This week’s Future of TV Briefing looks at the potential implications of pod bidding for streaming advertising — whenever streaming ad buyers and sellers start to support it.
The key hits:
Seventy-four pages into IAB Tech Lab’s OpenRTB 2.6 document lies buried a potential solution to the streaming advertising market’s emerging ad load problem.
Once implemented by streaming services, adopted by advertisers and supported by demand- and supply-side platforms, this fix could thread the needle between maximizing ad revenue and minimizing ad exposures at a time when the economics of streaming is pressing services to reconsider their low ad loads that have helped them to attract ad-supported audiences but capped their ad revenue.
“It’s going to provide a lever to get that nice balance between monetization and engagement of content upfront,” said Adam Markey, director of product management at Roku.
In April, IAB Tech Lab released an updated version of its OpenRTB protocol governing the processes for the programmatic buying and selling of ads. As incremental as a x.6 update typically is, this one included support for pod bidding. As detailed in the explainer video below, pod bidding would not only permit advertisers to bid to have the first or last ads airing in an multi-ad break (called a “pod”) but also would allow streaming services to dynamically divvy up their ad breaks in a way that could enable them to maximize ad revenue without expanding ad volume.
“It really enables this new universe for publishers — I would call it like TV on steroids,” said Amit Nigam, vp of product at sell-side ad server Beachfront.
“It’s conceivable that, in addition to having a target revenue per pod, you could have a target revenue for the entire stream. And if you manage to make your target revenue within the first one or two pods, that you could decide to skip the rest of them,” said Rob Hazan, senior director of product at supply-side platform provider Index Exchange. “All of these options and trade-offs between monetization and end-user experience are now possible.”
Ad load implications
Let’s rewind a bit to break down why cherry-picking ad placements and flexing ad pod compositions seem to have such big implications for the streaming ad market.
For starters, not all ad slots are created equal. “It’s known that on linear and on [streaming] the first and last slots are more premium positions,” said an agency executive. That premium pedigree stems from the fact that these ads are more likely to be seen by audiences because they are placed closer to the content that a viewer is actually intending to watch. As a result, being able to programmatically sell the first and last ad slots separately through pod bidding means that streaming services would be able to set higher prices for those positions.
Then there is the option to specify whether a pod is the first or last pod in an episode or video — similarly premium positions — combined with the ability for streaming services to construct dynamic pods. While a service would need to set a fixed length for the pod, they can adjust the makeup of the pod on the fly in accordance with advertiser demand.
As an example, let’s say that a lot of advertisers are bidding to have their ads air in the first pod, which is two minutes long and configured to carry four 30-second ads. If it’s set up as a dynamic pod, the streamer could reconfigure it to carry two 30-second ads — one in the first slot and the other in the last — and break up that middle minute into four 15-second ad slots if doing so would accommodate more advertisers and accrue more ad revenue.
“It’s the best of both worlds. I should be realizing higher CPMs for these two spots because they’re just more valuable and then, [for] everything else in the middle, I can get what I want out of it,” said Nigam.
What that boils down to is that a streaming service could use pod bidding to set a target ad revenue threshold for a piece of content, like an episode; manage the makeup of its pods as well as the number of pods needed to hit that mark; and then potentially remove ad breaks once that target revenue number has been reached in order to avoid annoying audiences by overloading them with ads.
“That’s a very exciting aspect where you’re going to see dynamic monetization from the sell side where we’re going to be optimizing to the best experience as well as trying to achieve the maximum CPM,” said Markey.
Adoption status
At this point, you may be wondering what’s the catch. IAB Tech Lab released support for pod bidding eight months ago, but for all the enthusiasm and excitement evinced above, all these executives are talking about it in the subjunctive tense as if it’s some Web3 technology waiting to become a reality. And that’s because it kind of is.
“I’ve had no SSPs, no DSPs, no publishers even come to me and say, ‘Hey, this opens up a new path for better CTV,’” said Mike Fisher, vp of advanced TV and audio at media agency Essence, which is part of WPP’s GroupM.
“I think there would be interest [in pod bidding]. It’s just that not a lot of people know about it from the buy side,” said an agency executive. “And then obviously it has not been adopted from the sell side. There’s no capability right now for buyers to do this until it’s adopted on the sell side.”
Support plans
That’s starting to change, though.
Roku — which not only owns a connected TV platform but also operates its own ad-supported streaming service The Roku Channel as well as demand-side platform OneView — is internally working on adding support for pod bidding. But Markey declined to provide a timeline for when the company expects to roll it out.
Meanwhile, Index Exchange is currently testing pod bidding in its ad exchange and plans to “deploy podded requests across as much supply as possible in Q1 2023,” said Hazan. He added, “We’ll continue to test and monitor buy-side adoption to determine when to start sending podded requests to DSPs.”
Tremor International’s Tremor Video DSP and Unruly SSP currently support bidding on the first slot in a pod and plan to roll out full support for OpenRTB 2.6 in the first quarter of 2023, according to a company spokesperson.
And Beachfront already supports pod bidding in its Unified Decisioning ad management product and plans to add support for pod bidding in its SSP in early Q1 2023. “The adoption levels are low, but the interest levels are definitely higher than average,” said Nigam.
“We have 3 million subscribers on Snapchat Discover, but revenue-wise, it’s nothing. It doesn’t cover the cost of publishing. At this point, it costs us money to publish on Snap.”
— Entertainment executive
34%:Percentage share of immigrant characters on TV who were Latino as of June of this year, shy of the 44% real-world share for U.S. immigrants.
$1,200:Maximum amount of money an Instagram Reels creator could earn in the past month after their cap had been $8,500 in October.
49%:Percentage share of top news publishers that regularly post videos to TikTok.
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