Aug 1, 2015

The Shot Heard Round The World?

Originally published at TDG Research on July 30, 2015

In TDG’s April 2015 report on OTT TV Advertising, we predicted that the artificial division between OTT and linear TV streams of the same broadcast would cease to exist within five years, at least for advertising purposes. Lo and behold, what should we see this week, but that CBS is going to run the same ads on the 2016 Super Bowl regardless of whether you’re watching the game through your set-top box or through your iPad.

Is this revolution already being televised or is CBS just slightly ahead of the game?

The answer is a little of both. CBS is in a great position to set new terms for television advertising, and the Super Bowl is the perfect vehicle to make this happen. It is, after all, the most desirable advertising space available. But advertisers are increasingly concerned that Cord-Never Millennials won’t see their commercials if they only run on linear and not via OTT. Having one’s ads featured on both is a huge plus…especially if CBS does indeed charge a record $4.5-$4.7 million for a thirty-second spot.

Traditionally, OTT broadcasts of network TV programs have been sold separately from linear broadcasts, even when they run simultaneously, as there is no universal standard of measurement for OTT — Nielsen does not yet measure most OTT streams. Rights issues also come into play, as advertisers must buy digital rights to the commercials, then pay extra for talent costs when the ads are delivered via OTT.

Waiting For Nielsen
CBS’s decision to run the same Super Bowl ads on both live linear and OTT streams may not immediately alter the reality of bifurcated ad buys. It will, however, open the door for the rapid adoption of a single-broadcast model — that is, once Nielsen (finally) begins to measure OTT broadcasts. Without a universally accepted standard of measurement, networks cannot properly monetize those TV shows that also enjoy large online audiences via operator and network TVE apps.

The Super Bowl, however, is a different animal. Advertisers know that millions of people will be watching the game. They are also aware that millions of fans engage in the weeklong extravaganza via social media, with ads frequently appearing on YouTube a week before the actual game.

Since the majority of ad views on game day will come through linear TV, advertisers need not worry that their ads aren’t reaching enough viewers. Even if concurrent OTT views remain uncounted, marketers know that their ads will be seen by enough viewers (and hopefully generate enough social buzz) to justify the extravagant costs.

The Problem With Live Broadcasts
There is one other issue with the OTT broadcast of the Super Bowl: the stream itself. In previous years there has been a significant delay between the linear broadcast and the OTT live stream, sometimes as much as four or five minutes. This voids the notion that the ads are running simultaneously and advertisers can claim that they are losing the promised synergy.

And while many have blamed the lack of concurrency on the Internet’s inability to handle live TV, the reason is far more mundane: the hardware and software used to broadcast the OTT live streams are just not up to snuff. They were not made to handle such a large audience, or the sizable traffic spikes that come with a live broadcast.

We’d thus advise CBS to invest significantly in perfecting its Content Delivery Network (CDN.) This will ensure that both the linear ads and OTT ads will show up at more-or-less the same time. This is a particular issue at a time when social media coverage of Super Bowl ads is at a peak, as live stream viewers do not want to read about ads in their Twitter feeds five minutes before those ads appear on their screens. (Reading about touchdowns and fumbles five minutes in advance would be even worse!)

Establishing A Precedent
While CBS’s decision to sell linear and live streams as a single unit is not about to open the floodgates, the precedent it establishes is huge. Running ads in tandem helps to usher in a system that reflects the way viewers watch TV today — on multiple devices and multiple screens without regard to how the signal is being delivered.

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