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The connected TV opportunity in Europe

How a new industry initiative by Google, Roku and IPonweb is driving new opportunities in the European CTV ecosystem

· Tech,Policy,In the News

With penetration and usage growing rapidly, many executives believe that Connected TVs (CTVs) have the potential to revolutionise the TV ad market – driving convergence between TV and digital, opening up the market to streaming services, bringing new advertisers to TV, and creating new opportunities for addressable advertising and format innovation.

This view is shared by Paola Colombo, general manager of adtech and business development at Publitalia ’80, Mediaset’s Italian TV sales house. “This hybrid medium can really make the most of two media, bringing together the impact and brand safety of TV and the flexibility and addressability of digital,” she says.

However, despite enormous excitement about the potential of the new CTV ecosystem, the European market is underdeveloped – and many executives believe there are important barriers to unlocking the full potential of CTVs.

Now, leading European TV companies, agencies, advertisers, technology providers and trade bodies are coming together to support the European Connected TV Initiative, backed by Google, IPONWEB Roku and Fincons Group, which plans to explore these opportunities, as well as developing proposals aimed at unlocking CTV’s full potential in the years ahead.

In the USA, the CTV ecosystem is developing rapidly. As of March 2020, 80% of US households had at least one CTV, according to consumer research from Leichtman Research Group, with the major TV manufacturers managing devices in tens of millions of homes, creating a powerful, large-scale distribution platform for major streaming providers such as YouTube, Netflix, Hulu and Amazon, along with offerings like Tubi, Xumo, Pluto and Philo. Consumption of streaming services on CTVs has grown rapidly, with shelter-in-place or stay-at-home orders only accelerating this trend. At the peak of the US lockdown, in late March and April, streaming services were delivering more than 160bn streaming minutes per week, up nearly 20bn minutes on the pre-Covid period (Source: Nielsen, Streaming Meter Homes).

The major CTV manufacturers leverage their scale in the USA to negotiate access to inventory from TV and video service providers and use their own data to sell against this content, creating a powerful new pool of premium video inventory. Many of the major demand side platforms (DSPs) have also rapidly grown their CTV offerings, bringing the programmatic trading models to TV screens.

CTV viewing data is also being licensed, notably by Vizio, to support a thriving ecosystem of measurement and attribution providers, and many CTV businesses are rolling out their own analytics offerings.

And CTVs are also being developed as a platform for addressable advertising. Project Oar, a major US industry initiative, is developing standards to support the delivery of linear addressable adverts using overlays stored locally on Vizio TVs, similar to Sky’s AdSmart offering in the UK.

In Europe, the market is also developing. CTV penetration and usage is growing rapidly in most major European markets and CTVs are now well established as the largest viewing platform for many TV and video streaming services. Major broadcasting groups such as Mediaset and RTL in Germany and Italy are rolling out addressable advertising offerings based on the HbbTV standard, which is attracting a lot of interest and investment. In the UK, Freeview Play is built on the HbbTV standard.

Mike Shaw, Roku’s director of ad sales in Europe, says: “We expect to see CTV explode in Europe, and the lockdown period earlier this year has only accelerated this trend. Marketers are quickly understanding how TV – traditionally the most effective advertising medium – can work even harder with the addition of smarter targeting.”

For major media agencies, CTVs offer new ways of buying TV and video inventory on TVs – and opportunities to bring new advertisers into the market. Steve Bignell, chief executive officer of the Publicis Media Exchange (PMX), part of Publicis Media, says: “We are seeing enormous growth in terms of offerings, be that TVOD, SVOD, BVOD or AVOD; substantial growth in consumer behaviour, so time spent streaming; and huge advances in terms of access to inventory and targeting capabilities. That all points towards an opportunity we are strongly recommending to our clients.”

This positive perspective is shared by Simon Thomas, global director of audiences research and media investment management at GroupM, who believes that brands are now waking up to how CTV advertising can benefit their businesses. He says: “CTV is the consumer’s motorway to their on-demand premium content, with crossroads to linear TV and social media. Still in technological infancy, CTV offers advertisers exciting creative and communication opportunities to grow their brands and deliver commercial success.”

Perhaps most excitingly, CTVs present opportunities for real innovation – a chance to bring randomised controlled trials and dynamic creative optimisation to TV screens.

However, many executives believe the European CTV advertising ecosystem is in its infancy – and may develop in a very different way. The major TV platform providers are at an earlier stage than in the USA, and are still developing their advertising strategies. CTV data is being made available, but its role and value in media measurement is still being explored, sitting uneasily alongside TV audience measurement in many markets – and the growth of streaming services on TV platforms is creating challenges for panel-based TV measurement, with unmatched viewing growing rapidly. Although viewing of Netflix, YouTube and Amazon has grown rapidly on CTVs, many of Europe’s AVOD streaming services remain small-scale, limiting the supply of inventory on CTVs. HbbTV is clearly an exciting development, but its roll out is uneven and only newer versions of the standard fully support frame-accurate ad replacement to enable linear addressable advertising. Discussions between broadcasters and CTV manufacturers to support the roll out of linear addressable advertising are only just beginning in many countries.

Jean-Paul Edwards, chief product development officer at OMD EMEA, thinks CTV advertising is an exciting opportunity for the industry, but argues that the time is right to develop a more standardised approach to CTV advertising. He says: “CTV in Europe has enormous potential. An efficient, equitable, scalable and sustainable marketplace is needed to embed CTV in communications strategies through the 2020s.”

Oliver Botti, the strategic marketing and innovation executive director at Fincons Group, agrees. “The time has come to create a more engaging user experience, on both the content and advertising fronts. TV is still one of the most powerful advertising channels, but advertisers want to be able to connect TV ads to cross-platform campaigns and want to leverage identity, in compliance with privacy laws. CTVs are an essential part of the plan, bridging the gap between traditional TV and the digital media mix. We have been working with early moving broadcasters and brands leveraging CTVs as a way of driving this new cross-channel approach, creating the basis for both new interactive ad products and TV formats that can reach consumers across their different viewership habits.”

The new European Connected TV Initiative is planning to explore these opportunities in Europe in more detail, as well as assessing the barriers and the steps that could be taken to unlock the full potential of the new ecosystem.

The Initiative is collaborating with leading industry organisations and trade bodies, including EGTA and the IAB Europe, and is planning a programme of events and forums across Europe, involving dozens of executives from the buy- and sell-sides of the market.

Jon Watts, a media consultant and one of the project directors for the new initiative, said: “CTVs sit at the centre of many of the most important current debates about the future of media – debates about media measurement, planning and buying across TV and digital, about the responsible use of data to support targeted advertising, about identity resolution, the role of programmatic buying and the future of the TV trading model, and about the relationships between platforms and media owners. Our plan is to work with our partners and with the wider industry to explore these opportunities in detail during the coming months. This is an exciting initiative – and, we hope, a valuable one, for the entire ecosystem.”

Mary Ann Halford, also a consultant and project director for the initiative, commented: “We are looking to build a constructive dialogue among all the key players in the CTV ecosystem, including the sell-side, buy-side, intermediaries and enablers, to help unlock the full potential of CTV in the 2020s.” The initiative will be running virtual seminars and executive roundtables in the UK, Germany, France, Italy and the Netherlands during the months ahead.

Refusing to embrace this new channel risks being left behind, but Jens Thenakara, EMEA head of programmatic media at Google’s Marketing Platform division, believes that advertisers are ready to embrace this new channel. “As people spend more time at home, we are seeing industry-wide shifts toward streaming viewership. Many advertisers are working quickly to adjust and expand their creative and CTV usage remains well above 2019 levels and advertisers are very excited by the growing opportunity. So, we’re making it even simpler for digital media buyers to discover and secure ad inventory on high-quality streaming content. We will continue to work with the industry and listen to our partners to ensure that brands can respond effectively to this rapidly developing space.”

Similarly, Brian Golbere, senior vice-president of technology and TV solutions at IPONWEB, believes that the new initiative “provides a timely forum to capture the industry’s critical needs of the industry and the potential of the CTV in Europe”. He commented: “By synthesizing the input and ideas from across the spectrum of participants, we can build on this forum a foundation to bring scalable solutions to address market needs.”

This article by me was originally published by The Drum here