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Ideas Addressability2020-11-18

When will advertising's Tesla moment arrive?

Adam Gerber

We are at a unique moment in time.

The pandemic has highlighted the shift in how people watch video and simultaneously, normalized initiatives that realign technology, consumer interests and business operations. One of the most notable results  - major US TV networks accelerating their transformations in earnest. The last 18 months has been witness to consolidation, product launches, and the ascension of experienced streaming executives with a digital first mentality to content production and delivery.

Whether advertising reinvents itself as part of this transformation is still an open question.  And that is a big danger to the free flow of content and efficacy of marketing.

We are headed towards an “on-demand” world where - generally -  sports, news and big communal events are all that will be watched live.  That time is closer than it has ever been.

The journey to an on-demand world has destabilized advertising - with Netflix, Amazon Prime and other non-ad supported platforms flourishing and traditional media companies fighting for declining, older audiences.  Now, a number of ad supported streaming services have launched or been announced, looking to recapture viewership.  But their success or failure won’t just depend on content - it will require a new ad model - to deliver the best possible viewing experience, provide value to marketers and generate adequate levels of revenue.

We have been talking about a future in which video advertising is addressable and less wasteful for decades. Continuing attempts at innovation - the Orlando Time Warner trials in the 90s; cable interconnects and zone advertising in the early 00s; platform based solutions and data-driven linear and household addressable today - never achieved their full promise or the scale marketers need.

Here’s one possible reason why.  As an industry we have never focused on the truly fundamental things that need to be changed.  Namely - what was being bought and sold and how it actually happened. Rating points aren’t what matters in a fragmented world - audience reach, attention and outcomes are - and maximizing those KPIs is not easily done when everything is managed through siloed sales channels.

The market is ready for “audience-based buying” but today’s solutions remind me of a hybrid car.  Yes, it makes things a little better, but at the end of the day, it's still reliant on old technology.  Hybrids aren't a big, bold change. Tesla is.

For video advertising to continue to create value we need to completely rethink how it works; to redesign it’s engine and establish a new infrastructure to provide its fuel.

What does bold, disruptive thinking in video advertising look like? It relies on privacy-friendly, centralized and open source identity, coordinated ad delivery across sellers’ portfolios to maximize reach and manage frequency, and customized ad-models in on-demand experiences to hold attention. It means better attribution and outcome-based validation.  At the end of the day - it means a fully connected, and coordinated ecosystem.  Not just within media company portfolios or walled gardens - but across them.

Consumers want more value in exchange for their time and attention. Media companies need to maintain and grow revenue. Advertisers want improved performance. These are not mutually-exclusive, and the solution has to be comprehensive - which it hasn’t been to date.

Getting to consensus might require a changed perspective. Media companies and platforms need to recognize that, with regards to ad sales and delivery, they don’t only compete with each other. They complement one another. Yes, programming departments and distribution groups will fight for viewers and subscribers. Once consumers decide where to watch, the focus should be on balancing their viewing experience, delivering value to advertisers, and ensuring appropriate monetization for publishers. That requires a fundamentally different approach than the one we have today.

The next ten years must be about reimagining video advertising. We need to stop insulting  consumers with more, repetitive ads, and redesign our systems for an on-demand world. We need the ability to create ad experiences that are managed across a viewer’s day, week, and month which aren’t just tied to individual shows or networks.

Thirty plus years ago, conversation began in earnest around electric vehicles. It seemed like a great idea but it was easier for the incumbents to maintain the status quo. Auto manufacturers experimented with hybrids but didn’t fully commit to letting go of their established technology. When GM recalled and destroyed its electric cars in 2003, Tesla was born to challenge them.

I’m left asking, “When will the Tesla of advertising stand up?” We need to move beyond the conventional model and recognize a transparent, joined-up and addressable video ad market is better for everyone. We can put self-interest and control aside and build it, or we can wait to be disrupted by someone with the ambition to create it for us. The ad-supported content model - that supports universal access to quality content, independent journalism and the diverse publishers that comes with it - depends on what we do next.

*An abridged version of this article was published by Campaign Magazine. Photo courtesy Szymon Kita on Unsplash.