The duopoly forces Europe on advertising walled gardens

There was yet another fascinating debate at London’s Connected TV World Summit this week about advertising, specifically about opening up the market for advanced advertising. Or rather closing it.

There is one debate with a title something like this in every advanced advertising forum for the past 4 years, and as usual they fail to ask the most basic question – will TV actually continue to have as much advertising as before? To the combined panel, and the audience too, this is just a matter of how advertising will shift from linear TV networks to OTT services – it’s a matter of how, not if.

We have already pointed out that Netflix, by delivering billions of hours of video (1 billion a week and rising) is taking away that same number of eyeballs from the TV advertising equation and some rivals are set to copy it. For music services you either take the free edition (Spotify) or pay to not receive adverts, and in China, video has already gone down this route. It may spread. The trouble with debates like this is that they fail to see that advertising may have to be relegated to the few people in a population who cannot afford to pay premium rate to get rid of the adverts. And those are the people with no money to spend and they are not worth reaching.

But that point aside, this debate was humorous and yet highly relevant – and the upshot was that programmatic advertising has not really taken off in Europe, and there are good reasons for this and they are the reasons that everyone always reminds us of – lack of brand safety, ad fraud and too much complexity, not enough standards.

The panel was made up of Anna Maria Vujinovic, head of digital sales at RTL; Laurence Miall d’Aout, VP advanced advertising at Liberty Global; Lorne Brown CEO of US digital agency Operative and Andrew Morley, EMEA managing director of sell side platform Telaria. Interestingly this was the first time that we have heard the bulk of them agree on how the market would go – Programmatic does not work here, so the larger operators should get together and create “brand safe” walled gardens, which all use the same standards, where the platforms take less of a cut, and sell a combination of programmatic audiences, addressable advertising and who then partner with the major agencies and turn the market by brute force.

It’s an interesting point of view, but once again this reeks of the current market leaders, working with the current leading agencies to hold change at bay and we’re not sure it’s likely to happen.

Our publication is called Faultline for a reason – it is based on the idea of a fat cat mining a rich seam, sure that nothing can change, when it suddenly hits hard rock and the seam that it had been happily mining, is now somewhere else, being mined by another agile start up. This happens in media all the time.

And we have seen huge strides made in programmatic in terms of technology on both the supply side and demand side and in auction systems, and the reason these are not embraced unanimously by operators is because they are not getting anything more out of the system – the whole idea of programmatic and addressable advertising, is that the whole adds up to more than the sum of the parts, and you can get paid several times over for advertising that reaches the same people. If this does not lead to more money, and if the platforms which provide this ability take too much of a slice, then it becomes a zero sum game, and no-one is interested.

Vujinovic kicked off the discussion saying that she thought about the future of advertising like Disneyland, lots of nice rides, but you can’t get on all of them. More a dream than a reality.

Miall d’Aout said that most revenue was in linear and that’s where it would stay and talked about addressable being the way forward – insert different adverts into the broadcast stream, for the right audiences.

Morley took a potshot at BARB and Nielsen, saying that agencies need to change culturally, and that linear and VoD need to be sold side by side in agencies and this is not how it is currently done, and they need to move away from panels to interactive measurement, but Brown said simply that this was “not going to happen,” and that what needed to happen was that TV must provide its own measurement tools, at scale and simplify. “We just need to control the yield” he said.

Vujinovic revealed that RTL had carried out a survey asking young people which their favorite TV channels were? and they had listed 55 YouTube channels. “I now hate the word ‘Data’,” she said. And complained that if anyone mined her hobbies and interests on Facebook, they would not find enough data to show her any adverts. At RTL she said they were using HbbTV dynamic ad insertion (and the following presentation was an update from last year when ProSiebenSat of Germany detailed a similar strategy).

At the mention of Connected TV makers Miall d’Aout reached for the expletives “They don’t give a shit,” she declared, meaning that when it came to standards and getting stuff done, they were too difficult to work with, and if you are not careful selling programmatic you end up with some unsold adverts which on Connected TVs show as black screens.

Finally the two elephants in the room were mentioned – the duopoly of Google and Facebook – Morley said that 80% of monies were going to these two online, and that’s when everyone decided that the walled garden approach was the right one. But a kind of “open” walled garden that only keeps the duopoly out. And there we were, back to the Disneyland view of advertising, in a dream world, which led to the final words – cooperate on selling adverts, build liaisons between enemy operators, create digital markets said Miall d’Aout, or it is too late. Applause. But what about that question – what happens if SVoD is the new face of TV and no-one wants any adverts. That was simply not addressed.