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Converging linear and digital TV budgets for 2020

Bill Swanson, VP EMEA, Telaria
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Today’s consumers are increasingly using the term ‘TV’ interchangeably, whether they’re watching linear or digital formats, at home or on the go. This is especially marked for Gen Z, only 30% of whom watch any linear or scheduled TV. They don’t differentiate between formats and, on the whole, are swiftly adapting to the introduction of new formats and platforms without seeing the enormous differences that lie behind each type of screen.

But these differences are causing a very real divide in the advertising industry, with brands and agencies unsure of how to approach budget planning for linear and digital formats. With this uncertainty resulting in both wasted spend and under-monetised inventory, budgets need to converge to reflect the increasing shift to digital, ensuring linear and digital TV advertising are as interchangeable for brands as viewing is for consumers. Ad dollars should be spent where the eyeballs are.

While they may not be keeping pace with changing viewing habits, budgets are shifting from linear TV into connected TV (CTV) and CTV ad spend is surging. US advertisers are expected to invest almost $7 billion in the format this year, and more than double that figure by 2023. Responsibility for CTV can lie with either TV or digital buyers but, for the most part, it falls to digital teams, with linear TV budgets remaining the domain of the TV planners. While conversations are beginning in the US around the merger of TV and digital buying, these are in the very early stages and are virtually non-existent in the UK and Europe.

It’s worth remembering that it took time for print budgets to move to digital, and for digital to grow into mobile. As eyeballs spent more time in these environments and less time in traditional media, the advertising dollars followed suit. And the same is happening here with the evolution of viewing consumption and habits.

There are major discrepancies between linear TV and digital-style CTV buying, and these are standing in the way of full-scale convergence. The first is buying methods, with linear TV still largely bought well in advance during the Upfronts, while CTV advertising is bought on the fly using programmatic technology – in the same way that digital advertising is currently bought. Although linear TV is becoming more addressable, ads are still largely targeted according to the audience that is expected to watch a particular show, whereas CTV ads are targeted to specific audience segments viewing across a wide variety of supply. The biggest hurdle by far is measurement. An industry standard to measure the performance of CTV is still in the works, and so the two formats are far from aligned, with digital ad attribution techniques differing greatly from panel-based linear TV measurement tools, such as Broadcasters Audience Research Board (BARB) ratings.

Huge technological advances in programmatic advertising over recent years have the potential to deliver the same premium viewing experience of linear TV, and some feel the time has come for TV advertising to move in the direction of digital buying and execution. Utilising programmatic platforms, CTV advertisers can minimise wasted impressions by delivering the right message to the right viewer at the right time, using an array of rich data, contextual targeting, and brand safe tools. They can increase efficiency by tapping into inventory from multiple sources and can optimise campaigns in real-time based on in-depth analytics.

But it’s also good for the digital advertising world to learn from TV. The tight regulations around TV advertising and the strict rules around programming enable a slick and highly creative ad experience – most of us can remember a plethora of good TV ads, whereas not many of us can recall a display ad from a desktop or mobile experience. CTV platforms are conscious that to maintain strong ad revenues they need to provide the same high-quality experience as linear TV. They can’t afford to have the wrong ad appearing at the wrong time – for instance, an Adidas ad running next to a Nike ad. The open programmatic market feels too risky and uncontrolled for these platforms, leading to a rise in private marketplace (PMP) trading, where buyers can be sure they are buying a certain audience within specific supply.

For linear and CTV ad budgets to merge, the existing rules from the linear space need to be applied to CTV. The technologies do exist to put TV rules in the digital space and run CTV advertising in a linear way, using tools and techniques such as ad podding, frequency capping, competitive separation, and blacklists to give brands more control. Not all providers have the technology to meet buyers’ requirements and standards, so brands and agencies need to ensure the technology partners they work with have the capability to deliver a linear TV style broadcast-quality experience, as well as direct relationships with CTV publishers that offer premium supply through PMPs.

The recent news of the removal of third party cookies over the next two years is a good thing for the CTV market. CTV is not traded via cookies and the rise of contextual buying will increase, allowing buyers to spend in a brand-safe environment that prioritises content and context and delivers to highly relevant audiences.

Having a single media budget and standardised measurement to cover advertising across all TV platforms – both linear and digital – is a necessary game changer for the industry going into 2020. If the industry can bring TV buying rules into the digital space, while making the most of the efficient benefits of programmatic delivery, brands and agencies can buy TV of all types in a streamlined way, switching between platforms, formats, and devices as seamlessly as consumers do.

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