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1 April 2021

Fox tells Faultline what makes FreeWheel deal actual industry first

Fox has tapped Comcast’s FreeWheel to enable programmatic trading of addressable VoD inventory on Xfinity set tops, in what is said to be an industry first. Advertisers will be able to run household-level addressable campaigns on any Fox on-demand content viewed within Comcast’s Xfinity footprint.

This means that Fox can get its teeth into targeted advertising across its extensive on-demand inventory. It is unclear whether this will be expanded to operators outside of Comcast’s footprint, but if FreeWheel expands this offering to other operators and broadcasters, it will be providing a temporary shield against the expected diminishing value of pay TV ad revenues.

Fox notes in the press release that VoD is making up an increasing portion of the total viewing hours served by programmers – which are therefore rushing to modernize their ad tech set-ups for these viewers.

It was not clear what exactly about this announcement was an industry first, so we had Fox confirm to Faultline that it is essentially a combination of two procedures. Addressable VoD content on set tops has not been previously available via programmatic guarantees, so this partnership combines the two.

In the past, if you wanted addressable ads in VoD on set tops, this would have to be purchased manually through a direct sales channel, whereas if you purchased via programmatic channels, you would only be able to purchase untargeted VoD inventory. It is quite astonishing that it has taken this long for addressable inventory as lucrative as on-demand video to be made available programmatically.

A scan of the Faultline archives reminded us that FreeWheel promised this feature back in June 2020, voicing its plans to make programmatic ad purchases available on an operator’s set top VoD inventory. This begs the question whether other operators are going to be allowed to use this technology to beef up the value of their VoD inventory, or whether Comcast is going to keep the goods to itself.

The Xfinity footprint of set tops spans Comcast’s 19 million cable customers and includes hardware such as Xfinity X1 and Xfinity Flex. North American pay TV subscribers have been churning at around 7% annually for the past couple of years, with Comcast often leading the way. Some recent calculations from Rethink TV, our research wing, found that if rates of churn were to maintain a steady pace, there would be no pay TV subscribers left in North America by 2032.

The Trade Desk is the first ad exchange to programmatically integrate Fox’s VoD inventory and further integrations with other demand partners are expected in the coming months. Jon Tabak, GM of Strategic Partnerships at The Trade Desk, noted that “TV has historically been somewhat of a blind spot from a digital advertising perspective. By further expanding our platform’s reach in the TV ecosystem, our clients have a clearer picture of their advertising investment and total impact across screens and devices, especially the biggest screen in the room.”

While 2020 saw much talk of addressability lead nowhere in particular, 2021 has seen signs that the technology might finally be ready for lift off. This news from FreeWheel marks another landmark for the technology, as Dish Media and ViacomCBS announced the first addressable impressions via set top within a live national broadcast in January. We suspect FreeWheel may have been involved in that milestone, too, as it had partnered with Dish Media in the past to optimize ad campaigns across addressable linear TV and demographic-based audiences.

As TV networks see the values of ad inventories withering, it is important to milk these assets dry for as long as they can, siphoning funds from wherever possible in advance of ad revenues inevitably crashing down. This means that on-demand inventory is now fair game for the addressable and programmatic techniques that are often focussed on live TV.

This is part of FreeWheel’s wider initiative to make addressable TV inventory available for programmatic markets. Doing so means advertisers can target audiences against a programmer’s VoD inventory on a guaranteed, fixed price and fixed volume basis.

Rethink TV’s forecast on addressable found that VoD and time shifted addressable advertising revenues were set to explode from $167.7 million in 2019 to $16.6 billion by 2025. In this time, the total global addressable market grows to $85.5 billion, while VoD as a portion of total addressable advertising revenues grows from 11% in 2019 to 19% in 2025.

It is worth noting that this forecast was conducted in 2019, so a refreshed and broadened advertising forecast is planned for the latter half of 2021, so keep your eyes peeled.