What are the main factors behind CTV's strong growth in the advertising sector? Mario Neumann, Director Business Development at marketer Goldbach Germany, knows the answers. An interview in W&V.

On the one hand, more and more viewers are using digital reception channels. This is forcing companies to adapt their advertising strategies. New providers such as Waipu and Zattoo are also helping to increase reach - especially among younger target groups.

Another driver is the fragmentation of the market. In addition to traditional broadcasters, platforms such as Samsung TV plus and LG are gaining in importance. These new players not only offer content, but have also established their own sales structures for cooperation with agencies and customers. However, this makes the market even more complex. In this interview, Mario Neumann explains what this means for marketers and how more transparency can be created.

Mr. Neumann, hardly any other type of media is currently predicted to experience such strong growth in the advertising sector as connected TV. What are the main factors behind this forecast?

We have been seeing a significant change in the way media, especially TV content, is used for some time now. This change in media consumption behavior has led content providers to go where viewers spend their time.

This is certainly one of the main drivers of the shift from traditional reception channels such as cable or satellite to digital reception channels such as connected TV. Companies must also react to this and adapt their advertising strategies.

And new channels are constantly being added.

That's true. Five years ago, only a few people knew about providers such as Waipu or Zattoo. Today, they have found their place in the media world alongside traditional reception channels and broadcasters. With ever new content.

There is a well-known saying in advertising marketing: money follows reach. For about two years now, we have noticed an extreme relevance of reach. Especially in the area of kids and youth culture as well as young adults.

In other words, those who have also migrated to YouTube and social media...

Exactly. And that's comparable to CTV. It's digital and takes place on the TV screen. It combines the advantages of traditional TV and online video platforms such as YouTube and the like.

I can watch what I want, when I want, where I want. Advertisers are naturally responding to this - there is no way around it if they want to fully reach this target group.

Does this also apply to the so-called "cord cutters" who no longer have a conventional TV connection?

For such households, it's usually no longer just about incremental, i.e. additional reach, but about reaching them at all. We have clearly observed this in the last two years of our long-standing Advanced TV studies.

At the same time, technological developments have made it much easier for agencies and advertisers to book this inventory programmatically and include it in their media mix. The industry has learned a lot from the topic of online video.

June 30 was the cut-off date for the end of the ancillary cost privilege - tenants can now choose their own preferred reception channel for moving images. Will this give CTV a further boost?

Let's put it this way: it has the potential. Our latest Advanced TV study shows, among other things, that households are becoming increasingly price-sensitive. This also applies to new media such as CTV.

If I am faced with the challenge of paying for it myself, then I can of course compare. I may then realize that a digital service is cheaper. Or I may even have the option of bundling existing digital subscriptions to get more content for the same or less cost.

However, if the landlords price this in at their own expense, there may be no need for action for some and the expected boost could fail to materialize.

You mentioned the booking situation. A lot has happened recently, partly due to technical advances. Is it now easy for agencies and customers to find their way through this "CTV jungle"?

Unfortunately, no. But it is getting better. The market players, especially the inventory providers, are of course very interested in educating the market and showing what options are available and how they can be used.

Nevertheless, it is still a challenge to classify the terms and understand the media offerings. Not only for agencies, but above all for direct customers, who are often even further removed from the technical side of things.

What does this mean in practice?

A large part of the sales process involves explaining not only how many contacts you can get at what price with which targeting criteria, but also where and in which usage situation you are actually advertising.

So: What is the advertising medium? What is the environment, what characterizes CTV? What is the difference to classic TV? There is still a lot of educational work to be done.

For example, about the fact that the content and the audience do not only take place in the traditional broadcast universe. For many people who think of digital TV, it's channels like RTL & Co and their streaming apps such as RTL+. But they only make up a fraction of the reach.

Where does the main share come from?

The large reach comes from outside the broadcaster apps. Platforms such as Magenta TV, Zattoo, Waipu TV, Samsung TV plus, LG and many others make a significant contribution to this.

The market has therefore become much more fragmented. There is no longer just the classic duopoly and the first, second and third generation broadcast providers.

Now there are digital content providers and distribution platforms. We have market players that previously stood for the sale of television sets - and suddenly they are also offering content.

These companies are also competing with traditional providers. Does this amount to fierce competition - or rather cooperation?

Probably both. This is a very global issue. We have some large content aggregators in Germany, such as Funke, who work with various distribution platforms such as Samsung. We have streaming providers, supra-regional, pan-European, we have the big digital companies like Netflix, Hulu and Peacock.

For all these players, the digitalization of TV is their growth strategy. It will be particularly difficult for broadcasters and the existing local champions to keep up with these changes and the technology-driven market players.

For their part, the big players have to deal with the issues that are taking place in the local market. In my opinion, this means that mid-tier companies will be forced to join forces locally in order to compete against the Googles and Apples of this world.

Samsung is particularly active at the moment - they recently bundled their TV marketing activities into a separate business unit...

We have had a very good and close partnership with Samsung for a long time, so we are very close to their developments. In 2016, there was no in-house advertising marketing at Samsung Electronics.

Today, they are organized globally in a separate unit with Samsung Ads. In Germany, they now have their own sales structure for working with agencies and customers. But you have to make sure that no further walled gardens are created.

Competitors are already responding to this. One major project, for example, is the ad tech platform Utiq, in which Deutsche Telekom, Telefónica/O2, Vodafone and Orange have joined forces. How do you rate the project?

That's a good sign. Something like Utiq is needed to be able to compete against the big global players and to secure a relevant position for the local market. We are already seeing the beginnings of this in CTV.

Data is also essential for measuring impact. A lot has happened recently - are there still gaps or is it already possible to map everything that is important?

Not yet, of course, because it is a very young medium and all market participants are just learning together. Two years ago, the IAB Europe published a guideline aimed at further standardizing advertising in the CTV sector and making it interoperable between the various market players.

That was a good, important step. But it also depends on the willingness of market players to adapt and implement it.

And this willingness is not there?

At least not across the board. One example: In the aforementioned IAB guideline, contextual parameters were published for the purpose of targeting, which can be used to identify the environments of the so-called adpods (advertising blocks) in CTV.

We have adapted these in our system and approached each of our publishers to ensure this standardization within our portfolios. For example, channel name, live or on demand, lengths, genre.

The majority of publishers went along with this. But there were also some who said: "What's in it for me?" Will I get more sales as a result, or will I just have more work? Or am I perhaps even worse off, because then my inventory is only booked very sparsely and not at all across the board? And so on.

Aspects that are actually understandable...

These discussions are justified. The ultimate aim of such standardization measures is to create more convenience and trust for advertising customers and agencies.

It's also clear that this happens at different speeds in different places. We've actually already made a lot of progress here, partly because we've been able to fall back on online video metrics and programmatic advertising.

What is still missing?

We already have a lot and are therefore in a position to offer CTV as a serious medium in the media mix. But more is needed to really scale it up and make it a relevant part of the media mix in terms of budget.

More impact studies: What is the advantage of CTV? Why does CTV complement TV very well? How does CTV benefit from TV and vice versa? All of this, of course, in a triad with online video. How do I identify the target groups and how do I make them plannable and optimizable? These are topics that market players have not yet standardized across the board.

When will it be ready?

There are already good attempts. We are working with various providers. For example, with XAD Spoteffects, which records, measures and analyzes the performance of commercials on traditional TV and video ads on advanced TV. This is a provider that wants to give advertisers more than just ad impressions and view through rates.

We also cooperate with Samba TV, whose technology is installed on TV sets and is therefore able to measure and analyze the usage behavior of smart TV viewers.

And we have some specialized providers in the area of business analysis and business intelligence. We also work with the most important institutions, IAB, Vaunet and AGF. We are putting out feelers in every direction.

To finally achieve true cross-media?

Exactly. We specialize in moving images across four media types. In this respect, we are cross-media and we live it. We have to make sure that we don't just do this as a "Gallic village" in Germany, but that we build a bridge to all market participants.

The article can also be found here in W&V.