How a Correctly Designed DAI System Maximizes Monetization
The streaming market is now fully embracing advertising. The pace of this transition is dramatic as in 2020, only one of the top four SVOD services in the US, Hulu, offered an ad-supported tier. Today, with the exception of Apple, all of them do, even SVOD stalwart Netflix. This shift is a testament to viewers' willingness to watch ads in exchange for lower subscription fees: SVOD providers are responding to market demand. Another key aspect is the explosive growth of Free Ad-Supported Streaming TV (FAST) platforms like Pluto TV, Tubi TV, Samsung TV Plus, and LG Channels.
The ad market situation
There’s additional complexity, as Caretta Research’s recent report —TV advertising’s new era: competing on digital terms — states: “The CTV advertising market has passed the point of inventory scarcity, introducing an era where audience reach alone is no longer enough to guarantee success. Incumbent broadcasters and global streaming giants Netflix and Disney+ now face tougher competition for brand budgets and must evolve to attract performance and SMB (small and mid-sized business) advertisers.” And then there’s the ever-growing ad-budget threat from YouTube.
What role is Dynamic Ad Insertion (DAI) playing?
DAI is a key component of streaming ad revenue maximization. Client-side Ad Insertion (CSAI) and Server-Side Ad Insertion (SSAI) are the two primary ad delivery methods used, with Server-guided Ad Insertion (SGAI) now finding increasing attention, although it’s relatively early days.
But there’s far more to DAI than the ad-stitching element, important as it is. The first step in maximizing ad revenue is delivering a great ad experience otherwise viewers will disengage or churn. The key factors can be summarized as:
- Acceptable ad load
- Ad relevancy
- Smooth, professional ad delivery
Lower ad loads are expected in streaming TV, especially in ad tiers within SVOD services: the penalty for overburdening viewers is severe. Two in five viewers choose one service over others if it offers a lighter ad load, and nearly half are likely to pay attention to shorter ads/ad breaks, according to a recent report from Hub Entertainment Research. Providers such as Netflix and Tubi have taken the need for lower ad loads to heart, with both delivering five minutes of ads or less per hour. However, lower ad loads mean ad values need to be higher to meet revenue targets. To boost ad values, ads need to be targeted with much higher accuracy, even to individual viewers.
How to overcome higher ad loads
Serving relevant ads to viewers can overcome a higher ad load. Hub Entertainment Research survey data shows US viewers rated Discovery+ as having the highest ad load among peer services. But when asked how they felt about the ad load, most viewers rated Discovery+’s ad load as reasonable. Crucially, the highest number of Discovery+ viewers rated the ads they saw as informative, consistent with show type, and relevant. The good news for service providers is that targeted ads are more relevant and far more valuable to advertisers.
The complexities of live streaming ad delivery
Delivering linear and live video content is significantly more complex than for on-demand, making targetting ads to millions of viewers simultaneously, with total reliability, a specialist capability only a limited number of vendors have a proven track record in. There are four main components of the ad ecosystem that must come together to ensure a personalized ad is shown at the right time to a viewer: a Dynamic Ad Insertion (DAI) solution like SSAI or, soon, SGAI; a primary ad-server to deliver first party advertising; and a supply-side ad platform (SSP) and usually multiple demand-side ad platforms (DSPs) to deliver programmatic demand.
The programmatic ad ecosystem allows automation of the ad buying process through these DSPs, driven by the buy side. On the supply side, SSPs are designed to optimize the value of a broadcaster or video streamer’s ad inventory. The combination of the two impacts how ads are targeted, and ultimately, both sides need to work for large audiences to realize the true potential of dynamic advertising in live events. The adtech system can also optimize placement for ads that come from direct advertiser-video provider relationships through private exchanges. It can do the same for other ad inventory to be filled through public ad exchanges.
The interfaces that allow these components to integrate with each other are defined by the Interactive Advertising Bureau (IAB), however interoperability between a DAI system and downstream components cannot be guaranteed. Therefore having proven integrations is important. These components combine to form the adtech system required for DAI, which delivers an addressable ad experience using public and private ad exchanges.
Real-time data presentation for maximum monetization
A final crucial aspect to a modern, scalable DAI system is how real-time viewing data is presented, driving last-minute ad decisions to maximize revenue. Real-time ad view data can be fed into live dashboards, surfacing the data in a form that broadcasters can respond to almost instantaneously. They can then quickly and easily adjust and measure campaigns to drive up fill-rates. Reports that are sent after the fact can affect a broadcasters ability to maximize monetization. All aspects of a DAI system must be dynamic.
DAI solutions are not created equally
Without professional ad delivery, a service provider puts at risk attention and engagement. It also greatly increases the challenge of scaling up DAI capabilities to efficiently handle global live streaming events. This is the current industry challenge alongside the completion of the standardization and rollout of SGAI, which will take a little while yet. Dynamic ad insertion solutions are not created equally and this must be born in mind by platforms and content providers alike.
[Editor's note: This is a contributed article from Yospace. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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