster is quoted: “From a commercial point of view there is definitely an opportunity around dynamic ad insertion and addressable TV. They could be a much bigger revenue stream than they currently are.”
There is a particular opportunity to maximise the value of live events programming like major sports and reality television, the reports says.
There was not a consensus about the danger from Google, Facebook, etc., in the live events content market, it should be noted. Many industry executives are sceptical about the ability of purely ad-funded business models to cover the costs of sports rights, for example. Some participants believe that global Internet media companies will struggle to acquire rights consistently across multiple territories, given the territorial licensing of these rights at present.
But there are also fears about the ability of online giants to cross-subsidise their video offers from other activities. And some TV executives said they believe it is only a matter of time before these companies become serious contenders for first-tier live sports rights.
The MTM/Yospace research paper looks at the growth of live IP-delivered television in Europe and the advanced advertising opportunities that are being created as a result. You can read it here.