A few weeks ago, Madison and Wall analyst Brian Wieser threw some very cold water on the fervor surrounding the supposed expansion of TV advertising fueled by tons of smaller or new to TV advertisers.
Roku is one of the companies that is bullish on this would-be sector, rolling out a self-serve platform called Roku Ads Manager about a year ago. The company says it’s seeing real growth here - with one key caveat.
“We’re seeing a new advertiser category emerging,” said Peter Hamilton, head of ad innovation at Roku on the Next in Media podcast this week. “We’ve got lots of different parts that make up our total platform revenue, and this area is the fastest growing.”
“I think the misnomer for a lot of these platforms is that they think there’s just going to be this onslaught of SMBs that is going to make up some really fast revenue opportunity. And the reality is that onboarding SMBs is challenging. You need to onboard thousands, if not tens of thousands or hundreds of thousands for that revenue to make up anything meaningful.”
What Roku is seeing is that performance advertisers, including many of those direct-to-consumer brands, are coming to TV quickly. That’s great, but it’s not the wave of mom-and-pop shops that make up huge chunks of the millions of advertisers drawn to Meta and Google.
“Those mom-and-pop shops, they advertise in the newspaper,” Hamilton said. “They advertise with local radio. Sure, they advertise on social and in search for sure. But they don’t have a sophisticated marketing team. They don’t have a very large marketing budget.”
“Whereas the digital performance buyer is very sophisticated in its methods and its measurement, and is doing its own analysis on revenue impact, total ROAS, their lift and regression analysis. They might be doing incrementality analysis and geo holdout lift studies and all of these kinds of things.
“That group is the one that we’re seeing move more heavily into CTV.”
Jason Fairchild, CEO of TVScientific, tends to agree with the idea that just because there are suddenly lots of options for non-TV advertisers that dollars will automatically follow is misguided.
“The market has this idea of SMBs, pizza shops, etc. all they need is easy access,” he said. “That’s not really the thing that’s going to get real performance brands onboard. For them it only matters if {TV{ works.”
“The big media companies don’t get it,” he added, citing Universal Ads (which aims to bring new ad demand to companies like NBC Universal and Paramount). “They let you buy ads, and then use something like Rockerbox for attribution. Unlike on Facebook, they don’t optimize on their own platform. It’s not about just making it easy to buy.”
The Intel Surrounding the Future of Web Advertising Seems Artificial
Last week, the ad tech nerd world was a ComicCon-level of excitement over Ad Context Protocol, or AdCP (cool, another acronym).
The idea, as I understand it, is to build a common means of employing AI agents to buy and sell digital media, and to cut down on the labor involved when media buyers and ad tech firms have to interact with every single publisher and platform in a unique technical way.
Sounds good - who wouldn’t want less headache work. Still, for this to be as revolutionary as it sounds, for AI agents to truly transform how agencies and ad tech companies operate, its got to work universally, right? On that point, I have some questions:
AdCP has been likened to the adoption of RTB standards a decade of so ago. Does that mean agent ad buying is going to be a replacement for, or limited to, the ‘open web’?
If so - that’s kind of limited, right? All we hear about is how the open web is dying - and that in the near future, nobody is going to surf the Internet anymore or visit actual websites. So why are we building agents to buy ads there?
Is this going to work in television? Because there are roughly a dozen TV ad sellers that matter, and they don’t offer up their ad inventory via RTB, and generally keep their best stuff close to the vest. So are these agents going to have access to live sports? Netflix? Without CTV, AI Agents feel like a non-starter?
What about mobile?
What about YouTube? Meta? Are the walled gardens going to play ball - because they are sort of integral to digital advertising?
Is Amazon part of this? Because if you haven’t noticed, their DSP is sort of taking over much of programmatic advertising, and their data is almost unmatched.
Last question - AdCP is being backed by Brian O’Kelley’s Scope3. Wasn’t Scope3 all about saving the planet by reducing programmatic advertising’s carbon footprint? Doesn’t AI require crazy computing power, and is thus really lousy for the environment?
Admittedly, I find this one a bit hard to penetrate. So please tell me I’m wrong.