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CTV Media Buying Challenges

Contrary to popular belief, the bulk of CTV ad spending is still manual. According to FreeWheel, 68% of connected TV spending in 2023 went to direct insertion orders, 25% to programmatic guaranteed, and only 7% towards auction-based, non-guaranteed deals like PMPs and the open exchange.  Digiday estimates that as much as 70% of CTV inventory is traded manually, often during upfront negotiations.

Pricing is usually the issue when it comes to buying upfront inventory, especially when advertisers seek to apply their preferential inventory rates from linear TV to the CTV space.

Why? From the network’s standpoint, CTV represents a distinct ecosystem with its own audience, delivery mechanisms, and measurement capabilities. Therefore, the networks argue, CTV advertising shouldn’t be tied to legacy linear TV rates and should be evaluated separately. So, advertisers seeking to migrate their preferred linear TV rates to CTV may face resistance from networks looking to establish new pricing structures.

To avoid pricing issues, media buyers sometimes seek out programmatic buying of CTV as a good alternative. In fact, research shows that in 2022 connected TV accounted for over 20% of all programmatic video ad spending and about 10% of programmatic digital display. In other words, CTV ad inventory is increasingly flowing through programmatic pipelines.

However, programmatic buying has its flaws:

  • Publishers lack transparency. According to eMarketer, the biggest challenge advertisers face when buying CTV inventory is a lack of transparency. Multiple vendors can sell the same inventory. These vendors typically don’t talk to each other and instead conceal inventory behind closed walls, leaving advertisers blind as to where their ads are running.
  • Less control over the ad buy: Programmatic CTV buying often relies on algorithms and automated systems to make ad placements. This can result in less control over the specific placements and timing of ads. Advertisers may have less influence in determining where their ads appear, which can affect ad performance and brand alignment.
  • Brand safety: Advertisers need to ensure that their ads are shown in appropriate and brand-safe environments. However, due to a lack of transparency in programmatic buying, there is a risk of ads being displayed alongside inappropriate or objectionable content.
  • Ad tech fees: In the programmatic advertising ecosystem, multiple vendors and intermediaries add fees and markups to transactions. Advertisers and publishers end up paying multiple markups for the same campaign, driving up costs and potentially exceeding the actual value of the media being purchased.
  • Accurately determining KPIs: CTV advertising spans multiple platforms and publishers, making it difficult to measure campaign performance consistently and accurately. To solve this, ad tech vendors are building robust measurement and attribution solutions to better track and analyze the effectiveness of CTV campaigns.
  • Ad fraud: The lack of transparency in the CTV advertising ecosystem makes it challenging to identify and prevent ad fraud effectively. Advertisers often have limited visibility into specific placements and inventory sources, making it easier for fraudsters to exploit loopholes.

Premium versus non-premium CTV inventory: What’s the difference?

Premium is a bit of a buzzword in the connected TV space. Marketers seek out premium inventory to reach premium audiences. Publishers advertise themselves as a premium supplier. But what exactly is premium connected TV inventory? The criteria for labeling inventory as premium varies from publisher to publisher, but there are some common themes.

Non-premium CTV inventory refers to ad placements in less popular or niche content, often from smaller or independent publishers. Non-premium inventory may include long-tail or user-generated content that may not have the same level of viewership or established brand recognition. Examples include independently owned FAST channels like Pluto.

  • It’s important to note that FAST channels are different from AVOD. FAST channels are always free, while AVOD models can charge a fee. Plus, FAST channels include linear programming, unlike AVOD.

Premium CTV inventory generally refers to ad placements within high-quality, sought-after content, typically from reputable publishers or premium streaming platforms. This inventory is typically hidden behind a paywall, signaling that audiences are willing to pay for said content. Examples include streaming services like Hulu and Peacock.

  • Performance is another indicator of whether inventory is premium. Premium is the same thing as performance. Premium inventory has a demonstrated ability to convince consumers to buy a product.
  • Advertisers not only seek out premium inventory to reach premium audiences, but also to mitigate brand safety concerns. Marketers agree that advertising along premium content is safer than user-generated content — which typically falls under non-premium inventory.

Tip: A common misconception is that premium connected TV inventory is the only way to effectively reach your target audience. While hit shows and primetime spots are attractive, there are more efficient ways to reach your target than exclusively focusing on expensive premium shows. Break out of the old-fashioned dichotomy by expanding your buys to wherever your audience is watching — premium or not. FAST channels, for instance, are a great place to reach your target audience, despite being thought of as non-premium.

Political Watch Out 2024

Every two years, political advertising descends upon the advertising landscape, gobbling up a significant amount of media inventory and bringing challenges for nonpolitical advertisers—challenges that only seem to intensify with each election cycle.  2024 could bring these challenges to an all new high.  A highly divisive Presidential race and hotly contested Senate races will likely drive unprecedented political ad spend.

To navigate the situation, non-political advertisers will need to study and evaluate a host of considerations.

Inventory Considerations

This year’s political ad spend is forecast to land between $10.2 billion and $12 billion—a 13%-to-30% increase from the 2019-2020 election cycle. For advertisers, this glut of money can bring higher CPMs—especially during certain time periods, in certain locations, and on certain channels. Inventory scarcity is another consideration, although there’s enough inventory out there that price will be most advertisers’ primary concern.

Timing Considerations

Political spending data from 2022 and 2020 show that about 50% of the year’s political dollars ran in the 30 days leading up to the election, with 25% running in the ten days leading up to Election Day. In 2024, expect to see political ads start a bit earlier as a result of early in-person and mail-in voting.

Location Considerations

Geography is the other major factor that will impact advertisers during this year’s election cycle. Political campaigns will heavily target certain swing states and counties, and ad rates and inventory will be much more affected in those areas than those that reliably vote blue or red.

For the presidential election, there are about seven states that will be hotly contested and see an increased proportion of presidential campaign ads: Nevada, Arizona, Michigan, Wisconsin, Georgia, Pennsylvania, and North Carolina. Inventory scarcity and higher CPMs will be pronounced in these states and their major cities.

Beyond the Presidential election, high volumes of political advertising are expected in cities like Las Vegas, Philadelphia, Phoenix, Reno, Pittsburgh, Missoula, Billings, Boston, Wilkes Barre-Scranton, Butte-Bozeman, Detroit, Los Angeles, Charlotte, Atlanta, Cleveland, Cincinnati, Harrisburg, DC, and Raleigh-Durham.

Channels Most Impacted by Political Advertising

Political advertisers love video, so the increased demand for advertising space across media will be felt most acutely on CTV, linear, online display video, and those social networks that accept political ad dollars. The impact on CTV will be especially pronounced with an estimated 45% of all digital political advertising in 2024 going to CTV, up 26% from the 2020 election cycle.

Additionally, advertising on linear television comes with the possibility of getting crowded out of ad slots. Because of the FCC’s Equal Time Rule, if a candidate wants to advertise and buy 60 seconds on a certain channel, that channel must offer other candidates a comparable amount of time and a comparable placement. This can end up bouncing other advertisers in situations where there is limited inventory, and while somewhat unusual, it is most likely to occur during the leadup to Election Day in competitive locations.

Prioritize Brand Safety

The election season poses multiple brand safety threats, manifesting in the form of possible adjacency to negative political content and/or to political disinformation and misinformation.

While negative political advertising has been around for a long time, the volume of election-related mis- and disinformation expected this year poses a newer challenge for advertisers. This kind of content was an issue in 2020, but experts expect it to be even more of a threat in 2024 because of the emergence of generative AI, which makes it easy for bad actors to generate huge amounts of false or misleading content.

Considering this environment, leaders will need to dial up their placement control, and there are a variety of ways to accomplish this. Advertisers can work with partners like ComScore, Oracle, and Peer39 to ensure their ads are shown in premium, non-divisive environments, and implement allow lists and block lists to avoid political and low-quality websites. Utilizing smart contextual targeting is another way to make sure messages only show up in desired environments, and investing in programmatic guaranteed and PMPs can further secure premium placement.

Wrapping Up

In what promises to be a tumultuous election year with record political ad spend, marketers who take a “business as usual” approach to their campaigns risk misallocating their spend, alienating potential customers, and taking major hits to brand perception. It’s essential that leaders plan their campaigns around how political advertising will impact the landscape—especially during the start of Q4.

Future of Digital Marketing

In the rapidly evolving realm of digital marketing, adaptability is not just an advantage—it’s a necessity. The future of digital marketing is unfolding before us, shaped by technological breakthroughs, changing consumer dynamics, and innovative strategies. There are key facets and trends set to redefine the landscape of digital marketing in the years ahead.

1. Artificial Intelligence (AI) and Machine Learning (ML) Integration

Artificial Intelligence and Machine Learning are poised to revolutionize digital marketing. AI-powered algorithms analyze vast amounts of data, providing insights that enable marketers to make more informed decisions.

From personalized recommendations to chatbots offering real-time assistance, AI and ML are enhancing customer experiences and streamlining marketing processes. As these technologies continue to evolve, businesses that leverage them will gain a competitive edge in understanding and engaging with their target audiences.

2. Voice Search Optimization

With the rise of virtual assistants like Siri, Alexa, and Google Assistant, voice search has become increasingly prevalent. Optimizing content for voice search is crucial as more users rely on voice-activated devices for online queries.

Marketers will need to adapt their SEO strategies to accommodate natural language queries, long-tail keywords, and local optimization to ensure their content is discoverable through voice search.

3. Interactive Content Marketing

Traditional content marketing is evolving into a more interactive and engaging experience. Interactive content, such as polls, quizzes, and augmented reality experiences, captivates audiences and encourages active participation.

This trend not only enhances user engagement but also provides valuable data for marketers to tailor their strategies based on user preferences and behaviors.

4.Video Dominance

Video content has been a dominant force in digital marketing, and this trend is set to continue. With the popularity of short-form videos on platforms like TikTok and Instagram Reels, marketers need to focus on creating compelling and shareable video content.

Live streaming, virtual events, and 360-degree videos are also gaining traction, providing immersive experiences for audiences.

5. Personalization at Scale

Personalization has been a buzzword in marketing for some time, but advancements in technology are now making it possible to achieve personalization at scale. AI algorithms analyze user behavior, preferences, and past interactions to deliver personalized content and recommendations.

Businesses that can tailor their messaging to individual consumers will build stronger connections and foster customer loyalty.

6. Blockchain in Marketing

Blockchain technology is not limited to cryptocurrencies; it is making waves in marketing as well. Blockchain ensures transparency and security in transactions, making it valuable for digital advertising.

It addresses issues such as ad fraud, ensuring that marketers get what they pay for and that ads reach their intended audience. As concerns about data privacy and ad fraud continue to grow, blockchain has the potential to reshape the digital advertising landscape.

7. Augmented Reality (AR) and Virtual Reality (VR)

AR and VR technologies are creating immersive experiences for consumers. From virtual try-on experiences in the fashion industry to interactive product demonstrations, AR and VR have the power to transform how consumers engage with brands.

Marketers can use these technologies to provide unique and memorable experiences that set their brands apart in a crowded digital space.

8. Inclusive Marketing

Inclusivity and diversity are no longer optional in marketing; they are imperative. Consumers are increasingly drawn to brands that authentically represent a diverse range of voices and perspectives.

Inclusive marketing goes beyond representation in advertisements; it involves creating inclusive content, supporting social causes, and fostering a sense of belonging among diverse audiences.

 

From the integration of AI and ML to the rise of interactive content and the push for inclusivity, marketers must adapt and innovate to connect with their audiences in meaningful ways. By staying informed and agile, businesses can navigate the evolving digital marketing terrain and position themselves for success in the years to come.

Contextual Revival

With the cookie deprecation on the horizon and consumers demanding both privacy and relevant ad messaging, contextual targeting is having somewhat of a revival.Contextual targeting has been a viable digital advertising tactic for years, allowing advertisers to target their ads according to the content of a webpage instead of user IDs or behavioral data.  It can help advertisers reach the right people at the right time.  And 7 in 10 consumers want and prefer personalized ads.  For example, if someone clicks on a YouTube video about waxing cars, they may receive a video or banner ad for car wax.

There are different types of context used for digital ad targeting:

  • Category contextual targeting: Places ads based on general categories, such as beauty or automotive or finance. This is the most basic form of contextual targeting, and its relative broadness means it isn’t always completely accurate.
  • Keyword contextual targeting: Places ads on web pages based on specific target keywords.  This type of contextual targeting provides you with more flexibility—and potentially more accuracy—when placing ads.
  • Semantic contextual targeting: A more advanced technique, as it typically uses machine learning to analyze the context of a given web page and determine whether an ad is a good fit.

What’s next for the revival of contextual marketing?  Currently, over 3/4th of marketers use contextual advertising as a work-around to the decline of device IDs and third-party cookies.  This trend will only increase in 2024.  Especially, considering the data showing contextual ads are 50% more likely to be clicked on than non-contextual ads.

Ad-Supported OTT Growth

While linear TV is slowly declining, there is growth in ad-supported OTT-CTV.  Seeking profitability, streaming services are raising subscription rates and getting more aggressive with advertising.  Almost all streaming services now offer ad-plans.  Viewership of those services has also greatly increased.  Initial ad costs were high but have softened, although not enough to make up for the large divide between linear TV ad costs and streaming ad costs.

Peacock, Paramount+ and Hulu lead the way in ad-supported content, but Amazon’s Prime is expected to make a big splash in 2024 with its advertising plan.  How things shake out in 2024 with streaming video in general will keep advertisers challenged.

2024 Outlook

Consumers are predicted to spend over 12 hours daily with media in 2024—about 60% with digital media.  Just ten years ago, this was traditional media’s percentage. Nonetheless, traditional media—led by TV—remains a big part of the equation.

In 2024, we’ll continue to see a fragmented media landscape with more niche networks and platforms delivering more and more content. Audience engagement will be more difficult than ever with consumers spread out across different channels.  Example:  From 2021-2023, the number of individual TV programs has grown to over 1.1 million. Combined with an explosion of streaming services, the video landscape alone has quickly become vast.

More content will lead to more time spent with media but also increased fragmentation.  Marketers will be challenged to achieve the target audience reach needed for their brands to grow and succeed. It will be more important than ever to adjust the media mix to reflect the growing fractionalization.

2024 is also a presidential election year, which always makes marketing more difficult for advertisers, especially in swing states like Ohio.  With issue-based ad spending expected to increase double-digits compared to the last presidential election, the key to success will lie in continuously monitoring and adapting to the ever-changing marketing landscape, while keeping the customer at the forefront of all strategies and initiatives.

 

AI and Marketing

There are now over 250 companies competing or collaborating for the AI space as it relates to marketing.  Needless to say, AI has the marketing and advertising world’s full attention.

Next-generation artificial intelligence burst onto the scene in 2022 with the debut of ChatGPT and DALL-E 2, both from Silicon Valley AI pioneer OpenAI. ChatGPT has now grown into a near-overnight sensation, reaching a million users in just five days and hitting 100 million active users faster than any consumer app so far.

One of OpenAI’s biggest early investors, Microsoft, has since poured an additional $10 billion into OpenAI while beginning to introduce a host of new AI-powered features, including a ChatGPT-powered version of the Bing search engine.

In turn, Google—the first company to utilize large language models (LLMs)—has introduced its own AI chatbot, Bard, while promising new, soon-to-launch AI-powered features in Google Search, Gmail and more. There’s also Meta that has spent nearly 10 years and billions of dollars on AI and has taken to touting its LLaMA as a powerful open-source language model.

The evolution of AI use for image creation by one of the many new generation AI companies, Midjourney, is pretty astounding.

So, how will marketers use next generation AI? 

The Marketing Artificial Intelligence Institute recently published this list of questions to help identify if there is a case for AI use in a marketer’s marketing.

AI is or allows for smarter marketing technology or systems that builds smarter businesses.  Every marketer should learn how to use it to their advantage.  Agencies, advertising and PR, shouldn’t fear it if they become AI integrators for their clients—much like how agencies became Internet/digital integrators when the Internet came about.

Based on what we see and know right now, marketers and agencies should definitely be considering new-generation AI in their tech stack.

 

How Americans Are Listening

There’s the perception that radio is being overcome by streaming audio platforms like Pandora and Spotify, especially among younger audiences ages 18-34.  New research from Nielsen debunks that perception and shows that radio isn’t just viable but is the only audio medium capable of reaching large numbers of all ages.  That’s true of ad-supported and non-ad supported platforms.

As marketers we are only interested in ad-supported channels.  Radio’s impact is even more pronounced when comparing reach among ad-supported options for audio marketing campaigns.

Like the reach comparisons, radio’s impact is also more pronounced when comparing time spent with ad-supported audio.

Radio use spans the bulk of the day, reaching consumers on the path to purchase; it is the dominant audio source in the car.  A daily habit for millions, radio is a particularly effective medium for advertisers due to its legacy of reaching listeners during the prime hours of the day while they are out of home and closest to the point of purchase (commuting, working, shopping). Furthermore, radio is also the top audio source in the car. More than 60% of all time spent with audio in vehicles goes to AM/FM radio as of the Q1 2023 Edison Share of Ear study.

Americans are still listening to radio in large numbers and it’s one of the few mediums capable of high target audience reach for marketers.

Meta’s Threads

There’s been a lot of buzz around Meta’s latest new social platform Threads, Meta’s version of Twitter.  While paid ads are not yet an option, it’s very likely to be one in the future through paid Facebook/Instagram accounts. In the meantime, here are some great points to be aware of from an organic perspective and initial set-up:

  • The app has more than 90 million downloads as of midway through 2023.
  • An Instagram account is required to set up a Threads account – read on for more implications before doing so.
  • If a Threads account is created but then the decision is made to delete the account, the associated Instagram account will be deleted as well.
  • Instagram username, contacts and other related information will be pulled from your Instagram account.
  • You will be able to automatically follow all the same contacts you follow on Instagram, which means your Instagram followers will also easily find you on Threads.
  • Threads’ posts allow:
    • Up to 500 characters (Twitter limit is 280)
    • Links, photos, and video can be included – video can be up to 5 minutes (Twitter limit is 2 minutes 20 seconds)
  • Currently there is limited functionality:
    • No direct messages.
    • No edit button.
    • No open API – currently not able to connect to third-party tools to schedule content.
    • No advertising as yet – but we have it on good authority it will be available in the future.

Should your organization have an Instagram account you may want to consider setting up your Threads account to secure your username and be discoverable.  I also recommend an initial post.  It could simply be a greeting and statement that you are exploring the best ways to use this new platform and encourage folks to follow you on other platforms.  Be sure to include links to those platforms.  Be sure to only include links to those platforms that you update regularly.

 

Influencer Marketing

An industry-wide anticipated report each year, Influencer Marketing Hub has released the annual 2023 State of Influencer Marketing results showing growing importance for the tactic according to U.S. marketers.  80%+ have dedicated influencer marketing budgets for 2023; more than 2/3 have increased budgets for 2023.

Notable Highlights

  • Influencer Marketing Industry is set to grow to approximately $21.1 Billion in 2023
  • 63% plan to use AI in executing their influencer campaigns, 2/3rd of these brands will use AI for influencer identification.
  • Nearly 60% of influencers felt they faced discrimination in 2022.
  • Over 83% of our survey respondents still believe influencer marketing to be an effective form of marketing.
  • 71% admit to having increased the amount of content they produce and share.
  • 67% of those respondents who budget for influencer marketing intend to increase their influencer marketing budget over 2023.
  • 23% of respondents intend to spend more than 40% of their entire marketing budget on influencer campaigns.
  • There is a strong preference for working with small (nano – 39% and micro – 30%) influencers ahead of expensive macro-influencers (19%) and celebrities (12%)
  • It is now the norm to pay influencers (42%), rather than just give them a free product (30%).
  • TikTok (utilized by 56% of brands using influencer marketing) is now the most popular influencer marketing channel, jumping ahead of Instagram (51%) for the first time, and well ahead of Facebook (42%) and YouTube (38%).