Why The Trade Desk is betting its future on the future of TV

The Trade Desk is enhancing its CTV offering.

At the 69th Emmy Awards on Sunday (September 17), Hulu became the first streaming service to win Outstanding Drama Series, marking the latest coup for a streaming platform in a space long dominated by TV networks – ever since Netflix won its first Emmy in 2013.

This rise to prominence among streaming services parallels well-documented shifts in consumer behavior – according to market research company eMarketer, for example, the US will have 202.1 million connected TV users in 2020.

“The change that’s happening in [connected TV] is one of the most game-changing things in media in [our] lifetime,” Jeff Green, chief executive of demand-side platform (DSP) The Trade Desk, told The Drum in a recent interview.

That’s in part because these streaming services are putting increased pressure on traditional media, which, in turn, means every media company has to have a programmatic ad strategy, he added.

“As more and more content moves over [to streaming] – and TV has always been and will continue to be ad-funded – it’s a really interesting time in TV,” Green said. “And…it all has a happy ending where there’s fewer ads that are more relevant and make more money and the consumer has a better experience.”

Here’s precisely how that’s playing out.

‘The current model of monetizing TV is a ticking time bomb’

According to Green, the most promising thing about connected TV (CTV) is the ability to advertise with precision.

“The big problem with most of advertising today – and, frankly, the history of advertising – is that it has been spray and pray,” Green said.

In other words, instead of putting up a billboard and buying a Super Bowl spot and assuming these tactics must at least in part be effective, advertisers can now target specific ads to specific consumers no matter what or where those consumers are watching and adjust what they’re willing to pay in order to connect with desired audiences. In fact, even though live sports are perhaps the last holdout in traditional TV viewing, as more consumers stream events like the Super Bowl, more ad targeting options will be available there, too.

“The part everybody talks about is consumers want to watch things on demand…the part that doesn’t get talked about a lot is what a ticking time bomb the current infrastructure for TV is,” Green said. “It wasn’t that many years ago, people would say it’ll be 20 years before content changes. What I think they failed to see is you have to follow the money…[that’s] often what dictates this. Consumers are driving it – they want on demand, but they’re taking their money with them.”

In other words, advertisers are potentially losing a generation – which is especially true for CPG brands like Coca-Cola and General Mills, Green said. That’s because multiple generations came to know and love these brands as kids watching Saturday morning cartoons. Now, however, children are watching on-demand content on tablets and they aren’t developing the same affinities.

“The only way to solve that is to get in front of on-demand content because millennials and Gen Zs are all watching their content on demand,” Green said. “Because of a shortage of ad inventory – Netflix and Amazon get so much of our time, but they’re not ad-funded – they’ve made it so all the others bringing content online are getting premiums because there’s scarcity…[and] there’s high demand from premium advertisers to advertise to the next generation and there’s not that much inventory to get in front of.”

And so the TV industry is arguably in something of an awkward adolescence.

“[Advertisers are] showing more ads, [consumers are] paying more money and the taxes have almost doubled…all of this to make up for an eroding system that makes it so it’s not sustainable,” Green said. “There’s an economic incentive to get into the connected world. Advertisers want to be there…and they’re going much, much more quickly. All of these reasons are why we’re betting the future of our company on the future of TV and the reason we added the CFO of Netflix to our board. We believe very deeply that all of TV will be run over the Internet and it’s going to change really quickly because the current model of monetizing TV is a ticking time bomb.”

Look no further than Disney and its forthcoming streaming service.

“Even just a year ago, [Disney, which owns ESPN] had the luxury or at least [was] sort of ignoring streaming and programmatic advertising,” Green said. “But it’s fair to say no big media company in the world [doesn’t] have a programmatic ad strategy at this point.”

‘Creating a healthy money-making engine for new TV is critical for us to maintain the quality of content’

And that’s in part why The Trade Desk is expanding its own CTV product to allow advertisers to more easily make targeted TV buys through Internet-connected TVs. This includes: targeting consumers while they are in a CTV environment using first- and third-party data; measuring the impact of CTV advertising with digital and traditional TV metrics, including video completion rate, gross ratings points (GRPs) and attributing view-through conversions driven by CTV commercials; and retargeting households that viewed CTV commercials across other devices, activating full-funnel strategies against individual households.

The Trade Desk said it has also completed deeper integration with Nielsen to support CTV measurement, allowing traditional media buyers to understand incremental reach and cost per point generated by their CTV campaigns.

This means advertisers are no longer beholden to Nielsen to extrapolate from survey responses whether a given household was likely to have seen a TV show, but can rather tell precisely what viewers have done.

“What we can do now is because every connected TV has an ID – whether that’s a device ID itself or in the Roku device or because you logged in…all of those create a mechanism where ads can anonymously target users,” Green said. “Now we can know this is Household ABC and that’s where it becomes really powerful so our ads can be really precise – [you’ll know you] already showed [a given consumer] 17 ads on mobile this week, so you won’t show a TV ad because you have shown too much. You can coordinate across devices.”

It also means The Trade Desk can determine exactly how many people watched an ad and measure every aspect of engagement, as well as correlate behavior to purchases.

“You can start to measure ads in a way they’ve never been measured before, which is why we believe what happens at the end of this sort of change from traditional TV to current TV is a much better world for everybody,” Green said. “There are actually fewer ads in every commercial break…they are more relevant…they are customized to you and advertisers pay more for them. Content creators are making more from them, which perpetuates the amazing content we’ve been getting in recent years and makes it sustainable. We think creating a healthy money-making engine for new TV is critical for us to maintain the quality of content.”

But it also means agencies and brands must be more deliberate about the media they run. That’s in part why The Trade Desk came out with a spot called Missed Connections.

“The most-watched TV show ever was the series finale of Mash, which was seen by over 100 million people,” Green said. “One of my favorite TV shows was Breaking Bad. The series finale had 5 million people chime in. So if you look at that difference, it’s a commentary on the fragmentation of media – there were 13 TV stations when Mash ran and now there are hundreds of them…and a giant thing called the internet. And so as media gets more fragmented, it becomes easier and easier to miss consumers in all that noise and you can think you’re getting in front of them when you’re not.”

In other words, when Mash aired, CMOs could buy ads in the season finale and be fairly confident 100 million consumers would see them. But today CMOs can spend money and actually make consumers like their brands less, Green noted.

“So given that dilemma, we think you have to be data-driven and you have to be super deliberate [about placements] and you have to be holistic to be successful,” Green said.

And, noting The Trade Desk has an advantage over Google and Facebook because it does not own any media itself, Green said The Trade Desk can show “all the details for every ad [clients have] ever bought,” delivering much-wanted transparency.

“I also think as media has become more fragmented and new media companies have emerged, the need for an objective technology provider to help the biggest brands and agencies buy and to buy objectively is the reason why we’ve done so well,” he added.

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