The growth of ad-supported CTV is completely upending our thinking on what an open marketplace or open ad exchange can deliver. Combined with new programmatic protocols and ad serving technology that’s finally delivering the transparency, control and security digital advertisers have come to expect, the open CTV ad exchange is about to democratize TV advertising in an exciting way.
CTV inventory scarcity is no longer a worry
By the end of this year, eMarketer says more than half of all US households will be cord cutters. And as viewers spend more time in streaming environments, eMarketer says the CTV ad market will continue to see strong growth.
The CTV supply chain’s exponential growth over the next few years will erase the biggest conventional objection to programmatic advertising in CTV: scarcity of addressable inventory. While many big streaming services and broadcasters will still focus on direct selling through insertion orders (IOs) and private marketplace (PMP) or programmatic guaranteed (PG) deals, we’re seeing the eruptive growth in free ad-supported streaming TV (FAST) and advertising-based video on demand (AVOD).
The US already has nearly 1,500 FAST channels. The FAST market is expected to top $4.5 billion in the United States in 2023, reaching $6.1 billion by 2025.
Even the major subscription-based video on demand (SVOD) platforms are now introducing ad-supported tiers, and as inventory liquidity grows, more will find its way into the open exchange.
All of this adds up to a tremendous influx of high-quality addressable CTV inventory for advertisers to target. Programmatic ad buyers can now access the biggest screen in the household, then optimize in real time across streaming services. But they need an open exchange to help them do this at scale.
Bringing transparency, control and security to the CTV open marketplace
The other barrier to a healthy open marketplace in CTV has been the perceived lack of transparency, control and security. But in the last few years, new technologies and protocols directly attacked those concerns.
The IAB Tech Lab led the way with App-Ads.Txt and ads.cert 2.0, bringing the transparency needed in the CTV environment. With the release of OpenRTB 2.6, advertisers can now get the same level of granular control to target a CTV ad break like they would a traditional TV ad break.
Companies such as Integral Ad Science (which owns Publica) are also innovating in this area as illustrated with the recent launch of their “Fully On-Screen” CTV prebid segment to ensure ads stop playing when the TV screen is off. They have also launched a “Content-Level Transparent” CTV prebid segment that enables ad buyers to target transparent inventory from CTV publishers that opt in to share channel- and content-level data for postbid reporting.
To be clear, bad actors still exist. But we’re seeing more developments like those outlined that provide the buy and sell sides the tools required to navigate the CTV open exchange more effectively and transparently.
The open ad exchange opens for publishers
With conventional barriers falling, newer FAST and AVOD services see big opportunities in the CTV open ad exchange.
These relatively newer players don’t always have the same deep-rooted advertiser relationships that the big broadcasters and scaled streaming services have. They don’t have the massive sales teams to service direct deals in the same way these bigger players can.
Instead, they’re leaning into the open marketplace in a controlled way to get an understanding of appetite for their inventory and the type of yield they can capture. Then they use the demand insights gathered via the open marketplace to inform their yield strategies and convert those advertisers into higher-yielding PMP or PG deals.
But the open exchange shouldn’t only appeal to newer and smaller CTV players. Any CTV publisher – including those already heavily selling via IOs and PMP/PG deals – can use it to supplement their yield strategies, especially when a unified auction (CTV header bidding) solution has been implemented.
The tools now exist to enable publishers to find incremental demand, test new regions and isolate new FAST channels to determine advertiser demand all in a controlled way where they can set price floors, advertiser block lists and manage things like brand safety and viewability.
Democratizing TV advertising
The maturation of the open ad marketplace democratizes TV for advertisers, enabling new types of advertisers to play on the biggest screen in the living room.
For example, digital and social advertisers in direct-to-consumer or local are really leaning into the open CTV ad exchange. Traditionally, these advertisers didn’t have the upfront budgets or sophisticated TV assets to transact via a PMP or PG deal with the biggest streaming services or broadcasters.
But what they do have is a strong understanding of how to use data and programmatic technology to find their audiences and use the data output to optimize their activations.
We’re going to see more of these digitally savvy advertisers leveraging the flexibility of the CTV open marketplace to make real-time optimization decisions across the growing number of AVOD and FAST services they invest with this year.
Catalyzing a cycle of value
I’ve been closely watching the evolution of the CTV open marketplace for years. It’s exciting to see the conventional concerns around inventory scarcity and lack of control/transparency/security falling away. And it’s even more exciting to see opinions shifting to recognize the potential.
You can see it clearly in a LinkedIn poll question I’ve been asking for a few years now. Nearly three-quarters of my peers in the digital ad world see the value in the CTV open ad exchange:
That majority opinion represents a tipping point that kicks off a cycle of value within the CTV open marketplace. Publishers are now delivering a critical mass of high-quality CTV inventory, and new tools are enabling both new and established CTV publishers to turn to the open ad exchange to understand advertiser interest and discover incremental yield.
That inventory and tool set is simultaneously democratizing CTV advertising, lowering the barrier to entry and bringing in new advertisers. The resulting advertising demand is helping to fuel the continued expansion of the ad-supported CTV landscape.
And the biggest winners of all are cord-cutting viewers, who are increasingly ditching premium SVOD and enjoying the proliferation of high-quality (often free) streaming content.
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