• In Focus: Connected TVs’ Ad-Supported Future

    Our 8th annual VideoNuze Online Video Advertising Summit is coming up on Tuesday, June 12th. In the next few weeks leading up to it, I’m going to do something new - a series of posts called “In Focus,” each of which will provide a preview of one Ad Summit Session, including what I hope you’ll learn and why I think the topic is important.

    There is a ton going on in the video industry these days, and as an analyst, I’m constantly trying to identify and write about the most critical trends and news. I use the same approach in programming the Ad Summit. Hopefully the result is an outstanding day of learning for Ad Summit attendees.

    This first “In Focus” post looks at our 2:10pm session, Connected TVs’ Ad-Supported Future, which includes Rich Calacci (Chief Revenue Officer, Pluto TV), Jim Keller (VP, Sales, Hulu), Frank Sinton (Founder, Beachfront Media) and Seth Walters (VP, Demand Partnerships, Roku), with Colin Dixon (Principal Analyst, nScreenMedia) moderating.

    I’ve written many times about connected TVs (“CTV”) and continue to believe they are one of the most important factors in online video’s rise. It wasn’t that long ago when online video almost exclusively meant watching a short clip in a small player on your computer. How far we’ve come: now it’s a no-brainer to watch a full-length TV show or movie on a large HDTV from a variety of services in what FreeWheel has dubbed the “new living room” setting.

    While there are many enabling technologies, CTVs and smart TVs are the core ingredient. eMarketer estimates there are already over 181 million U.S. CTV users, many of whom now regularly use it, instead of a pay-TV set-top box, as their principal way of watching premium content. YuMe and Nielsen research found that 74% of CTV owners or 44% of U.S. homes use CTVs on a daily basis. Inexpensive options from Roku, Amazon, Google and others have made CTVs one of the most successful CE devices of the past decade.

    Something very important is now happening with CTVs: the premium content viewed on them is shifting from being almost exclusively ad-free SVOD to being a broader mix of ad-supported sources. Evidence of CTVs’ ad-supported opportunity is everywhere. Hulu has said nearly 80% of its consumption is via CTVs and I’ve heard the same from others. Meanwhile research from Roku has shown purchase intent increases 67% in CTV ads, as the company continues investing in ad-supported The Roku Channel to create its own inventory. The Trade Desk, a demand-side platform, reported booming Q1 revenues, due partly to a 21x YOY jump in CTV revenue.

    CTV ads are so compelling because they combine the best of digital’s targeting and interactivity potential with the best of traditional TV advertising’s brand-building benefits.The Ad Summit session will explore these developments, and dig into the implications. As more high-quality CTV ad inventory is created, how will it be sold? Will it gravitate to a reserved, upfront process? Or will it be filled programmatically, leveraging data, targeting and dynamic ad insertion, all of which is popular in digital?

    As important, as CTV viewership accounts for a greater percentage of a show’s overall viewership, how will it be measured, and how will this be combined with traditional Nielsen ratings? Meanwhile, will CTV ads look similar to traditional TV ads, or will they be more interactive, enabling new commerce models to flourish? And if so, how will these ads be sold?

    Looming just ahead is potentially CTVs’ biggest boost yet: the growing momentum of skinny bundles, whose consumption gravitates to CTVs and could therefore create massive new levels of CTV ad inventory (we have a session solely dedicated to skinny bundles’ future too). As this happens, more linear viewing will occur though CTVs as well. That raises the question too of how the monetization of live sports is set to change in the CTV-dominated future.

    Clearly CTVs are one of the most consequential parts of the online video ecosystem. How CTV ads will evolve should be on the radar of every premium content provider and streaming video service today. The CTV session at the Ad Summit will address these questions and more, empowering attendees to capitalize on CTVs’ massive potential.