How Bad is CTV Fragmentation? A Comprehensive Look at the Challenges and Opportunities for Advertisers in a Fragmented Market The Connected TV (CTV) market is heating up, with
billions of dollars in ad spending projected in the coming years. However, with the rise of CTV comes fragmentation, which presents challenges for advertisers. The CTV market is an ecosystem with multiple players, making it difficult for advertisers to reach their target audience across different devices and operating systems. As consumers become more selective with their subscription choices, they are looking for ad-supported options, providing opportunities for advertisers to partner with
streaming services to provide targeted ads. However, measuring the effectiveness of CTV ads remains a challenge, and programmatic ad fraud is a persistent issue. AdTech companies that can develop better CTV ad measurement solutions and provide precise attribution metrics will emerge on top. Despite the challenges, CTV advertising is here to stay, and its potential is enormous. As they say, where there's fragmentation, there's opportunity.
The growth of Connected TV (CTV) as a top-tier advertising and content channel has been widely discussed. Initially, a small platform with a limited number of supporters, CTV has now expanded into a premier
advertising and content channel with numerous channels and intense competition. With more individuals ditching traditional cable services and opting for streaming services, media companies have introduced new channels to cater to their growing audience, many of which have an ad-supported alternative. Over the past couple of years, several popular services have been introduced on CTV
such as HBO Max, Disney+, and Peacock. Additionally, legacy streaming services like Netflix have also announced ad-supported options to remain competitive. At the same time, there are more Over-The-Top (OTT) devices that stream content than ever before. From video game consoles to smart TVs to third-party devices like Amazon Firestick or Roku, today’s consumer has more choices than ever
before to find and stream content on their TV – and advertisers have more options to reach them. Leichtman Research finds that 82% of all U.S. households have at least one internet-connected TV – and the average household subscribes to four streaming services. This exponential increase in services and devices has fragmented the market. What was once a simple media transaction is now a
potentially confusing conundrum for advertisers who struggle to find the right way to reach and measure their audiences across so many ecosystems. The increased number of apps, OTT devices, and subscription services can also overwhelm consumers, many of whom are starting to experience “subscription fatigue” and being more selective with what services they sign up for. A recent poll found
that 73% of consumers prefer ad-supported content that either removes or lowers the subscription cost – and streaming services have been more than willing to accommodate this request to generate higher subscription numbers. In this article, we will take a comprehensive look at the challenges and opportunities of CTV fragmentation for advertisers. What is Market Fragmentation? Marketing fragmentation is the concept that, as a market grows in popularity and scope, it eventually breaks into various and diverse segments to serve distinct customer groups. In this market, no single company or organization has enough influence to influence the industry single-handedly and customers break out into distinct sub-markets that pursue options based
on their needs, tastes, responses, or behaviors. Examples of markets fragmenting to serve distinct and unique audiences include social media (Facebook, Tik Tok, LinkedIn), online dating, broadcast and cable television, and now Connected TV. How the CTV Market is
Fragmented Connected TV’s rise to marketing dominance has been well documented. Once a fledgling platform that was supported by just one or two mainstays has now evolved into a premier advertising and content channel with hundreds of channels and fierce competition. As more consumers cut the cord and embrace streaming services, media companies have increasingly launched new channels to chase them – almost all of which feature some form of ad-supported
option. The last two years have seen some of CTV’s most popular services launch, including HBO Max, Disney+, and Peacock, and legacy streaming services like Netflix have now announced ad-supported offerings to keep up. At the same time, there are more OTT devices that stream content than
ever before. From video game consoles to smart TVs to third-party devices like Amazon Firestick or Roku, today’s consumer has more choices than ever before to find and stream content on their TV – and advertisers have more options to reach them. Leichtman Research finds that 82% of all U.S. households have at least one internet-connected TV – and the average household subscribes to four streaming services. This exponential increase in services and devices has fragmented the CTV market into various segments that advertisers must navigate to effectively reach their target audience. The fragmentation occurs at various levels, including content, devices, and operating systems. With the rise of CTV, there has been an explosion of content options. The days of only a few channels to choose from are long gone, and now there are hundreds of
channels, each with their own unique content. This fragmentation of content means that advertisers must carefully choose which channels align with their brand and target audience. It also means that advertisers must keep track of where their audience is consuming content and adjust their strategy accordingly. Consumers have more device options than ever before to stream content on their TV, and each device comes with its own unique set of features and
limitations. Some devices have built-in ad-blocking technology, while others may not support certain ad formats. Advertisers must be aware of the devices their target audience is using and ensure that their ads are compatible with those devices. Another layer of fragmentation exists at the operating system level. Each device runs on a specific operating system, such as Android TV, Roku OS, or Amazon Fire TV OS. Each operating system has its own set of
rules and guidelines for ad placement and measurement. Advertisers must be aware of the operating systems their target audience is using and ensure that their ads are optimized for those operating systems. One of the biggest challenges for advertisers is accurately measuring the effectiveness of their ads across various devices and channels. Advertisers must use multiple measurement tools to track their ads' performance across different ecosystems, which
can be time-consuming and complex. Another challenge is ensuring that their ads are optimized for each device and operating system. With so many different devices and operating systems to consider, advertisers must carefully craft their ads to ensure that they are compatible and effective across all platforms. Despite the challenges, the fragmentation
of the CTV market presents several opportunities for advertisers. With so many different channels and devices available, advertisers have more opportunities to reach their target audience than ever before. Advertisers can now target their ads to specific audiences based on their viewing habits, preferences, and demographics. The fragmentation of the CTV market has also led to an increase in
ad-supported content. Consumers are becoming more selective with their subscription choices and are looking for ad-supported options that reduce or remove subscription costs. Advertisers can capitalize on this trend by partnering with streaming services to provide targeted, relevant ads to their audiences. Connected TV (CTV) has emerged as a critical advertising channel, with 46% of US
consumers watching content on connected devices daily. The CTV advertising market is rapidly gaining traction as every major broadcaster launches over-the-top (OTT) offerings and independent players multiply. CTV ad spending is set to increase from $14.11 billion in 2022 to $18.29 billion in 2024. As Netflix and Disney+ launched ad-supported tiers, ad inventory will also grow in
volume. However, media buyers have mixed feelings about CTV advertising, with over $1 billion in ad budgets being wasted on running ads when CTV sets are off. CTV advertising is also perceived as difficult to measure, but connected TV ads can provide data points equal in relevance to other digital channels with a proactive approach to partnerships and interoperability. The CTV market is an
ecosystem, with smart TV device manufacturers, standalone media players, OTT providers, and content distribution platforms owning (but not always sharing) consumer data. The market is highly fragmented, with no single player dominating the smart TV OS market or the OTT market. The fragmented market landscape has implications for AdTech companies as device and data fragmentation
complicates CTV ad measurement. Sourcing data from multiple smart TV sets, OTT providers, and OS is technically complex, with many conflicting requirements and limitations, further complicating CTV ad measurement. CTV attribution is hard primarily due to the absence of shared standards for measurability. Nielsen pioneered measurement for linear TV advertising, but its frameworks are often
criticized for inaccurate audience counts. Brands (and their agency partners) are on the hunt for a better measurement solution. CTV ad space faces a dilemma as it needs cross-platform identifiers, but IP addresses are not a reliable ID as consumers share streaming accounts and use various devices to view content. The “big four” CTV platforms (Samsung, Roku, Amazon, and Google) employ proprietary approaches to measurement, further complicating CTV ad measurement. Since most platforms rely on IP addresses for user identification, it’s hard to determine who saw the ad: the same person on two different devices, multiple people on one device, or multiple people via the same OTT app. CTV/OTT ads rely on the server-side ad insertion (SSAI) mechanism, which needs accurate device ID data to deliver accurate impression counts. Programmatic ad fraud is a gruesome industry issue, with
invalid traffic (IVT) rate in open programmatic CTV advertising remaining in double digits. Sophisticated ad fraud detection mechanisms might help, but the challenge lies in implementing them. To gain full visibility into CTV ad performance, ad platforms have to integrate data from multiple sources. The good news is that AdTech companies that can develop better CTV ad measurement solutions
and provide precise attribution metrics will emerge on top. A proactive approach to partnerships and interoperability can provide data points equal in relevance to other digital channels. As more advertisers consider CTV advertising, competition will increase, leading to lower prices, and a buyer’s market. CTV advertising is here to stay, and its potential is enormous, but measurement and attribution challenges need to be overcome to unlock its full potential. |
All the news you need today, in a format that isn't TL:DR, summarized for the busy executive.
Streaming's domination of TV viewing continues to rise, with ad-supported streamers accounting for a growing portion of the market. According to Deloitte's Digital Media Trends report, the current economic conditions have led to around 50% of U.S. consumers making changes to their entertainment subscriptions. In
addition, approximately 60% of households now use free ad-supported streaming video services (FAST). The report also reveals that almost half of consumers believe they are paying too much for subscription-based video-on-demand (SVOD), resulting in a 44% overall subscriber churn over a six-month period. Interestingly, the group that spends the most on streaming services, Millennials, are also the ones most affected by subscription fatigue and cost-sensitivity. Nicole Carroll, the former editor in chief of USA Today, has been appointed to lead a local journalism initiative at Arizona State University. Carroll will work with ASU Media Enterprise and the Walter Cronkite School of Journalism to develop reporting methods and business strategies for local news outlets, with a focus on news deserts. Carroll sees the lack of local news as a crisis that leads to a loss of cohesion, political participation,
and community connections, and is looking forward to helping smaller communities save, sustain, and transform their local news.
If you want to establish trust and favorability with TikTok users, collaborating with a creator is an effective strategy. To ensure success, authenticity is key, so avoid providing a script and allow the creator to incorporate your brand into their existing format. Using trends and
picking the right community are also important. Identify long-term and short-term trends that match your tone, and encourage your creator to use the lingo and video formats popular in their community for credibility. Remember, 64% of TikTok users buy a product after watching creator advertising, so getting this right is worth the effort.
According to digital marketing expert Augustine
Fou, pre-bid fraud filters from legacy verification vendors are useless and advertisers are wasting money by paying for them. These filters only catch amateur bad guys who forgot to disguise key information, and they fail to filter out more sophisticated fraudsters. In fact, when turned on, fraud filters can actually let more fraud through. Fou's studies show that there is practically no difference in dark red (bots) or dark blue (NHT and naked ad calls) between paying for a fraud
filter, using a simple blacklist, or having no filter at all. He encourages advertisers to turn off fraud filters and test for themselves, and says that recent anecdotal evidence supports his findings.
Guardian Digital has launched EnGarde Cloud Email Security, an AI-powered tool designed to protect companies
against email threats. The solution uses machine learning to identify malicious emails that traditional methods may have missed, and it also leverages AI to prevent AI-driven attacks. By analyzing a hacker's past behaviors, EnGarde Cloud Email Security can discern patterns and eliminate confusion between noise and signal when working with large datasets. However, Guardian Digital acknowledges that AI can be used for malicious purposes, and that generative AI models trained on phishing
emails could generate highly convincing emails that are difficult to detect. EnGarde Cloud Email Security uses open-source architecture to provide protection and foster transparency. IAB President David Cohen has declared this the most disruptive time in his years working in the advertising business, citing unprecedented changes in areas such as cross-media measurement, currency, attention metrics, and the
redefinition of "premium video." He emphasized that there is a lot at stake and up for grabs, and cited findings from a forthcoming IAB report showing that 64% of media buyers surveyed consider social video a must-buy and that creator-driven video can be considered premium. Despite the changes, ad-trade association chiefs continue to pitch advertising executives with enthusiasm during this time of year.
Commerce media, which allows brands to engage with consumers beyond a retailer's website, continues to grow in popularity and has the potential to generate more than $1.3tn in enterprise value in the US, according to McKinsey & Company. Shopify added Criteo as an app in 2022, resulting in a 36% YoY increase in new Shopify merchants using Criteo's platform. Criteo and Shopify have partnered for four years and spent 18 months integrating platforms, with more than
1,000 advertisers now using the integration. Merchants can now access the Criteo App on the Shopify App Store via self-registration capabilities, which automates setup and enables quicker speed to market.
A study conducted by AdGuard found that on average, 19.6% of internet traffic is made up of ads and tracking requests, rather than the 7% previously estimated. AdGuard analyzed the number of requests
handled by its ad-blocking server and found that one in five domain-name system requests from a browser is made to load an ad or tracking domain. When an ad domain is loaded by a browser, it can trigger a chain of requests to other ad servers. This means that most of the requests made to load ads are hidden, and each depends on other ad domains to load. AdGuard was unable to draw conclusions for some countries because the number of requests processed was too small.
SeenThis has launched a new iteration of its technology, enabling advertisers to optimise performance through segment-by-segment optimisation. This enhanced offering reduces overall data use and carbon emissions, while improving performance. The updated proprietary technology, which uses segment-by-segment optimisation, is adaptable to both user conditions and video content itself. SeenThis's technology adapts to the complexity of ads
across their timeline and offers a number of benefits, including improved user experience, performance enhancement and powerful data-saving capabilities. The Swedish company has worked with more than 1,000 brands in over 40 countries.
YouTube superstar creator Alan Chikin Chow offered ad executives attending the platform’s newfront presentation
in New York City a masterclass in producing successful YouTube "short" videos. Chow explained the three main components of a successful YouTube short as: the hook, which must be visually engaging and compelling; watch time, which is the “king on YouTube shorts”; and rewatch value, because online long-form YouTube videos and shorts play on a loop until you scroll away. Chow then proceeded to turn the masterclass into one of his YouTube shorts, incorporating the IAB NewFronts audience
into it and transforming the attendees into his “rewatch value.” |
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INSIDE AMAZON ADS' CASH COW Amazon is one of
the world’s largest companies, with operations spanning across various industries. One of its most promising business segments is advertising. The company’s advertising services division generated $9.51 billion in revenue in the first quarter of 2023, up from $7.87 billion in the same period in the previous year. This represents a 23% gain, excluding foreign currency. The growth in Amazon’s
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WARNING TO GWYNETH PALTROWThe Federal Trade Commission (FTC) has issued a warning to advertisers, urging them to back up their product claims or face steep civil penalties. In notices sent to 670 companies, the FTC stated that companies are required to provide “reliable evidence” to back up their product claims, a requirement that has been in place for some time. However, many advertisers continue to make
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STRATEGIES The age of relying on third-party data for media buying may be coming to a close, but don't count out the power of collaboration just yet. Data clean rooms (DCRs) have emerged as a popular avenue for brands to uncover valuable insights, but they're not the end-all-be-all solution to marketing strategies in the face of a looming recession. While a DCR can help match audiences and allow brands to... READ MORE
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LANDSCAPE As Netflix dives into the realm of ad-supported streaming, it’s clear that the video advertising landscape is about to experience a seismic shift. With the streaming giant making its move, we sat down with Dave Morgan, CEO of Simulmedia, to discuss how Netflix’s new tier will impact the industry and what it means for advertisers,
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