The TV Business Wants More Advertisers. The Way it's Going About Getting More Seems Ridiculous.
So many ways to buy CTV makes it so hard to get started
Everyone wants TV to be a bigger business.
It seems like everyone thinks they are the ones who are going to make that happen.
And that seems like a potentially big problem.
Sean Buckley, head of revenue at Magnite, practically groaned when the topic came up a few weeks ago at the Luma Partners DMS event in New York. “I didn’t think there would be four or five platforms trying to do this,” he said. “I’m not so sure that’s going to be the path forward.”
The dream path forward, of course, is that the TV business goes from being dominated by a few hundred mega-national advertisers, to millions, even tens of millions, like Meta and Google. With the growth in streaming, coupled with more ad tech and data coming to connected TV - as well as the creative possibilities unlocked by generative AI - television advertising seems poised to become a much larger industry.
Except that Buckley’s estimate was actually a little on the low side. Consider that:
The ad tech firm MNTN just launched a $1.6 billion IPO backed by the promise of way more mid-sized TV advertisers
Earlier this year, tvScientific raised $25.5 million while promising Instagram-like ad-buying and optimization for TV
A startup named Upscale AI just raised $5.5 million
There’s the French startup Vibe
Don’t forget Streamr.ai
Comcast’s Universal Ads (which includes partners such as A+E, AMC Networks, DIRECTV, Fox Corporation, NBCUniversal, Paramount, Roku, TelevisaUnivision, Warner Bros. Discovery, and Xumo)
Warner Discovery unveiled Neo during its upfront
Peacock Ads Manager (which is integrated with TVScientific)
Should we go on? Do you think Meta and Google are getting nervous yet?
“You need a single access point,” Buckley told me in a follow up conversation. He mentioned that his wife works at a direct-to-consumer women-focused brand that has grown via social media, and might be a candidate to move into CTV. However, there are roughly two people at the company who oversee ad spend, he noted, and they have a lot to do.
“At a small, resource-constrained advertiser, I don't think [these platforms] are in the consideration set,” Buckley added. He believes there is an opportunity for someone to harness this market, but the question is how. “Remember, Facebook and Google are very well known consumer products. How do small companies find out about [these other platforms]?”
There’s the awareness question of course - and there’s also the market opportunity. Buckley noted that some, like Madison and Wall’s Brian Wieser, have pegged the new CTV market potential at around $5 billion, while others have predicted it could be closer to $60 billion.
“I’m more bullish than Brian,” Buckley said. “But still, with all of [these players] chasing that budget, there is going to be disappointment.”
Eric Franchi, partner at the ad tech VC firm Aperiam Ventures, is also bullish on this space, forecasting tens of billions in potential new spending. He made an important point on where those dollars might come from.
While we (meaning me) tend to lump all those millions of Facebook and Google brands together, there is a world of difference between a born-on-Instagram makeup brand, a regional car dealer that has long made its hay on local TV and radio, and the one-shop dry cleaner or plumber.
In Franchi’s view, “there are two big opportunities ahead.” The first being the small-to-mid-sized market, where MNTN, Vibe and others are competing. The idea being, it’s easier than ever to use AI to make TV creative, you can throw in a QR code for tracking, and start catering to local brands without requiring them to spend huge budgets.
“This does feel like a crowded bet,” he said. “It makes sense, though customer acquisition is going to be the challenge. Who besides Google and Meta can onboard millions of SMBs? It's not impossible but it's a challenge.”
The other distinct market, in Franchi’s view, is pure performance advertising, where tvScientific, and maybe even mobile ad giant AppLovin, could play. The bet there is to “show performance brands, and brands with performance budgets, that CTV converts like other digital channels. I am super bullish on this opportunity since it comes down to the best data science and AI, the customer universe is known and the budgets are there.”
Joe Yakuel, CEO of the performance agency Within, said there is a growing appetite here. With SMBs and DTC brands, they are always asking “what is the most efficient place to put their next dollar?” he said. “It’s still going to most efficient to start on Meta and Google. But once they start spending more, that equation changes.”
Yakuel said that the threshold to make such a shift used to be higher - brands that were spending $500,000 a month on search and social ads are now potentially maxing out at $200,000 a month.
But they still need assurances that CTV will satisfy their optimization needs. “The functionality follows the money.”
Jason Fairchild, founder of TV Scientific, agreed that performance brands are going to be tough customers in TV. “Marketers have to believe that TV is performing,” he said. “They have to see the data and attribution. Anybody can sign up with a DSP and get started running ads on TV. That’s not the magic. You have to have proprietary optimization tech.”
It’s not clear to me where the TV companies various self-serve platforms play here, or what ‘magic’ they offer, if at all. As Buckley noted, that might not even be their intention. For instance, Warner Discovery sees its Neo as a means of just making TV deal workflow more manageable Others see platforms like Universal Ads and Disney Campaign Manager are for brands that spend a fair amount on TV but don’t want to pay a big agency.
Another question is, regardless of whether all these new TV buying platforms can channel demand, are the ads delivered going to be both TV-worthy? And can whether they can support the volume of creative these social advertisers are used to?
“These are the kinds of companies that are accustomed to testing 100-200 creatives a month on Meta,” said Kevin Weatherman, Cofounder Upscale AI. “We can help them run dozens of ads a month on CTV."
Upscale AI’s advantage may be that it’s plugged into the Shopify ecosystem, and will be able to market itself to thousands of potential eCommerce advertisers.
"We see a lot of value in pairing creative with media buying,” Weatherman said.
In the meantime, the good news is, even with all this clutter, new advertisers are finding their way to TV. “We are definitely seeing net new demand,” said Buckley.
“While it’s hard for me to see [small brands] suddenly logging into all these new platforms and apps, we can’t forget that TV is a very powerful medium, even its more expensive. So we have that on our side.”
Great article