The clock is ticking on the BVOD market

James Young, general manager, Telaria
By James Young, general manager, Telaria | 23 March 2020
James Young

Collaboration has a track record of producing some vital cogs in our industry. Over 20 years ago now, OzTAM was created out of desire for more robust measurement of viewing figures. More recently in 2016 we got an update with VPM reporting from OzTAM and also the creation of an industry body to represent the broadcasters’ wider interests in the form of Think TV.

New iterations keep coming with the Premium Content Alliance and the introduction of VoZ, which now could prove vital as broadcasters face challenges which have never been seen before.

Traversing the impact of Covid-19 remains unclear. Some tent pole sporting events have been moved like the Euros in soccer, while the Olympics weighs up its options. There's pressure now to reduce the impact that this could potentially have.

The market now more than ever needs to act together to investigate new collaborations which could offer increased revenue. There are many external forces which can’t be predicted, however, one new avenue which could potentially benefit all stakeholders and make lives easier for advertisers, is for publishers and broadcasters to make premium inventory buying easier by collaborating. The technology already exists for publishers and broadcasters to sell inventory centrally at a programmatic level, they just need to combine forces more formally to truly scale and demonstrate benefit to the industry.

While Covid-19 did not start this issue, it is emphasising the need for it to be addressed.

This is particularly true of the thriving broadcaster video-on-demand (BVOD) sector, which saw viewing soar 43% last year. Audiences are growing due to low-cost tech and the Netflix effect, which is diminishing appointment viewing and conditioning consumers to watch what they want, when they want. Broadcasters recognise the opportunity to provide, not just catch-up, but digital-only content, and are investing in world-class VOD services. In fact, the combined reach of free-to-air broadcasters currently in market is 34%, second only to Netflix with 51%. As illustrated below, Australia is the market with the highest penetration for the Netflix platform anywhere in the world.


Ampere’s slide presented as the Future TV Advertising event

In turn, buyers see a real opportunity to reinforce traditional TV advertising and also reach audiences that don’t consume linear TV, while achieving higher completion rates than other forms of video advertising. In a consolidated market, buyers demand the flexibility to buy seamlessly across all supply, so broadcasters have relied heavily on programmatic monetisation, which now outweighs traditional IO-based activity.

A number of imminent threats are coming, beyond the full realisation of Covid-19, to their status as the dominant ad-supported services in the market. Which means they have a rapidly shrinking window of opportunity to fortify their position. Collaboration between broadcasters can take many forms and is the way forward in the new digital world.

Making data the currency of choice
In the cookieless environment of connected TV (CTV), buyers are largely reliant on publisher first-party data to find audiences. But this situation is changing rapidly as buyers build up their own capabilities around targeting and identifying audiences across CTV supply. Standardisation around identity within CTV is enabling demand-side platforms to scale their own data assets. The Identifier for Advertising (IFA) is the semi-permanent identifier across CTV devices which can be used as an anchor for the household if the IP address ever changes. Publishers have a finite amount of time to maximise the adoption of their first-party data before buyers have enough technology around their ad stack to target and monetise their own audiences, ultimately leading to deteriorated CPMs.

To maximise the data opportunity, publishers would benefit from moving to fully logged-in environments. Some broadcasters are ahead of the curve in this regard, while others are playing catch up. With this they must all offer something unique in the market that buyers can’t already determine. Ideally a combined approach with a standardised data set that scales across all supply and offers greater reach across the BVOD market controlled by the broadcasters involved would be the best opportunity to position publisher insight as the currency of choice.

Competing with new services
Local broadcasters currently dominate the ad-funded CTV market, but competition will surge in the coming years as global content creators and rights holders build their own streaming services and bring them to Australia. Platforms such as Disney+ are already entering the market, with services such as HBO Max likely to follow soon. With only so much room for subscription models, ad supported services such as Tubi will become the norm and the increased choice will put a squeeze on local publishers. Broadcasters need to collaborate and create something bigger than the sum of their parts to compete with these new entrants to the market, keeping audiences locked in and engaged.

Addressability and complexity
Addressability is a huge topic this year and buyers see value in targeting ads to specific audiences. However, BVOD isn’t the only way to achieve this. Platforms such as YouTube and Facebook allow advertisers to reach the same audiences through a simple and streamlined buying process and get a lot of insight back. Advertisers don’t buy YouTube or Facebook inventory because of the great content, they buy it because it’s incredibly easy to set up, manage, and track. But the value gained from data-driven advertising around brand safe, professionally produced BVOD content is far greater than advertising on these platforms, and it can be increased even further if broadcasters come together to standardise data sets.

The BVOD market is strong – underpinned by seamless programmatic monetisation – but with Covid-19 and the other multiple threats building, the clock is ticking and broadcasters must recognise the opportunity to grow the revenue share they get today through collaboration. They must realise new market entrants and digital platforms are their real competitors, not each other. Driven by efforts such as the Premium Content Alliance, collaboration – not competition – is their best way forward.

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