How Buyers Can Capitalize On CTV’s Emerging Walled Gardens

On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Samantha Stockman, group director at The Media Kitchen.

This year’s virtual Newfronts made it clear: The connected TV (CTV) industry has heard advertisers’ pleas for better, more universal measurement. Whether it’s increased direct integration with demand-side platforms (DSPs) or building out an owned solution, a common theme was aggregating linear and CTV buys into one platform with the ability to control reach, frequency and duplication across an entire buy.

Improvements in measurement are coming at an important time, as CTV viewership continues its year-over-year rise. This is further bolstered by consumer behavior during COVID-19: The average time spent with CTV is expected to increase by 23%, according to eMarketer.

As a result, CTV providers are sweetening their individual offerings and investing in owned technology to convince advertisers to spend more on their platforms. There are two major strategies:

1. Hardware-first approach

Roku and Amazon dominate the marketplace. Roku captures 39% market share of CTV devices in the United States, with Amazon close behind at 30%. With Roku’s recent acquisition of dataxu and subsequent launch of OneView – and Amazon’s exclusion of OneView from its Fire TV platform – both now operate their own DSPs.

2. Content-first approach

NBCU launched Peacock in July – without support on Roku – as the sole source to access ad inventory on the platform. And Disney Hulu XP, coming later this year, will solidify Hulu as a major inventory source, granting advertisers access to both Hulu and Disney inventory.

This trend of platforms and streaming services building their own DSP solutions is a step closer to having an aggregated view of all linear and CTV in one place. At the same time, it restricts the inventory that advertisers can buy through a single DSP and increasingly fractures the CTV landscape.

Similar to paid social, CTV is increasingly moving toward walled-garden content providers that do not share inventory or data with each other.

Advertisers know from the evolution of paid social into walled gardens that it is important to understand the pros and cons in order to piece together a holistic plan.

Pros of CTV walled gardens

A single platform to manage OTT and linear TV buys: The line between linear TV and CTV continues to blur. TV is TV, whether it’s live, on demand or through a smart TV, connected device or cable box.

Access to first-party data: Through Roku’s logged-in user information and ACR technology, Amazon’s shopper data and Disney/Hulu’s viewer signals, platforms provide a wealth of proprietary data.

Deduplicated reach and frequency within the DSP: Within buys integrated into the DSP, better control and measurement of reach and frequency across a CTV buy provides a better viewer experience and wastes fewer advertising dollars.

Cons of CTV walled gardens

The largest drawback of the shift to CTV walled gardens is fragmentation, which causes a few issues:

It necessitates the use of multiple DSPs, eliminating a universal view: Amazon’s DSP covers ads on Fire TV; Hulu Disney XP will give buyers access to Disney inventory; and Roku’s DSP – despite allowing advertisers to integrate private marketplace deals – does not have access to all CTV inventory.

It muddles available inventory: Independent DSPs, such as The Trade Desk, continue to play a role in CTV buys with inventory available from Roku, Hulu and more. However, their access to inventory can become limited by what the platforms dictate, and they do not have access to the same exclusive first-party data sets.

Premium content is spread across disparate platforms: Platforms and streaming services that do not own their content – whether originals or licensed content – risk losing valuable premium content. We’re already seeing Amazon bundle IMDb TV inventory with Fire TV inventory and Roku deliver impressions to the Roku Channel in an effort to own the inventory.

How to navigate

In an ideal world, advertisers would have transparency across all platforms and networks to plan and report on unduplicated reach and frequency across their entire video buy, regardless of who owns the inventory.

However, in the current direction the CTV industry is moving, the reality is that it is tricky to structure a CTV buy in a way that gives you access to your audience across platforms and streaming services without cannibalizing yourself across campaigns.

For coverage, advertisers will likely need to work with a combination of partners. A buyer could, for example, use Hulu for access to top-tier inventory across devices, Roku and Amazon for coverage on respective devices, while suppressing Hulu inventory, and an independent DSP such as The Trade Desk to fill in the gaps.

No matter the approach, buyers have options and can build a framework that works for their goals. And if they understand the nuances of how the pieces of the landscape fit together, they can capitalize and create a powerful CTV plan.

Follow The Media Kitchen (@themediakitchen) and AdExchanger (@adexchanger) on Twitter.

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