Ed Laczynski is a co-CEO of Backlight Streaming, which provides cloud-based solutions for OTT video streaming, content management and more.
In an era of escalating cord-cutting and dwindling traditional TV viewership due to rising consumer prices, free ad-supported TV (FAST) channels have emerged as an up-and-coming alternative for consumers and advertisers. FAST presents an appealing option to price-sensitive consumers amid the economic downturn and inflation while granting advertisers an innovative avenue to connect with broad target audiences.
Data supports this trend, demonstrating a surge in the popularity of FAST channels within the United States. According to FASTMaster, the creation of new channels rose sharply between January 2022 and January 2023. There are six services that offer at least 300 channels, firmly solidifying their position in the market.
However, despite this undeniable momentum, the ad experience within FAST channels still needs to catch up, warranting immediate attention and improvement.
Distinguishing Itself From Cable
Although FAST channels represent a relatively novel concept, consumers are readily embracing the user experience itself due to its resemblance to the seamless, lean-back experience of cable TV. Yet it is crucial to recognize that FAST is not merely a reinvention of traditional cable services.
FAST distributors, publishers and the technology ecosystem that supports them can innovate to refine the lean-back experience. One area that is particularly ready for change and differentiation is the advertising experience.
The Impact Of Advertisements
FAST channels heavily rely on advertising, yet the current ad experience significantly detracts from user satisfaction. Persistent issues, ranging from intrusive “we’ll be right back” messages to malfunctioning ad slates, underscore the considerable distance still to be covered in meeting viewers’ basic expectations of reliability—an aspect resolved decades ago in traditional broadcast and cable television.
On the flip side, brands and advertisers face their own set of challenges. They require a comprehensive understanding of the efficacy and performance of their media investments, but gaining a holistic view of performance takes time and effort. In traditional broadcast and cable TV, limited data is available to distributors and publishers (much less than in an IP-based FAST environment). Still, a time-trusted regime, from ratings to ad delivery monitoring agencies, provided a solid and consistent footprint for ad sales and commercial growth.
With the emergence of FAST, over-the-top (OTT) and virtual multichannel video programming distributors (vMVPDs), the expectation was that the digital footprints, breadcrumbs, and aggregated or specific identifying and demographic data would be hyper-accessible and lead to a nirvana of bull’s-eye ad targeting, 100% fill rates and high CPMs.
This has not yet happened.
Advertisers are restricted in the insights they can derive from publishers and networks, severely limiting their ability to gauge the reach and impact of their campaigns. In some cases, this is because of a hodgepodge of privacy laws. In others, it’s because the waterfalls and revenue shares (and how that maps to audience data) are just too fragmented.
Publishers are dealing with opaque reporting from almost all major FAST distributors and have limited availability to understand how their content is engaging in the wild.
The nascent data pipelines aimed at enhancing transparency for advertisers and delivering a more viewer-friendly experience are only beginning to take shape. Resolving these growing pains is vital to creating a superior overall experience for all parties involved.
Charting A Course For The Future
Attendees of conferences and industry events are talking about the issues and opportunities surrounding interactive ads and sophisticated targeting.
Industry consortiums like OTT.X are working on standardization recommendations and best-practice guidance to help ensure a publisher seat at the table. FAST distributors like Samsung are building new reporting capabilities like “Streaming Segments” to bridge these gaps.
These are encouraging developments, and they’re not surprising given the enormous market opportunity for ad-supported streaming on FAST—which is expected to grow north of $6 billion by 2025. This opportunity will force innovation and connectivity, as the demand for advertising is far outpacing the capacity to fill in a way that’s acceptable to publishers and advertisers.
Leveraging data to facilitate improved ad delivery and fostering collaboration among technology providers, publishers, distributors and advertisers are vital steps forward.
Technology providers recognize the significance of these objectives, and they’re innovating and investing in strategies that yield superior results for content providers and viewers alike. Through seamless ad tech integration, reduced latency, pre-fetching and other advanced techniques, there are ways to ensure viewers remain fully engaged and immersed.
Approaches such as these resonate with viewers, improving the ad experience. As an industry, we must prioritize the interests of both viewers and advertisers and embrace solutions that transcend limitations.
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