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Published On: Wed, Nov 29th, 2017

Article: Navigating the Challenges of Connected TV and OTT Advertising

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Ryan Reed
Director, Innovation, TV and Video
Lotame

As more advertisers start to explore the benefits of connected TV and over-the-top (OTT) services, buyers and sellers are facing a slew of challenges. eMarketer’s Lauren Fisher spoke with Ryan Reed, director of innovation for TV and video at Lotame, about the major hurdles on both sides of the spectrum, including what’s holding up programmatic trading of connected TV and OTT inventory.

eMarketer: Buyers want to access connected TV and over-the-top inventory programmatically, but it’s still early. What are some of the main challenges marketers face today?

Ryan Reed: There are two big challenges today. One is technical, and the other is pure baggage from traditional TV tendencies.

In OTT especially, there are multiple platforms to deal with. In mobile, we have the duopoly of Android and Apple. In connected TV, you have to cater to Roku, Amazon, Apple, Xbox, PlayStation and smart TV manufacturers. There are a lot of different hardware platforms, and it creates a technical challenge. And there are probably 20 different hardware platforms that your OTT video goes to, which is a logistical challenge.

As the big content owners and media companies see their viewers move—whether it’s because of cord-cutting or supplementing with OTT—they’re trying to figure out how to connect to those OTT and connected TV platforms, taking the data that they spent years gathering and using.

But there’s also a business problem. Sales teams are only equipped to guarantee age and gender. The cross-platform measurement of that age and gender panel for OTT is so small that you have to churn through impressions to hit that number. If a sales team is only equipped to sell off of those guarantees, when they put their inventory out on OTT, they burn through impressions, and the viewer sees the same ad over and over. It’s a bad consumer experience, and a bad brand experience.

eMarketer: Are brand and performance advertisers gravitating equally toward connected TV and OTT?

Reed: It’s a pretty even split. Some brands are more likely to go on new platforms, and others just have more budget. Automotive, for example, has enough money to throw at new initiatives. Whereas liquor brands and CPGs [consumer packaged goods] might be the ones you don’t see on pure linear TV, but they’re coming into connected TV and OTT.

Some of these brands are willing to take a little more risk because they’re very elastic—meaning, it’s hard to turn your customers off—or they have a high-risk threshold. Overall, brands know that consumers are going to connected TV and OTT, so they have to be there.

eMarketer: Are these marketers getting access to that inventory programmatically, or is it still largely procured through direct-sold deals?

Reed: A lot of it is still being sold direct. It depends on the nature of the company. From what I’ve seen from the major media companies, especially the broadcast networks, they don’t want to change horses midstream, meaning they keep OTT all under the same audience guarantees they offer for their TV inventory as well.

But the buyers then have the same issue I mentioned with age and gender guarantees. Buyers are going back to networks after three months and saying, “This is very inefficient. I’m not able to fulfill all of these because it doesn’t work the same as traditional TV in terms of getting the overnights, the C3 ratings [which look at the live TV airing as well as the following three days of DVR viewing] and knowing how you did.”

eMarketer: But the shift to different audience targeting parameters or guarantees isn’t a simple fix either, is it?

Reed: No. There’s still a lot of confusion with targeting and audience capabilities. Just because OTT and connected TV inventory is delivered through the internet to a big screen or a mobile phone doesn’t necessarily mean it can be purchased the same way you programmatically purchase video through a DSP [demand-side platform]. And it doesn’t mean that your targeting options are direct, one-to-one targeting options that a digital marketer might use when they’re putting audience segments into a DSP.

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