Free Ad-Supported TV is Growing FAST. So Why Does it Feel Like a Bubble?
The ad mood is - rather glum
NBCUniversal has over 40 FAST channels. The BBC - a dozen-plus. LG has channels dedicated to “Little House on the Prairie,””Degrassi” and “Court TV.”
Nielsen’s Gracenote estimates there are close to 2,000 free ad-supported channels available via smart TVs, just in the U.S.
Is that a good thing? Not if you’re in the business of making money, it seems.
I spent last week at the decidedly un-Cannes StreamTV Show in Denver, Colorado, where a ton of connected TV ad tech executives, dealmakers, and lots of FAST proprietors mingled and talked about the future.
And when it comes to the state of advertising in the supposedly red-hot FAST (Free Ad-Supported TV) sector, the mood wasn’t exactly exuberant.
“Most FASTs are struggling with demand and fulfillment,” said Dave Bernath, general manager, Americas, Wurl -an ad tech company specializing in this space. “We’re kind of in a bit of a plateau phase right now.”
“Random programmatic advertising is not cutting it,” said Anthony Layser Executive Director, Content Acquisition, Xumo.
“Monetization is incredibly difficult and getting more so,” said Raphael Daste
Global Head of Media, Entertainment, Gaming, and Sports GTM
Stripe.
Wait, isn’t connected TV advertising booming? What’s going on here?
Well, for starters, there is suddenly a ton more streaming TV ad inventory in the market overall. Netflix, Disney+ and HBO all have their ad tiers, while Amazon plans to ratchet up its ad supply for all Prime subscribers even further. So pricing is down for everyone.
But there also may be just way too many FASTs at once for viewers, and particularly brands, to wrap their heads around. Not to mention that as much as people in the industry throw around these monster growth numbers, outside of the big guys (Roku, Tubi, Pluto), none of them show up in third-party research data - which is still pretty important in the TV business.
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“There’s a lot of channels, and a lot of it is not very good,” said Mark Garner, Executive Vice President & Head of Global FAST for A&E, which has bet heavily on the space. “We’ve compounded the problem with too much inventory. We need to work together to make it more valuable, and bring ourselves together rather than fighting each other.”
“Something as simple as Nielsen, we can’t agree on. It’s ridiculous.”
From the folks I talked to at the StreamTV show, it’s super easy to start a FAST channel. Maybe too easy. If you own a library of content, you can get off the ground for about a thousand bucks, and there’s basically no limit to how many FASTs can exist.
One executive noted the number of hours of available FAST content pales in comparison to what’s added to YouTube each day. Fair point, but the thing is, people inarguably watch YouTube. The view numbers are right there on the app.
But in FAST - who knows?
I recently found myself stumbling upon an all “Beverly Hills, 90210” channel (Brandon and Kelly were seriously concerned that Valerie was fully on her way to becoming a 'pothead’). How many others people were there with me?
Some folks I spoke to dismissed the notion that FASTs need more transparency, and more third-party validation. It sort of reminds me of the early days of web video originals, when I would ask whether a particular webisode was a hit or not, and I’d hear back “you may need to redefine your definition of a hit.”
Yet somehow, if the viewership for these shows or FASTs was off the charts, I’m sure we’d hear about it. At a certain point, when you’re talking with brands, a long tail goes from being a strength to the blogosphere of TV - and not in a good way.
Of course, FAST channels would be ideal for the would-be longer tail of programmatic advertisers. That market seems to be materializing slowly - which is part of the reason The Trade Desk wants to build its own TV software, according to Matthew Henick, SVP of the company‘s fledgling Ventura TV operating system.
“One of the purposes of our entrance [into the TV OS world] is make this ad supply more fair and transparent,” he said. “[Brands] need to know that ad opportunities are real, who is watching, what that show is, etc., to accurately represent that value.”
Yet that kind of transparency and control doesn’t necessarily fly with TV operators, who are building walled gardens in their own right, and are still new to this targeted advertising world. “There is an inherent conflict,” said Takashi Nakano, Vice President of Content and Programming, Samsung TV Plus. “As a viewer, do you want your TV data out there? Advertisers want to know what you ate for breakfast. I’m not sure that we want that out in the ad tech bid stream. So how do we create an ecosystem that is pretty good, but not one-to-one?”
That may not be music to a ton of performance brands’ ears. As of now, the word coming out of the Denver show was that programmatic demand was low, and CPMs were sliding. “Everyone is struggling,” said one ad tech exec.
It would seem like a culling of FASTs may be on the horizon. Or at least some more ad maturity. I know Nielsen says some of these channels are too small to show up in it’s data. I wonder why an ad tech company that sees these FAST’s viewing data up close doesn’t also start compiling - and maybe publishing - viewership data.
“We need to make the buying process easier,” said Bernath “We need third-party measurement. This whole ecosystem - we’re at the very beginning. You’ve got to have some of these things in place.”
Otherwise, you start looking like TV pretenders pretty fast.