VIDEO & TV ADVERTISING GUIDE 2019 VIDEO MARKETPLACE Premium. Brand safe. Transparent.

www.rtl-adconnect.com FOREWORD

...what our industry does actually matters and goes far beyond simply selling products online and monetising content. Advertising helps fund the journalism that is the t’s a privilege for Video Ad News to cover an industry that is shaping the media and backbone of our democracies. Itechnology industry landscape like no other. It makes information freely When we first started out, video advertising was regarded as a sideshow and over the available to all years we have seen it move to take centre stage as it converges with TV advertising.

Last year we published the Addressable TV Advertising Guide with a view to mapping out their money. Our industry is a great place and Europe’s embryonic addressable TV advertising has an even brighter future ahead of it. market. This year we have expanded the guide to And what the industry does matters. If you want include video advertising and have strengthened evidence of that, you just have to look at how it’s the focus on the buy-side in this edition by no longer just niche trade publications covering the featuring a range of leading agency voices. industry. Now it regularly features in the mainstream Our aim in creating these guides isn’t to replicate press, even if it isn’t always for the right reasons. the many white papers already out there, but But my point is that for good or for ill, what our rather to use our experience to intuitively capture industry does actually matters and goes far beyond the industry zeitgeist by partnering with the most simply selling products online and monetising content. respected companies and experts in the field. Advertising helps fund the journalism that is the Much has changed over the last year. Thankfully backbone of our democracies. It makes information it seems like the Wild West days of video freely available to all. And it pays for equal access VIDEO MARKETPLACE advertising are coming to a close, and we’re to information, along with the entertainment that finally seeing meaningful progress on things makes us laugh and cry. As an industry we’ve a lot Premium. Brand safe. Transparent. like brand safety, privacy and fraud. to be proud of and we’re grateful to be a part of it. These developments will in my opinion lead A final thank you to our partners and friends at to a premium revolution, where we finally see FreeWheel, RTL AdConnect and Taboola, as well as creators and publishers getting their just rewards to the contributors who helped bring it all together. online, and advertisers getting more value for

CONTRIBUTORS: VINCENT FLOOD Editor: Vincent Flood, Editor-in-Chief, Video Ad News EDITOR-IN-CHIEF, VIDEO AD NEWS Lead Writer: Tim Cross, Journalist, Video Ad News www.rtl-adconnect.com Designer: Michael Salmon, [email protected]

3 TV

Thomas Bremond | General Manager, International, FreeWheel ON TARGET: HOW TV CAN ACHIEVE ITS ADDRESSABLE GOALS WHY CONVERGENCE, COMPREHENSION AND COLLABORATION ARE KEY

he ongoing evolution of the TV ecosystem 1. CREATE CONVERGENCE continues to open up exciting new Topportunities for both broadcasters and AT SCALE advertisers. Among these, the promise of As an increasing number of viewers are addressable TV advertising stands out, with US watching across many different screens, marketers forecasted to spend more than $3 audience fragmentation is becoming a 1 billion on data-driven TV ads by 2019 . growing concern – especially on the buy side. The main focus area for sellers is how to re-aggregate these viewing experiences What is addressable TV advertising? to create the kind of scale that buyers It’s the ability for a seller to offer need in order to transact and achieve their advertisers selective segments of TV goals. Advertisers also want to to purchase audiences based on things like geo, as smoothly and efficiently and possible, demographic, household income etc, which poses an additional challenge. and to serve different ads to those From a technical perspective, the segments at a household level, but biggest challenge arises from bringing within national content playout. together legacy and new technology TV However, the benefits of being able stacks. Operating individually, they each to offer different ads to different have different people, backgrounds, households come without a whole skill-sets, and measurement methods new set of complexities. The TV and to consider. This further complicates premium video industry must be ready the ultimate goal of the industry – to to face these in order to optimise the enable publishers to offer one buy viewing experience both today and in across all screens in a way that buyers the future. We believe the future success can receive a single report back. hinges on three strands: convergence, Some key players in the industry are comprehension and collaboration. already demonstrating that unification across screens is achievable. In the US, programmers are already beginning to unify their digital and linear inventory, while agency initiatives like Finecast have been successful in using technology to allow all actors in the buying chain to converge.

1 eMarketer, ‘Advanced TV Continues to Build Momentum’, August 14th, 2017, https://www. emarketer.com/Article/Advanced-TV-Continues-Build-Momentum/1016329?ecid=NL1001

4 The continuing evolution of the television 2. BOOST COMPREHENSION ecosystem provides an array of opportunities for BY ENHANCING INVENTORY both broadcasters and INTELLIGENCE advertisers. Traditionally, TV advertising has been an invaluable asset for upper-funnel brand marketing, but addressability enables 3. FOSTER CROSS-INDUSTRY solutions for middle and lower-funnel a particularly important role here as marketing. Opening up these additional traditional TV legacy systems are unable COLLABORATION revenue streams has led to an addressable to achieve the smarter, unified ad TV boom in the US, with eMarketer decisioning required across all screens. Finally, there’s the importance of forecasting growth of 23 percent in 20192. partnerships between industry leaders. We also need to unify data from Companies who have traditionally been Utilising data to make inventory more different actors in the supply chain. fierce competitors, must now unite in intelligent is a necessity once it’s been For example, operators are working order to achieve two goals: to ensure re-aggregated – so the buy side is able with programmers to make inventory TV continues to be the most effective to transact, follow, and reach users more intelligent, and ensure their data platform to deliver marketers’ goals, wherever they are. The goal to create sets are privacy-compliant and secure. and to provide an audience scale that viable solutions for marketers at all levels The ultimate goal of this is to create rivals the new digital platform giants. is already becoming a reality; although a better, safer advertising experience, it is happening at a swifter pace in the and build long-term relationships with This isn’t just a concern for those in US than in Europe. The ad server plays viewers – and ensure that the errors the UK or US industries – it is of global experienced within the early age of importance – and these collaborations can 2 eMarketer, US Addressable TV Forecast 2019, https://www. digital advertising won’t be repeated. benefit a variety of areas. In the US, for emarketer.com/forecasts

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ACHIEVING ADDRESSABLE TV SUCCESS

Companies who have traditionally been fierce competitors must unite to ensure TV continues to be the most effective platform to deliver marketers’ goals

These are positive and important first steps, and FreeWheel will continue to support and encourage them. example, the Open AP initiative has seen However, there is still significant leading publishers such as Viacom, Turner, scope for improvement – and we and Fox come together with the aim of need to see more unified technology simplifying purchasing on the buy side, and measurement standards, and provide advertisers with workflows to alongside region-wide TV alliances, reach segmented audiences. Meanwhile, for addressable TV to truly thrive. in Europe, the European Broadcaster Exchange (EBX) has united Channel 4, Mediaset, TF1 Group, and ProSiebenSat.1 Media with the ambition of providing a regional advertising opportunity against their premium content, and within the brand-safe environments that TV is well- known for; and smaller publisher alliances in the region are working to improve data enablement and measurement.

6 MEDIA ALLIANCES

STRONGER TOGETHER MEDIA ALLIANCES ARE TRANSFORMING THE EUROPEAN MEDIA LANDSCAPE

ver the last few years we have seen a number of interesting Omedia alliances springing up around Europe. Media companies who were once fierce rivals have found common ground and have been working together to pool their resources. Media companies who were once Various industry trends have provided fierce rivals have found common incentives for pushing these companies together. Firstly, the competitive pressure ground and have been working from the US tech giants has forced together to pool their resources. publishers to think about how to offer additional scale to advertisers. Working together enables them to simplify the buying process for advertisers, whilst also making data-driven advertising more effective as it’s easier to find audiences across a larger pool of inventory.

The increasingly international nature of the advertising business has also seen various pan-regional alliances spring up. These haven’t only emerged on the advertising side — content alliances and partnerships on multi-platform networks have also started to gain traction. The charts overleaf illustrate the ones Video Ad News has been tracking.

7 MEDIA ALLIANCES

TV ALLIANCES

Name Markets Participants Purpose Media Channels Is Data Main Tech Bundled? Provider European UK, Spain, Channel 4, Mediaset, Unified VOD inventory Digital VOD Yes Not disclosed Broadcaster Italy, France, TF1, ProSiebenSat.1 sales house for premium Exchange Germany European video at scale AdSmart UK, Ireland Sky, Liberty Global Scaling of Sky’s Addressable TV Yes Proprietary AdSmart addressable TV advertising offering OpenAP US Fox, Turner, Viacom, Creating consistent audiences Advanced TV, Yes Accenture NBCUinversal across video inventory Cross-Platform NCC Media US Charter Create, deploy and sell unified ad Linear and VOD Yes CM360 Advanced Communications, solutions to NCC participants Advertising Comcast, Cox Solutions Communications Viacom/Comcast US Viacom Data and tech sharing VOD Yes FreeWheel Alliance Comcast Atrium TV Nordics, UK, Viaplay, BT, Orange, Joint commissioning of drama VOD N/A N/A France, Spain, Movistar+, Deutsche series for streaming services Germany, Telekon, Iflix, Sky New New Zealand, Zealand, Antenna, Greece, Israel, Yes, TB, Newfilm, Russia, India Big Flix, Showmax Poland, South Africa, Malaysia ProSieben/ Germany ProSiebenSat.1 Build a joint streaming platform, VOD Not N/A Discovery Discovery combining 7TV, maxdome disclosed Streaming and Eurosport Player Platform LOVEStv Spain RTVE Create a joint HbbTV platform VOD Content Not Cellnex Atresmedia and web-based OTT platform via HbbTV disclosed Telecom to dsitribute content. Mediaset Studio71 Germany, ProSiebenSat.1 Jointly operated multi- Social Video No N/A US, Canada, TF1 channel network (MCN) UK, Austria, Mediaset France, Italy RTL AdConnect Germany, RTL Group Ad sales house to provide local All Video Yes SpotX France, ITV expertise and data for media Clypd Belgium, planning. ITV and RAI sell RAI VideoAmp Netherlands, international inventory only. UK, Italy

8 PUBLISHER ALLIANCES

Name Markets Participants Purpose Media Channels Is Data Main Tech Bundled? Provider Pangea Alliance 140 The Guardian, United sales house, offering Display, Yes AppNexus Countries Dennis Publishing, targeting using first-party Outstream, CNN, Mansueto, data and reading habits. Mobile, Rich Ventures, Reuters Media The Ozone Project UK The Guardian, News United sales house, Display Yes Not disclosed UK, The Telegraph offering agencies to use their own data to target ads across domains. The Verified UK The Guardian, News Exclusive sales house Outstream Yes Unruly Marketplace UK, The Telegraph for desktop and mobile (Desktop and outstream video Mobile) MediaSquare France Altice Media, A merger of La Place Media Display, pre-roll Yes The Rubicon (Formed after Bertelsmann, France and Audience Square, video, native Project La Place Media & Télévisions, Lagardère MediaSquare acts as a AppNexus Audience Square Group, Le Point, TF1 joint sales house and also merger) sharing knowledge on tech and best practices TRUSTX US Time Inc, Viacom, Joint marketplace for Display, plans for Undisclosed Google CBS Interactive, News premium inventory with video and in-app Marketing Corp, ABC, Meredith, unified standards around Platform NBCUniversal, Conde viewability and transparency. MediaMath Nast, Fox News, Hearst The Trade Desk Nucleus Marketing US Gannett, Hearst, Joint sales house, to Display, video Yes Rubicon Project Solutions McClatchy, tronc help reach local news audiences with national media campaigns. Concert US Vox Media, NBCUniversal, Joint sales house, Display and video Yes Index Exchange New York Media, combines first-party data for desktop and Rolling Stone, PopSugar, and unique ad units. mobile, specific Funny or Die, ad units designed by Concert

9 VIDEO & TV

Stéphane Coruble | CEO, RTL AdConnect IT’S TIME FOR VIDEO’S ETHICAL RENAISSANCE

he last few years have seen the worlds of Whilst it’s always easy to analyse the past with online video and TV advertising become the benefit of hindsight, it seems fair to say that Tincreasingly enmeshed. At first we saw some of the large tech platforms could have the web-native players touting their data avoided many of the problems with brand safety, privacy and fraud by simply observing how the TV and targeting, whilst the TV industry focused industry has been operating for many years now. mostly on their scale and the quality of their content. However, over the last few years we have seen both sides trying to be me more like the other. This is because the future winners OUR RESPONSIBILITY TO in video won’t be ‘digital-first’, nor will they be ‘TV-first’, they’ll be the companies who can THE CONSUMER blend the best of both. Across the TV value chain, everyone’s interests are protected in one way or another, which not only helps build trust between the various stakeholders, but also puts the industry on a more stable and sustainable footing.

Most importantly, the consumer is protected as both TV content and the type of advertising shown ...the future winners in video to them is monitored and regulated for quality control. Each market has its own regulations, but won’t be ‘digital-first’, nor will let’s take the UK as an example. Organisations like Clearcast help to ensure that every TV advertisement they be ‘TV-first’, they’ll be the complies with regulations designed to ensure that advertising isn’t misleading, harmful or offensive. companies who can blend the Children are protected too. For example, TV ads aren’t best of both. allowed to imply that children will be less popular if their family doesn’t use a product or service. Ofcom then regulates things like scheduling, so children’s programming with a scheduled duration of 30 minutes or less cannot be interrupted by advertising whatsoever. Similar rules to protect children are in However, as the TV industry evolves it’s important place right across Europe and help to build trust that it retains its core strengths, one of which is the between our industry and those influenced by it. way in which it takes its responsibilities towards individual consumers, advertisers and wider society seriously. This behaviour - and the regulations that ensure compliance - is a key cornerstone of TV’s status as a premium media channel.

10 QUALITY CONTROL AND THE FAKE NEWS

The TV industry also has a responsibility towards adult viewers. Whilst the mainstream media undoubtedly veers into bias from time to time, in Europe it’s fair to say that for the most part news reporting has attempted to report the facts. That’s not to say that TV has been perfect. Media bias is almost impossible to avoid completely - for example, the simple act of choosing what should or shouldn’t feature on the news is easily open to bias, or perhaps some broadcasters might give a certain slant to particular story.

But more often that not, TV news reporting has ...maintaining the trust aimed to provide truthful information to viewers and has been tightly regulated when it comes of advertisers, consumers to elections. Whereas businesses who portray themselves only as media agnostic platforms have and wider society is key often seemed to pretend that they were devoid of any responsibility for the behaviour of their creators. to our future success.

Taking this stance has allowed the leading platforms to be ‘weaponised’ - most notably in the case of Cambridge Analytica’s use of Facebook - by those who wish to unfairly distort the outcomes of elections and referenda by distributing ‘fake news’. return. A recent study carried out by GroupM and Newsworks found that ads appearing in quality online environments are 42 percent more cost effective GOOD BEHAVIOUR IS GOOD for advertisers based on levels of engagement, FOR BUSINESS viewability, above the fold placement and dwell time. In contrast, ads in quality digital environments - which Broadcasters and pay TV operators are GroupM defined as a website where consumers have protected by these regulations and standards “a deeper relationship or affinity with the brand”, are too, which makes it much more difficult for 98 percent more likely to be placed fully above the one bad actor to poison the well by tarnishing fold. Premium placements also produced stronger the reputation of the wider industry. response rates across the board with average uplifts Creating truly brand safe environments helps to of +10.5 percent for brand awareness, +19.2 percent build trust amongst advertisers of course. But the for ad recall, +9.7 percent for brand perception buyers have a role to play too. For far too long, far and +10.3 percent for recommendation intent. too much money was wasted on video inventory If anything, I believe all of those engagement figures that was being sold at “too good to be true” prices. are likely to only improve in the future as we improve Now we know that the reality was - and still is - the advertising experience with enhanced creative that cheap video inventory is far from premium, and targeting. But in doing so we need to remember as quality video is always expensive to produce that maintaining the trust of advertisers, consumers -- but is also far more likely to deliver a positive and wider society is key to our future success.

11 AGENCY

Q&A: JAKOB NIELSEN, CEO, FINECAST

n 2017 WPP’s GroupM launched Finecast, a new WHERE IS ADDRESSABLE TV SPEND division dedicated to addressable TV advertising. COMING FROM? IS IT TRADITIONAL IIn their first year, Finecast ran more than 400 TV ADVERTISERS LOOKING TO campaigns for more than 100 advertisers. In the UK ENHANCE THEIR TARGETING, OR IS IT NEW MONEY AIMED MORE AT the company serves addressable TV ads to all major PERFORMANCE? broadcasters - Channel 4, Five, Sky and ITV - and can also deliver to Sky, Virgin and YouView set-top boxes, Over the last 18 months particularly as well as to various OTT devices, smart TVs and we’ve seen digital money moving games consoles. Here Jakob Nielsen, CEO at Finecast, into TV, because clients have been discusses Finecast’s progress and shares his view on very frustrated with the digital the market. ecosystem. The challenges Facebook has had and the challenges Google has had have led some advertisers saying that over the last two years, to stop their spend in those areas 16-34 year olds have moved from and move it back into TV, but into linear to on-demand by about 22 addressable TV in particular. Broadcasters are a lot smarter percent. That’s a gigantic number, I’m not saying all digital money than people think. They and that will carry on. Everyone is coming back into TV. We’re understands that and knows they understand the basic notion seeing millions moving over, and need to go in that direction. that viewers are migrating in the grand scheme of things from the traditional world into But obviously it takes time to that’s not a lot, but it is a trend turn the ship around. Some we’re seeing, particularly as things the on-demand world. broadcasters have invested millions like postcode targeting change in technology, like Sky with AdSmart advertiser perceptions of how and Channel 4 with a lot of data TV advertising can be used. DOES THE TV INDUSTRY NOW access points. ITV I would argue UNIVERSALLY WELCOME has been a little slow, but is also ADDRESSABLE TV ADVERTISING progressing in lots of different WITH OPEN ARMS, OR IS THERE ways and they’re looking into many STILL SOME RELUCTANCE? new technology partnerships.

Broadcasters are a lot smarter than Finally, when you hear someone from people think. They understand the digital side complaining about the basic notion that viewers are TV, it’s also worth remembering migrating from the traditional that it’s in the pure digital players’ world into the on-demand world. interest to say that broadcasters Everyone has seen all the reports. don’t understand these trends! Just take BARB in the UK - BARB are

12 DO YOU THINK THERE’S AN DOES SVOD PRESENT AN OPPORTUNITY FOR ESTABLISHED EXISTENTIAL THREAT TO THE TV I think Netflix will go MEDIA BRANDS - TAKE NEWS AND ADVERTISING MODEL? WEB NATIVE PUBLISHERS FOR into advertising, it’s EXAMPLE - NOT ALREADY IN THE Yes and no. Obviously people are TV SPACE TO MOVE INTO OTT? buying into SVOD through the likes only a matter of time. of Amazon Prime and Netflix, and Yes I think there’s a gigantic you have to accept that. Having said opportunity there. Broadcasters that, TV as a product has never been all have their content available as good as it is today, and there are in apps in the OTT environment, more people watching TV than ever but lots of newspapers and other if you look at it more broadly, rather THERE’S BEEN A LOT OF organisations with professionally- than just traditional linear TV. SPECULATION ABOUT NETFLIX produced content don’t have those Then the question becomes what MOVING INTO ADVERTISING. apps yet, and they need to. will happen in the future - will WOULD THIS BE A GAME CHANGER, They won’t have the viewership people start spending more and OR WOULD ITS PROPOSITION NOT of ITV or Channel 4 yet, but that more money on subscriptions, and BE TOO DIFFERENT FROM WHAT’S doesn’t matter in the OTT world seeing less ads? I don’t think so. ALREADY OUT THERE? because it’s all programmatically With addressable TV you get more I think Netflix will go into connected. So whatever you have relevant ads, and maybe fewer advertising, it’s only a matter of you can grow, and you could sell ads so it’s not as disruptive, and time. They spend an awful lot money most of it out quickly. The barrier when we do it really well we even on content and need to grow their is that you need to invest to have ads becoming content, so revenue, and they’ll face more and develop that destination, which people are willing to watch them. more competition and not be able will cost money up front, but Combine that with the fact that to keep growing at their current still it’s a great opportunity. people are wising up to the fact rate. Eventually I think they’ll create that they’re paying a lot of money hybrid models between subscription for subscription services. I’m not and advertising, and will just sure households currently sit down become another broadcaster. and calculate how much they They’ll probably be a more modern spend altogether on SVOD, but I broadcaster, in that their existence think they will in the next couple is based on data and technology, so of years. They will figure out their that will help them move into the subscription threshold, and then addressable TV world much quicker. accept advertising for the rest, and I think that mix will work fairly well.

13 VIDEO

Adam Singolda | CEO and Founder, Taboola COMMON TRAITS OF THE MOST SUCCESSFUL VIDEO ADS

s a new parent, I think this is quite a stat. The attraction of video is all about I’m not sure how to tell you this kids, but movement, which humans are Aaccording to research carried out by the evolutionarily designed to detect, whether US Bureau of Labor Statistics1 , your parents to identify a threat or spot prey. spend four times more time consuming We’ve carried this motion-detecting 2 video than they do playing with you. instinct with us into the digital space. In fact, studies have shown that it’s almost impossible to ignore videos Granted this may be because many online, and we are naturally drawn parents are obligated to spend more toward visual storytelling - something time at work and doing stuff online, advertisers have long capitalised upon. but it still says a lot about the power In fact, studies of video to distract and engage. have shown that it’s almost AVERAGE TIME PER DAY SPENT WITH PLAYING TO INSTINCT DIGITAL VIDEO (USA) impossible According to eMarketer, we’re now to ignore consuming 82 minutes of digital video a 91.6

87.6 day (in comparison, the average person

videos online, 83.0 spends 50 minutes on social networks 77.6

and we are 70.7 a day), which means the opportunity naturally drawn for brands and marketers is greater toward visual than ever before. The hard part is storytelling taking advantage of that opportunity 23.4% effectively and efficiently - producing 22.9% 22.3% 21.6%

20.6% great videos that draw in consumers and achieves the desired result.

So what makes a video appealing to the visual human? To find out, we took a 2016 2017 2018 2019 2020 look at the top 2,000 most successful videos on the Taboola Network to Minutes % Time with Digital media discover exactly what makes a video perform as we now broadcast over 100 million video views every single day, trending fast towards streaming a billion 1 Bureau of Labor Statistics, ‘US Average hours per day parents spent caring for and helping video views a day on the open web. household children as their main activity’, https://www.sciencedirect.com/science/article/pii/ S1090513816300046 Okay, so here’s what we discovered. 2 ‘US Time Spent with Media: eMarketer’s Updated Estimates and Forecast for 2014–2019’ https://www.emarketer.com/Report/US-Time-Spent-with-Media-eMarketers-Updated-Esti- mates-Forecast-20142019/2002021

14 1. STRETCHING, DANCING, OR SWIMMING strong emotion while doing so. ARE ALL GREAT. ACTION DRIVES VIEWABILITY AND COMPLETION As a result of this campaign, favorability grew by a stunning 18.9 percent. Our research showed that certain types of According to a Millward Brown motion have a bigger impact than others benchmark study that included 60 on viewability and completion rate. campaigns in the same category, the norm for digital campaigns in the Videos with more vigorous action, such travel industry is just 1.2 percent. as stretching, dancing, or swimming, performed well for our advertisers. On the flipside, videos that included less energetic actions like tanning, texting, and sleeping didn’t perform as well.

2. REALISTIC EMOTION KEEPS CONSUMERS WATCHING

Subconscious signals are essential for keeping the user engaged with your video. Tapping into our instincts might help to lure us in, but it’s emotion that keeps us riveted.

Our study revealed that when actors show clear but not-too-artificial Creativity, emotion, consumers were 23 percent more likely to complete a video. fun, mystery, affirmation - good For example, actors in a travel video should clearly be enjoying themselves, but video can offer they don’t have to be exaggerating their consumers all Creativity, fun, mystery, affirmation - happiness to keep a consumer’s attention; good video can offer consumers all kinds kinds of appealing the emotion should be believable. of appealing experiences. But across experiences. the board, it appears that the right level of motion and emotion play a big role 3. MOTION AND EMOTION ALSO BOOST in a video’s success. Marketers looking BRAND FAVOURABILITY to produce impactful video campaigns should look to incorporate these Beyond viewability and completion characteristics to improve performance. rates which are tactical yet important KPIs, the right video elements can drive even more - they can make consumers remember and favor a brand. For example, the Dominican Republic Ministry of Tourism ran a campaign of four videos to promote its brand, all of which included actors doing things like surfing and parasailing and experiencing

15 MOBILE

COULD 5G SHIFT THE INDUSTRY’S BALANCE OF POWER?

will be arriving in some markets in The same can be said of VR and AR ads - companies 2019 and will make our smartphones’ like Oath and Teads have already experimented 5Ginternet connections considerably with these formats, but slow speeds hold them back. “4G didn’t include support for things like faster. This in itself has a few obvious VR/AR or wearables, which made it so only a implications for digital advertising as it will few select tech companies could really begin to reduce load times for data-heavy ads and utilize these,” said OpenX VP of mobile Maggie encourage more consumption of video via Mesa. “Once 5G is out, however, the playing mobile. field will be leveled, and many others will have the ability to be disruptive in the space.” However, 5G’s impact could be far more significant than simply speeding up existing services, to the Looking further down the line, 5G could be the point where some believe it has the potential to force that unleashes the true potential of the reshape the media and advertising industry as it ‘Internet of things’ (IoT), where everything from puts swathes of consumer data into the hands of fridges to cars to street lamps will able to connect mobile network operators (MNOs), which could to the Internet and communicate with each other. siphon some of the power away from the tech We’ve already seen the first fruits of the IoT, with the giants who dominate the landscape today. ‘connected home’ being a major focus of the big tech exhibitions for a couple of years now. However 4G, according to GeoSpock VP of product Ben Manning, is simply “not fast enough, not reliable enough, and FASTER SPEEDS = NEW coverage per square metre is not strong enough” OPPORTUNITIES for the internet of things to reach its potential.

5G will be up to 1,000 times faster than 4G, with But 5G won’t be enough to push through these 100 times less latency. In the short term, the improvements on its own. Besides the obvious boost to speed of mobile internet will help iron fact that handsets need to be 5G-enabled, out existing problems around ad load times. smartphone hardware needs to be quick enough to handle these new, more complex formats. Faster connections will also make interactive ads more viable. As Joshua Koran, managing director of DMP at Sizmek points out, interactive advertising does exist today, but interactive formats come with hefty file sizes which struggle on mobile.

16 The full extent of the specific opportunities that 5G will open up for Mobile network operators are one group of potential winners. With so much data flowing through their advertisers will be hard pipes, they could potentially offer advertisers a profile of their consumers that eclipses even what to predict Facebook and Google have access to according to Glispa VP of global sales Luca Mastrorocco.

“Right now carriers don’t really take advantage because they don’t fully understand the potential,” A NEW PROGRAMMATIC BACK-END said Mastrorocco. However he believes that if 5G creates a world where mobile phones are no longer The programmatic back-end which supports digital just an endpoint, but a primary way consumers advertising may need to be reworked to be able interact with the internet of things, MNOs might have to keep up with 5G too. OpenX chief product a much more attractive proposition for advertisers officer Todd Parsons says that programmatic and be able to pose a much more serious challenge. infrastructure will likely need a rework in order to cope with higher transaction volumes and heavier The pay TV industry could also be in store for a data loads generated by the Internet of things. shake up. The speed of 5G could mean that live TV broadcasts could be broadcast directly into a smart Whilst there are some who remain sceptical about TV set without the need for a set-top box. A report IoT advertising medium, it will open up lots of new from Strategy Analytics last year concluded that doors in digital advertising thanks both to the new 5G will allow operators to support TV-equivalent types of ad inventory that will exist, and the large services, which could eat into the global TV and amounts of data advertisers will have access to. video market currently served by cable, satellite, IPTV and terrestrial broadcast service providers.

David Mercer, VP and principal analyst at REDISTRIBUTING POWER strategy analytics, said that 5G TV would “raise important questions relating to the The full extent of the specific opportunities that 5G roles of different ecosystem players and the will open up for advertisers will be hard to predict, future structure of the media value chain”. in the same way that few predicted how 4G would help enable the likes of Snapchat and Uber. Some prominent mobile network operators -- the likes of AT&T, Verizon and Liberty Global -- are However, regardless of the specific use cases already significant players in the pay TV industry for 5G, some believe it’s emergence will shake today of course, but 5G could open the door for up the balance of power in ad land thanks to other operators to expand into 5G TV delivery. the amount of disruption it brings about.

17 AGENCY

THE BUYERS’ VIEW HAS THE INDUSTRY DONE ENOUGH TO CLEAN UP VIDEO?

ssues like brand safety, fraud and a lack of supply- chain transparency have continue to plague the Iindustry over the past year, but we’ve also started to see the fruits of various cross-industry efforts to combat these problems. But are buyers happy? ANA PAK, GLOBAL DIGITAL STRATEGY & INNOVATION DIRECTOR, VIZEUM

Change is never fast. We are taking steps in the right direction is the best you can say for it. Transforming a commoditised ecosystem that has grown fast, and thrived on a lack of transparency, is highly complex. There are too many conflicting forces at play: procurement KRISTEN KELLY led pricing vs. quality and value. Lack of EVP PRECISION EMEA, PUBLICIS MEDIA measurement and strategies that drive business growth vs. delivering vanity metrics. The I think the fact that we’re still seeing brand debate between platforms, brands and agencies safety and measurement issues cropping up across the over who is responsible for brand safety. And ecosystem shows that we have much more work to do. the squeeze on publishers throughout. Brands are increasingly worried about where their ads are showing up, whether or not they’re seen and how For example, Ads.txt is a great step forward for they’re being distributed and monetized. Trust has taken a some, but many publishers lost out due to minor nosedive, so the industry needs to work hard to reassure errors. Others resented Google’s move to “force” trust, clean up the supply chain and put partner processes adoption with “Ads.txt only” buying filters, which in place to make sure rigorous verification is happening. others say is driving prices up for advertisers.

On one hand, great strides have been made to make There is no quick fix here. We will need the operational side and process of buying video a constant stream of new practices, inventory more seamless. We’ve seen stronger iterations policies, business models and technologies. of the video tech standards with the release of Video And for them to be aligned. Ad Serving Template (VAST) 4 and now 4.2. Adoption has been slow, but there is a major effort to bring verification and viewability into play, which will hopefully spur greater adoption and ease brands’ concerns.

There is no question video will continue to grow, with mobile usage up and connected TV growing at a rapid rate. Industry working groups like Trustworthy Accountability Group (TAG), Advertiser Protection Bureau (APB) and others have made and continue to make great progress.

18 ...improving measurement and verification technology will help grow premium, brand-safe and fraud free content.

DANNY HOPWOOD, PRESIDENT DIGITAL DISPLAY EMEA, OMNICOM

The industry has certainly come a long way in terms of cleaning up the ecosystem in general but also specifically video. If we think back a few years all LIZZY DALE, manner of video formats was available and there was PARTNERSHIPS DIRECTOR, GROUPM UK a plethora of ways to achieve your video campaign Video pre-roll, in particular, is in high demand yet KPI’s. Viral video marketing was at one point on quality supply is limited. Fraudsters seek profitable agenda for every major marketer. But as soon as opportunities in our digital supply chain and issues around the veneer of high quality pre-roll, large player advertising fraud, player spoofing and viewability continue video supply was wiped away, what was discovered to impact video placement – especially as the industry is was large volume of in-banner video being charged slowly adopting video ad serving standards which would for at broadcaster or premium publisher rates. It allow for improved delivery and measurement controls. didn’t take long for the industry to understand the As a media buyer we have a zero tolerance policy to fraud underlying infrastructure and commercial incentives and protect our clients by trading directly with publishers. that led to the “boom” for in banner video. There is also a real brand safety gap in the market right now In a matter of months in 2015 this whole industry for a robust, automated technology that can evaluate ‘actual changed its narrative to one of native advertising. video content’. The context of the page through keyword To do that they had to ensure that the formats and scraping is available, but fully understanding the dialogue ad slots being made available met certain quality and imagery in the video, at present, requires human criteria. This really was the start and from that vetting. The ecosystem is reliant on editors at publishers point on, in conjunction with viewability, began the signing off content that meets a whole range of brands road to an always on, ever present brand safety standards. We are constantly evaluating new technology and inventory quality strategy for many vendors, and believe in the importance of third party verification. buyers and marketers. It’s practically unheard of now to see no contractual terms protecting clients Both challenges combined, slow down the speed and from these types of occurrences within their volume of supply to market and its effective monetisation. investment or solutions to protect against it. Ultimately, investment in premium video production is key, but improving measurement and verification technology Ultimately, we seem to be seeing a resurgence in will help grow premium, brand-safe and fraud free content. demand for high quality video inventory, as buyers and publishers mitigate the fraud and avoid non- brand safe environments as much possible, but we are never able to remove everything. So the industry can’t afford to lower its guard as it will always be an endless game of wac-a-mole.

19 INNOVATION

IN-TRANSIT MEDIA: THE NEW PROGRAMMATIC FRONTIER

or many years in-transit entertainment was confined BYOD is becoming more popular almost exclusively to long-haul flights, since the in other modes of transport too, Fhigh cost of putting screens in the backs of seats and ad technology is catching and maintaining a media library makes the economics up. Inadvia, a London-based start-up who are one of the unworkable for shorter flights and other forms of transport. innovators in the space, have created what they say is the first Now however, some of the larger causes a lot of problems. On- SSP for in-transit media which players in the transport industry board wifi isn’t able to handle delivers ads over these systems. are taking advantage of the fact hundreds of passengers trying that many travellers will bring to stream at once, making Matthew Blay, Director at Inadvia their own screens with them, connections slow and unreliable. described how inter-city train lines creating ‘bring your own device’ in the UK often have three 4G BYOD services provide an (BYOD) on-board entertainment sims providing wifi for an entire alternative, whereby the airline/ systems, opening up new cabin, making speeds extremely trainline/coach operator buys opportunities for advertisers. slow. BYOD therefore gives train digital rights for a selection of operators a much more reliable content and houses it on an way to connect with customers on-board media server, then as the content is served from a making it accessible to customers ...many travellers will bring their own server on the train. This of course via an app during their journey. means that a lot more in-transit screens with them, creating ‘bring This app doesn’t require an inventory is becoming available. your own device’ (BYOD) on-board internet connection to stream the content, meaning it’s doesn’t entertainment systems, opening up face the same problems around new opportunities for advertisers. a lack of speed and bandwidth. AUTOMATING OFFLINE Short-haul flights make up 90 VIEWING percent of air-travel, and don’t tend to offer entertainment Automating the trading of this via fixed screens due to the inventory isn’t easy though. “Over prohibitive costs, so BYOD makes the last 20 years most publishers in-flight entertainment viable at have gone from direct relationships IN-TRANSIT’S a much larger scale. Research with advertisers towards the BIG BANG MOMENT from Sitaonair and Euroconsult exchange-based systems we have predicts that in 2019 over 70 now, but in-transit publishers Traditionally, BYOD is thought to percent of airlines will offer BYOD haven’t adopted these trading refer to customers bringing their on-board entertainment on at methods because of the isolated own devices on board and then least some of their flights (up from nature of the inventory they’ve accessing content via on-board roughly 30 percent in 2017). always had,” said Blay. wifi, but for video streaming this

20 As programmatic solutions give trading to overcome in the in- advertisers the ability to execute transit world. Given that on BYOD in-transit campaigns at scale, systems media is viewed when Blay says it will become a more customers are offline, trading compelling opportunity. He said must occur before the journey in-transit BYOD’s main appeal to begins, and reporting is much advertisers is how it gives access more delayed than DSPs are used to premium content in a brand safe to as data is only fed back in once environment, with an audience the plane or train’s destination is that’s (in the case of air travel) reached. This offline environment “literally strapped into their seats does have its benefits as audiences and unable to do anything else”. can’t be distracted by other online content, but Blay said that it’s Ralf Ollig, director of advertising more about educating buyers solutions at Ve Global, an ad about some of in-transit’s nuances. technology company, agreed, saying that “in-transit advertising Suppliers need to be educated connects well to a varied too. Blay says there are still audience, across demographics, misconceptions from those psychographics and sociographics. in the in-transit world around Connecting to your target programmatic trading, for example audience is easier and reception that it drives down yield and is higher, as there is limited only appropriate for performance competition for attention when advertisers. These misconceptions watching a documentary about are fading though, as they once did your destination on a plane.” in the digital advertising world.

DATA IS PLENTIFUL

There’s a surprisingly large amount of data available for advertisers to use to target their ads on in-transit inventory. There’s a surprisingly large Apps working with Inadvia for amount of data available for example will collect some basic demographic data (age, data, advertisers to use to target their country of residence) which users opt into when they agree to the ads on in-transit inventory. app’s terms and conditions. There are also some unique data sets specifically related to the journey that can be used, such as its origin and destination, and airlines will often have considerable data on frequent fliers.

There are a couple of key challenges for programmatic

21 FUTURE

HAS THE BLOCKCHAIN BUBBLE ALREADY BURST?

longside AI and VR, blockchain has been OVER-HYPED AND one of the most exciting bits of technology UNDERPERFORMING? Ato emerge in recent years promising to change the entire digital advertising GroupM’s futures director Adam Smith says on ecosystem. However, considering the first the whole there has been a lack of enthusiasm blockchain solutions for digital advertising across much of the industry. “Few countries emerged as early as 2016, some feel let down tell us they are discussing the application of by what they see as a lack of progress. blockchain in marketing communications,” he said. “Blockchain is slow, clunky and expensive, so for now at least seems likely to be confined to big problems which cannot be solved some simpler way (usually, an honest, efficient, independent third party). It is peddled by self-interested suppliers and advisers, and in its present state could not But much of the tech’s promise keep up with the demands of real-time media.” could be summarised in one word: Smith doesn’t believe there is no future for blockchain in advertising, and says that GroupM is already using transparency. At a time when the tech to support GDPR compliance, while also shady practices and obscured fees considering how blockchain-like applications can be used for purposes like understanding and policing are a hot topic, blockchain seemed the money flow throughout the programmatic supply chain. But his view reflects perhaps a common to be the answer. opinion, that the actual use-cases for blockchain aren’t as all-encompassing as it initially appeared.

Blockchain has been suggested as a solution BLOCKCHAIN “NO SILVER BULLET” for a wide range of industry challenges, from The idea that blockchain hasn’t lived up to transferring consent under GDPR to fighting ad industry expectations doesn’t actually appear fraud. But much of the tech’s promise could be controversial among those working with summarised in one word: transparency. At a time blockchain.They say however that these inflated when shady practices and obscured fees are a expectations came from people who didn’t hot topic, blockchain seemed to be the answer. really understand what blockchain is or does.

These problems still remain though, leading One of the most prominent proponents of blockchain some to conclude that blockchain was were MadHive, an ad technology company based all hype and no substance, and now the in New York. MadHive’s CEO Adam Helfgott says blockchain bubble has already burst. part of the problem is how blockchain, a very

22 ...blockchain is capable of solving problems from a technological specific mix of technologies, has become a catch-all perspective, it cannot bring about buzzword for anything related to cryptography.

“When it comes down to it, blockchains are a transparency single-handed. fancy way of talking about a mix of three pieces of cryptography - Merkle trees, digital signatures and hashing - which are merged together in an innovative way to solve one particular problem, i.e. being able to move money around on the internet without having an intermediary,” said Helfgott. “Then people had this idea that we could managing client relationship are clearly obfuscating take this autonomous money moving thing and the reality of their commercial deals,” she said. make a tonne of other things autonomous.” “It’s entirely up to the leadership of the industry Helfgott said that in reality, blockchain cannot just be to change, and what I’m seeing and hearing is slapped on top of existing infrastructure and expected these people all have fingers in their ears,” she to produce results. As MadHive EVP Rebecca Lerner continued. “They don’t want to hear it!” explained, creating blockchain-based applications is very complicated. “I think a lot of people thought Both Keane-Dawson and Helfgott remain confident building blockchains would be like building an iOS though that with time, blockchain-based applications app. Newsflash, it’s not! It’s like building iOS, and will bring substantive change to the industry. the app,” she said. “People may have underestimated Helfgott said the concerns around blockchain being what it would take to reach true scale.” too slow for digital advertising are misinformed. “Thinking of a blockchain as a transactional system Mary Keane-Dawson, CEO of Truth, an agency that needs to record every single transaction on the who have made waves by encouraging the use blockchain is equivalent to thinking the Supreme of blockchain for media transparency, agreed Court needs to see every single traffic ticket,” he said. that there had been naivety within the industry about how effective blockchain could be without He believes too that any disillusionment towards changes elsewhere. “It’s been positioned as blockchain right now says nothing about its long a technology that will solve all the industry’s term prospects. “During the dot com bust, Amazon problems, but of course it won’t. It’s a nascent lost 98 percent of its value, but now that’s just a technology, and it’s not a silver bullet,” she said. blip in it’s growth. That same stuff will happen with blockchain, it will enable businesses to do business in Keane-Dawson emphasised that while she’s new ways, and we’re now figuring out what that is.” certain blockchain is capable of solving problems from a technological perspective, it cannot bring about transparency single-handed. “It’s nothing to do with the tech itself, it’s about how humans who are in charge of these organisations and are

23

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29 FINANCIAL

Q&A: RICHARD KRAMER SENIOR ANALYST, ARETE RESEARCH

ichard Kramer is Senior Analyst at Arete Research, a in the same way in key markets company specialising in independent equity research. like China or Russia, where the RHere he shares his views on the state of media and duopoly or oligopoly is simply a ad tech from an investment analyst’s perspective. different set of names like Tencent, Alibaba, Baidu or Yandex.

MANY IN THE INDUSTRY ARE OFTEN BEMUSED AT THE VALUATIONS OF DO YOU THINK THE GLOBAL VARIOUS AD TECH COMPANIES. DO M&A ACTIVITY ACROSS THE TV THE MARKETS NOT UNDERSTAND INDUSTRY WILL BE ENOUGH TO AD TECH, OR DOES AD TECH NOT DEFEND THEIR TURF AGAINST THE UNDERSTAND THE MARKETS? DIGITAL COMPETITION?

A bit of both – you have to realise No, M&A is never a real solution to that the market can take the positioning or sclerotic company same absolute amount of profit cultures. Its largely a fantasy of or cash flow and attach vastly investment bankers and consultants. different multiples to it based The hallmark of the digital giants is on perception. Witness the gap that they have relied less on M&A, or between Criteo, trading at a mostly bought early stage companies distressed multiple, and the Trade and grew them, than the large mega- Desk, trading at a stratospheric mergers that leave managements one, when both are fundamentally jockeying for position for years. For in the data-driven media buying a company like Disney, the move business on behalf of advertisers. to create its own branded OTT streaming service is an example of an effort to change the culture and IS IT FAIR TO REGARD business model that doesn’t involve FACEBOOK AND GOOGLE AS A M&A (the Fox deal notwithstanding). ‘DUOPOLY’ IN YOUR OPINION?

Not entirely since there are many other players, it’s just that most lack the scale and vast first party datasets that these two do. There is also a relative lack of management talent and it doesn’t benefit from being spread so thinly among dozens of ad tech and publisher players. These two are not present

30 NOT THAT WE’RE IN THE LATE STAGES OF AD TECH CONSOLIDATION, WITH THE BENEFIT OF HINDSIGHT WOULD YOU SAY THAT VENTURE CAPITAL (VC) MONEY HAS BEEN A HELP OR A HINDRANCE TO THE INDUSTRY?

A massive hindrance. Greedy VCs and mouthy boutique investment banks positioned ad tech as a panacea; the result was vast overfunding for hundreds of DSPs, The famous industry chart SSPs, etc. typically too fragmented and small to have real tech. that has done the rounds at

The famous industry chart that has conferences has caused more done the rounds at conferences has caused more value destruction value destruction than any than any infographic in history, THE CHINESE TECH GIANTS LIKE infographic in history encouraging tons of copycat TENCENT AND ALI BABA HAVE companies to pile into nascent BEEN A LITTLE SLOW WHEN IT markets. Look at how poorly the vast COMES TO MOVING INTO WESTERN majority of listed ad tech players MARKETS. IS THAT LIKELY TO have performed. Where are all CHANGE IN YOUR OPINION? the investment bank analysts and WHAT’S THE MOST TROUBLING MISCONCEPTION PEOPLE HAVE industry research firms that were No. Not in the current political ABOUT OUR INDUSTRY DO YOU giving out rosy hockey stick forecasts climate with a trade war THINK? for the “programmatic revolution”? between US and China. Only a handful are left standing. I get nausea when I hear ”programmatic” – it’s just automation of what was formerly a manual process. The other one is that so many ad tech companies pretend to be tech companies when they are really just practising a form of arbitrage.

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