When you sit down in your living room to watch TV, you grab a remote and navigate whatever interface your TV presents. The content you choose to watch may come to that screen in a number of different ways. You might think that since you bought that 50-inch smart TV, it all comes from the internet. Afterall, when you first plugged it in, you had to set up the network connection. And maybe that’s the case with your TV. But every household has a TV (likely more than one) that is custom and unique to the household’s viewing preferences, paid subscriptions, and HDMI or Bluetooth connected devices.
Content providers and the platform partners they work with perform a lot of fancy footwork to present you with the content you enjoy while also working with the brands and agencies that fund a great deal of their production. As video content providers strive to get their content to every screen, whether TV, mobile, or laptop, fragmentation of the landscape becomes painfully apparent.
Before we show what a converged world of TV and video could look like, let’s take a look at the fragmented landscape that exists today. We first need to understand how ad breaks have defined the different ways in which we consume video. Then we’ll look at the different technologies that silo content distribution, how technology fostered divergent cultures for buying and selling inventory across each channel, the technical barriers to TV convergence, and finally, the potential for a solution to address these limitations.
Here’s how we’ll break down advanced TV as it exists today:
- Video Classification By Ad Break
- Distribution Channels
- Video Ad Culture and Operations
- The Challenges To Overcome
- The Vision For TV Convergence
Video Classification By Ad Break
Digital video came to your browser in the early 2000s and has grown as a completely different medium than what you watch on TV. Executed in a web-supported environment, digital video grew with all the advantages in advertising that the web had to offer in display. You could place ads targeted to known audiences, meaning that I would see different ads than you might see. This didn’t happen with the content you accessed on your TV; everyone saw the same ads within a given region.
The other benefit to browser-based video was the interactive capabilities: an ad could be placed anywhere in the content, it could be of any length, and you could invite interaction that could increase the duration of the ad or take the consumer to a brand’s site for further engagement and a possible conversion. None of this was possible in linear programming, where shows were scheduled and ads were matched to the content and the assumed audiences who would watch that content.
Ad placement in video content has divided the viewing experience into three separate classes:
Ad-supported Video On Demand (AVOD)
AVOD is any ad-supported video that the viewer requests from a server at any time the viewer wishes to watch. This class of video is in stark contrast to linear TV that is provided on a schedule and is only available at the scheduled time for all viewers. AVOD is the rich marketplace of streaming video that has grown with all the benefits developed in browsers and web-based video players on mobile devices.
While the technology for distribution and ad placement can vary, AVOD is mostly IP-connected. The content is streamed and ads can be dynamically inserted based on decisioning algorithms and often using a service called server-side ad insertion (SSAI). Because the viewing experience is unique to a single viewer, the ad breaks can be of any duration and can include any number of ads. The ads can also be interactive and can take the viewer away from the content to engage with the brand elsewhere.
While the capabilities of AVOD are advanced and flexible, and can stream to today’s connected TVs, the more rigid ad break in linear still holds significant premium value.
Linear
Unlike AVOD, linear TV is thought to be scheduled programming only available to its audiences at scheduled times, which it is. However, when we consider the ad breaks of linear programming, the significance of this class of video becomes more clear.
Because of the scheduled nature of linear TV, the ad breaks must be of a set duration. Viewers all experience the ad break starting and stopping at the same time. Having a structured duration dictates the number of ads and the duration of each that can be included in the break. This restriction also limits the ability to insert ads programmatically as has become commonplace in AVOD.
Dynamic ad insertion (DAI) is possible in linear, but the process involves including a base set of ads (or ad pod) with signals in the content that allow for a new ad pod to replace the existing one. This makes the ad pod “addressable ready,” meaning that an opportunity for replacing the existing ad pod with new ads that address a given audience is available. If not replaced, the standard ads included with the content will still play.
Addressable linear holds a lot of premium value, but the enabling technology needs significant upgrades before the inventory can be scaled creating a viable market. The application of technology for addressable advertising in live linear is even more profound, but the process is daunting enough that ad insertion teams often engage in rehearsals before going live.
Live Linear
Like linear TV, live linear ad breaks are structured so that all viewers see the ad break at the same time and return to the program at the same time. The difference in live linear is that you never know when the ad break will occur or how many ads will be shown.
Consider live sports: the network might go to a break during a time-out or a player injury. Depending on what’s happening on the field, one ad might be shown before getting back to the action or multiple could be shown if there’s a long delay.
In standard linear where addressability is enabled, the programmer builds in a signal before each ad pod so that an ad can be selected and inserted at a frame-accurate position. No such signals are built into live linear because the programming is happening in real time; the signal is triggered manually. And then, upon signaling the ad break, millions of ad requests from each TV go out to determine which ad addresses the audience in front of each of those TVs. If not handled appropriately, the sudden surge in ad requests can strain the network.
Enabling addressability in live linear is the most challenging use case to handle, but not impossible. The technology exists today, but without standardization across platforms and distribution channels, live linear addressability will remain a challenge.
Distribution Channels
The content coming through your TV may come through a direct cable connection or satellite service, apps on your smart TV enabled by your home’s wi-fi and the TV’s embedded software, an HDMI port that originates from a set-top-box or game system, or even by a broadcast signal that either uses the digital or analog frequencies delivered by a nearby broadcast tower. These distribution channels have all contributed in some way to the evolution of TV as buyers seek to achieve more with their messaging. The different technologies involved have also created the fragmented landscape that exists today.
The good news is that TV viewing and ad experiences can advance without changing the distribution technology. However, we still have to work through them as we evolve toward TV convergence.
Broadcast: Then and Now
The first TVs brought content to you on radio waves over the air (OTA). Today’s broadcast TV technology operates differently. Local TV Broadcast Station Groups have been upgrading their Local TV Towers to support an IP Multicast-based technology called ATSC 3.0. Now known as NextGen TV, one of the key attributes of this new generation of digital IP broadcast is the ability to dynamically insert ads at the CTV device level. Many local broadcast markets are already upgraded to support both NextGen TV and traditional OTA-based signals. Scaling the inventory and increasing the demand in this market means understanding how it works and standardizing a signal that works across all mediums.
Cable (QAM-Based MVPDs)
A direct feed from a cable connection is QAM-based. QAM stands for quadrature amplitude modulation, which is a format for transmitting content for each of the channels it offers, and it’s different from the IP-based signals transmitted over wifi. Instead of the IP address associated with a household, a QAM-based signal for an ad request is passed through a proxy and associated with the ad server. This association makes QAM-based inventory look different, and in some cases it’s easily mistaken for ad fraud. Cable service providers are updating their set-top-boxes to provide IP-based signals, but the transition will take time.
For roughly the last ten years, traditional cable multichannel video programming distributors (MVPDs) have been supplying addressable linear ad inventory by working with their local affiliates. Whether this has been applied at a household or regional zone, the MVPD’s are very experienced in selling both local and national addressable TV Ads. Within the last year, a consortium of MVPD’s (Comcast, Spectrum/Charter, Cox) have been expanding the reach of addressable linear with an initiative called Go Addressable that enables national cable networks to carve out linear TV ads for addressable ad management.
Satellite
Instead of a land-based carrier as your internet service provider (ISP) with fiber optics or cable traversing the globe to individual homes, a satellite that orbits Earth is instead your ISP. This type of connection is common in rural areas where the cable has yet to reach.
Satellite connections offer an IP connection for your home, but when the content is offered as part of your satellite service, any addressable inventory has to also go through that service, creating still more siloed access to addressable inventory via the myriad of service providers globally: Sky Satellite in the UK, Telus in Canada, Claro in Brazil, DirectTV and Dish Network in the US.
The two primary pay TV Satellite MVPDs in the US, DirecTV and Dish, co-own a company named Invidi that enables addressable TV advertising. This system typically uses pre-cached ad inventory that is often stored in the hard drive or cache of a connected digital video recorder (DVR) or set-top-box (STB) in the service home.
Both DirecTV and Dish Ad sales teams have sold addressable linear inventory based on enabling their affiliate inventory splits on traditional cable network carriage relationships. Both satellite MVPD’s have recently set up linear addressable projects for their cable network partners.
Making addressable linear available via satellite service providers had taken a lot of coordination between competing companies. Inventory would scale more easily across service providers by standardizing a universal signal that can be more easily coordinated across all service providers.
Set-Top-Boxes, OTT, and Other HDMI-Connected Systems
Set-top-boxes (STB), or over-the-top (OTT) devices, are the content provider devices that you plug into your TV using an HDMI connector. Examples include Apple TV, Amazon Fire TV Stick, or the device your cable service provider supplies. Over the years, game systems have also evolved to provide content to your TV. Content from these service providers may stream from an internet connection or from a QAM-based cable connection, which impacts the data on audiences. An internet connection can break down audiences by households regionally while a QAM-based connection shows audiences of a region all coming from one server.
Regardless of the connection, service providers have limited-to-no insight into any content executed directly on a TV and would prefer that their customers connect using their devices so that they can collect the data they need to provide more personalized options.
To some extent these systems communicate with the TV they’re connected to–the remote for your STB will turn the TV on and off–but sometimes content will stream through the device while the TV is off. For ad playback, reports will show that the ad was “seen” when in fact the TV was off. For addressable linear to scale for service providers offering content through STB, we need standardized communication between the TV and the HDMI-connected device.
Connected TVs (CTV)
If you bought a TV in approximately the last five years, you bought a smart TV. Today’s TVs connect to household wifi and serve up content using the sort of protocols your computers and devices use. They serve streaming, on-demand content as well as programmed linear and live linear. Inserting ads and measuring them is almost as diverse as the capabilities developed in digital video. Almost.
IP-connected devices that stream on-demand content are accustomed to dynamic and programmatic placement and measurement of ads. But CTVs are where linear and digital converge. Where content comes from other distribution channels previously discussed, ad insertion and measurement operates on a very different system–not just in technology but also in operations, sales, and culture. And when that content is linear, the rich capabilities developed in digital video fall short when it comes to placing addressable ads.
Video Ad Culture and Operations
As with the different video classifications, ad buying and selling operations have evolved as part of the technology.
The Operational Difference Between Linear and Digital
At the dawn of advertising on television, ad placement was planned as part of the content. A pause in the middle of a show was an intentional segue to a commercial break, and the ads for each ad break were built into the final video asset. Ad buying and selling was done as part of planning the season’s content production. The process has matured, but the premise is still the same today.
The rise of digital video flourished separately after the internet became mainstream and with it the power of programmatic ad placement. Instead of matching ads to the content and a generalized audience, web-based video could provide ad experiences personalized to each viewer. Ad buying and selling happened in campaign management interfaces and campaigns used complex algorithms to match ads to viewers.
In digital video, audiences are targeted. In linear TV programming, audiences are becoming “addressable.” Addressable linear became possible with the advent of the SCTE tag. SCTE (often pronounced “scutty”) stands for Society of Cable Telecommunication Engineers. In 1992, well before digital video became mainstream, SCTE developed technology that enabled dynamic ad insertion. A signal placed in the ad content is triggered 4 seconds ahead of the break, which allows for an algorithm to find a suitable set of ads to replace the existing ad break.
Even though the prospect of addressable ads in linear came with SCTE tags 30 years ago, the capabilities have come nowhere near that of IP-connected digital video. The technology in linear is fragmented. And until recent years where consumers have more options than ever before, the innovation to a more dynamic medium in linear wasn’t a priority. In addition, each siloed distribution channel has resulted in operations that further divide the IP-connected markets from their traditional counterparts.
Where’s the Inventory?
As the demand for addressable linear increases, the market culture and technical siloes will have to adjust before inventory can scale across all environments. Having a fragmented system for signaling ad breaks limits the volume of available ad slots for addressable ad replacement. Without standardized technology that operates universally across systems, inventory is only offered in multiple proprietary channels. Not only does this technical barrier limit available inventory, consolidating measurement data across platforms impossible.
In addition to the technical limitations, premium content providers (networks and MVPDs) are tentative about giving up control of their ad inventory. On the one hand, moving toward addressable inventory opens up new revenue opportunities, but on the other hand the risk of having anything go wrong with ad replacement is too great. If the ad doesn’t load, if it’s not a good fit to the content, if it conflicts with any of their affiliate placements, or even if it doesn’t meet their standards for quality, the impact to their brand comes with a high cost. The resources needed to mitigate these risks are not yet fully known, nor are the benefits fully quantified.
Increasing addressable linear inventory in the market involves developing a universal signal that includes the protocols for both ad break management and measurement. More importantly, however, is easing content providers into a new market where they feel safe to offer more addressable linear to the market.
The Challenges to Overcome
The screens of linear TV and digital video have been converging in the space of CTV. With CTV, you can stream content on demand from an IP connection. You can sit down to watch your favorite live programming (sports, concerts, and more) in real time, or you can browse the scheduled programs to see what’s currently playing. The potential for premium addressable linear inventory is massive–but the scale is just not yet available.
Advanced TV, the new medium that stretches across all viewing experiences, across all screens regardless of distribution, and where diversity flourishes, has some challenges to overcome before the market is fully streamlined.
Some of the challenges we have to overcome are in:
Ad Break Management
Because of the structured and prescriptive nature of ad breaks in linear TV, the technology for ad break management is vital to the stability of Advanced TV. Today’s solutions are fragmented and managed differently across distribution channels.
SCTE tags brought addressable ad placement to linear and is even used in digital video for linear content and live linear applications. However, working with the technology across distribution channels can be a challenge and accounting for important factors like competitive separation, affiliate preference, and brand safety is not easily worked into the solution. Ad break replacement with SCTE tags typically happens per ad break, so you have to replace the entire set of ads or not at all. In cases where you can replace an individual ad in the break, the process is not clear cut and involves the challenge of making sure the ad placed doesn’t run up against a competitor’s ad. Clear guidance on the best practices for SCTE use is needed to help stabilize ad break management with SCTE.
Another technology developed for ad break management is a watermark signal. Watermark signaling involves an invisible row of pixels encoded into the content video used to signal the frame-accurate location for an ad. A TV or CTV app designed to read that signal can request an ad to be dynamically inserted into the content for a given viewer. While this technique holds promise, multiple types of watermark signals exist across the market and TVs may be equipped to read only one type of watermark, if at all. Watermark signaling holds a lot of promise beyond just ad break management, but standardization, guidance, and widespread adoption is needed to make this technology a viable solution.
Measurement
Measurement in linear has traditionally relied on Nielsen’s Gross Rating Points (GRPs), but GRPs are a measure of views for the content. This worked as long as the audience watching the content all saw the same ads as part of the content stream. As we separate content from ads in addressable linear, we have to find new ways to measure ads as a separate metric from content views.
One measurement service that is offered in CTV is automatic content recognition (ACR). The original equipment manufacturers (OEMs), or the TV brands such as Vizio, Samsung, and LG, have equipped their TVs to gather data on the content being executed on their TVs to provide a rich set of metrics for advertisers. However, each system runs a proprietary instance of ACR and the results are difficult to verify or compare to other ACR data collected in other systems. As privacy becomes more regulated across different regions globally, ACR is going to run up against privacy restrictions on some of the data they collect. As an option for measurement, ACR will have to be evaluated and standardized while allowing for privacy control that meets regional and global regulations.
Market Culture
Linear TV and live linear programming is associated with the most premium inventory in the video market. Great care is taken to keep that inventory premium, even in the case of addressable linear. Dynamic ad placement carries risk and the networks and MVPDs are wary to take that risk until the appropriate safeguards are in place.
Digital video has survived all the mishaps that can happen with programmatic ad placement: latent ad placement, ads that won’t load, mislabeled ads that could mar the publisher’s brand, poor brand safety measures, and more. Over time a rich suite of tools has been developed in digital video to mature the technology and account for all the use cases that matter to brands and publishers. However, these tools won’t work the same way in linear programming. We’ll have to find new ways to scale dynamic ad insertion while addressing all the concerns on both the buy and sell side of the supply chain.
General Fragmentation
If we used one word to describe the state of TV where streaming, linear, and live linear all fall under one umbrella term, that one-word description would be: fragmented. Different technology has evolved over different channels of distribution to handle unique challenges. This kind of fragmentation in a growing market has always been the state of the ecosystem where IAB Tech Lab standardization has been the catalyst to remove barriers to scale and streamlined operation.
…enter IAB Tech Lab’s Advanced TV initiative.
The Vision for TV Convergence
In 2011, IAB released a tech standard for a video ad serving template (VAST 2.0). Streaming online digital video had already been established in the early 2000s, but the release of VAST 2.0 correlates to escalated growth in the market at the time. Growth in digital video remains strong thanks to the continued use and adoption of standards like VAST. Today, the latest interesting trend to note is the growth in CTV.
Connected TVs are where linear TV and digital video are converging. Video content, regardless of the class of video or its distribution channel, is landing on connected TVs across the globe. And yet, the addressable inventory for advertisers is disparate and the technology is fragmented. Shifting from the limited ability to place ads in content for assumed audiences to addressing audiences more deliberately on a granular level has been a challenge. Products and technologies have been popping up throughout the market over several years to enable a more dynamic marketplace, but the inventory is lacking as technologies continue to be offered in siloed environments.
The time is ripe for standardization.
IAB Tech Lab has been watching the existing market technologies to see where the most promise lies in standardization. The market needs a solution that can be made available across TV environments for maximizing efficiency in dynamic ad exchange across all video screens, despite the video class or distribution channel. What we found was a multi-phased approach to standardizing what exists, while developing guidance and recommendations for new standards and a transitional path forward.
The IAB Tech Lab has commenced work on foundational standardization that will offer immediate results for today’s fragmentation, but our overall roadmap to a more dynamic ecosystem in Advanced TV is a five year plan. Over time, the goal is to establish a seamless experience in the supply chain with technologies that scale addressable media across screens.
Join us for our Advanced TV event in New York on November 10th and learn about what we have planned for 2023 and beyond. We’d love to meet you in person and discuss your concerns and visions for the future of Advanced TV.
Author:
Katie Stroud
Senior Product Manager, Ad Experiences
IAB Tech Lab