An early pioneer in advertising, John Wanamaker once stated, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” More than 100 years later, his words reflect what many advertisers from the world’s largest to emerging brands still face, however, programmatic advertising and ad-tech are beginning to change this landscape.
Programmatic advertising is a relatively recent addition to the Telescope Investing megatrends, but it’s become a bigger focus for us since 2020, and we’ve made several investments into companies in the Connected TV space.
What is Connected TV?
Just to give a couple of definitions to scene set, all television up until the early 2000s was Linear TV – the traditional means of watching broadcast television, in which a viewer watches a TV program on the channel it’s presented on, at a scheduled time.
Platforms such as YouTube and BBC iPlayer launched in the mid-2000s and created the ability to watch a show at your convenience – to pause, rewind, skip ahead, and watch again and again.
Streaming video content has been ubiquitous for the last decade, with live sports being one of the final hold-outs for ‘appointment viewing’, although in many markets even sports viewership is being eroded by companies such as fuboTV.
Like so many other investment megatrends, the Coronavirus pandemic accelerated the rise of streaming TV, condensing years of evolution into just a few months. A 2021 key-insights survey of Connected TV (CTV) advertising spend on platforms such as Hulu, Roku, and YouTube highlighted that:
- 49% of advertisers consider video to be the most important media type that helps them reach their advertising goals
- 41% of advertisers increased their Connected TV ad spend compared to the previous year
- Linear TV advertising ad spend decreased by 14% in comparison to the previous year
What is programmatic advertising?
Although Connected TV is great for the viewer – they get to consume the content they want at the time they want – it also creates a fantastic opportunity for advertisers. Rather than buying a regional ad spot based on the show being broadcast, Connected TV enables a specific viewer to be targeted with a specific advert, based on their demographics, interests, location, buying history, and countless other factors that make the advertising spot so much more valuable than the ‘spray and pray’ style approach of traditional advertising.
An advertiser needs to pay more for a targeted ad spot (typically 2-3x the cost compared to linear TV advertising), but they get far more value from knowing that they’re targeting their ad spend effectively, and in many cases are also able to track behaviour post the advert to see where that led to a purchase (although these latter capabilities are being impacted by recent privacy moves by companies such as Apple).
How do I invest in ad-tech?
We anticipate a continued move of advertising dollars from linear TV to connected TV, enabled by the capabilities that ad-tech companies such as Magnite, The Trade Desk, Integral Ad Sciences, and DoubleVerify provide. We firmly believe that ad-tech is a key investment megatrend for the coming five years, you can read more about our ad-tech investments in the articles and podcast episodes linked below.
As ever, this is not financial advice and you should do your own due diligence before making any investment to ensure that it’s suitable for your particular circumstances.
Podcast #63 – Digital Turbine deep dive
Podcast #47 – Integral Ad Science deep dive
Magnite one-pager
