To make linear TV more compelling, programmers must cut ad loads and boost relevancy. Can this be done in a way that scales to television-sized audiences? A team of industry experts thinks it can happen before the 2024 Olympics in Japan.
There are just too many ads on TV
According to Randy Freer, CEO of Hulu, television programmers simply don’t value the viewers time enough:
“We overloaded the formats; we overloaded the commercial messages going to consumers. So, they started to say, ‘this is too much…my time is more valuable than that.’ As an industry, I don’t think we value people’s time in a way that allowed them to say ‘I get this, there’s a transaction. I’m not paying as much as I could be paying because my entertainment experiences are being supported by advertising.”
Signs are that television can get the balance right between ads and content. For example, though Hulu offers an ad-free option for $4 more per month most people don’t take it. Moreover, Hulu’s engagement is the highest in the industry. Video streamers watch 29 hours on Hulu per month versus 27 hours for the ad-free Netflix experience.
The key to a more competitive experience is reducing the ad load and delivering ads that are relevant to the user. Programmatic ad selling and server-side ad insertion are key technologies enabling the addressable future of TV advertising. However, delivering targeted ads to tens-of-millions of viewers in real-time is still very challenging. Can the issues be resolved?
According to three experts in video streaming and live ad insertion, the future is bright for live ad-supported television. At Go-Live, an invite-only event to discuss the challenges facing live video advertising, representatives from Yospace, Akamai, and SpotX struck a positive note for the future. I asked where we would be with live and linear ad-supported video six-years from today, in 2024. Here is what each had to say.
Universal ad ID underpins ad workflow
David Springall, CTO of Yospace, sees automation of the buying, selling, and playout of video ads as key to future of live and linear video. By 2024, he thinks it will all be in place:
“It seems logical to me that all advertising sales will be automated by then. There’s going to be the use of computationally intensive technologies like blockchain to give purchasers better protection against fraud which further cements the need for pre-fetch at any real scale.  Ad copy management workflows will be made more secure. It is going to be handled in the same way that it is handled on broadcast, through a trusted chain of custody which is consistent throughout the industry. In other words, trafficking ads by a universal ID rather than some arbitrary URL.”
Addressable delivers increased ad value
Kevin Schaum, Senior Director of Advanced Solutions Group at SpotX, struck an optimistic note. He believes the industry will be at full addressability by 2024, and that it will deliver the needed revenue lift:
“The idea of addressability for everybody is a reality. Where there are personalized ads and the media owners, and broadcasters get higher rates because of that. I hope that in the next six years we can work through a lot of the challenges. I believe we are going to get there.”
Low-latency live is the challenge
“Akamai is partnering with somebody that is doing some blockchain identity work in the ad space that could become a big player in this. As there is more <ad> bidding, there will be more scale challenges with it. Trying to deliver that in the context of ultra-low latency – 1-second segments – and a very low tolerance for error I think is going to make it a really interesting time.”
Why it matters
Linear and live television need to reduce ad loads and, to maintain revenue and improve engagement, boost ad values with addressable ads.
Uniquely targeted tens of millions of viewers with ads in live and linear will be challenging.
However, experts believe it will happen in time for the 2024 Olympics.
 Pre-fetch: To ensure a targeted ad is available at the moment it is needed the ad-insertion platform calls for the ad well ahead of when it is needed