Unifying the Video Footprint through CTV: Lessons Learned from Project OAR

In the ever-evolving landscape of premium video advertising, one of the most significant challenges has been the fragmentation of advertising services. This fragmentation affects advertisers who are interested in achieving unduplicated reach, which, given the number of independent video services, becomes almost impossible without causing viewer burnout on a significant portion of the target audience. Content providers face a different problem: much of their viewership still watches video on traditional linear channels delivered through cable and satellite systems. Both conditions affect ad spend and consequently reduce the funds available for generating new content. Although it may be too soon to declare the industry unhealthy, the number of recent layoffs is certainly a leading indicator. To understand this problem better, it may be educational to examine a recent attempt at providing addressable advertising across both linear and digital services: Project Open Addressable Ready (OAR), which was initiated to bring addressable advertising to linear TV and provide the targeting capabilities available on streaming services.

Addressable advertising was already available from distributors such as Comcast, DirecTV, DISH Networks, and Verizon, but campaigns had to be run independently within each distributor’s inventory as allocated by their contracts with content providers. While the CPMs were much higher than those of linear spot-based ads, content providers did not realize any of that revenue.

Content providers needed to unlock the potential of addressable advertising for TV, but several issues stood in their way:

• National Signal Limitations: Content providers typically broadcast a national signal, but targeted ads need to be specific to individual viewers or households. This national approach didn't allow for the precision needed in modern advertising strategies.
• Limited Reach: Distributors like DIRECTV and DISH Networks had national addressable footprints, but their reach covered less than 50% of households, limiting the effectiveness and scale of targeted advertising campaigns.
• Resistance from Distributors: Some distributors were reluctant to open their addressable capabilities to content providers, fearing it would create competition for their own advertising offerings. This resistance created a barrier to broader implementation of addressable ads.
• Inconsistencies in Capabilities and Measurement: Although most major distributors embraced addressable advertising, there were inconsistencies in their capabilities and measurement methods. This lack of standardization made it difficult to achieve uniform campaign execution and accurate audience measurement.
• Broadcast Network Practices: Affiliates and owned-and-operated stations of major broadcast networks (ABC, NBC, CBS, and FOX) processed signals in ways that disabled set-top box-based ad insertion, further complicating the deployment of addressable advertising.

Additionally, linear addressable advertising systems, used by distributors, were only effective with linear TV, treating digital services like OTT, AVOD, and FAST separately. While offering addressable advertising capabilities was critical, it was only a first step toward providing the unified footprint and unduplicated reach that advertisers need.

Changing Market Dynamics

The TV remains the preferred viewing platform for a large percentage of the audience, but TV capabilities have changed dramatically over the last ten years. Several market dynamics indicated the possibility of a new ad delivery mechanism:

• Smart TV Adoption: Almost all new TVs are smart TVs with internet connections, making them capable of connecting to streaming services. This technological advancement made smart TVs a central hub for both linear and digital content consumption.
• TV Replacement Cycle: The average lifespan of a TV is seven years, meaning newer sets would replace outdated, unconnected TVs. This regular replacement cycle provided an opportunity to introduce new standards and capabilities into the market.
• Market Dominance: A few major players dominated the TV market, including Samsung, LG, Vizio, and Hisense. Understanding their market share and influence was crucial for driving industry-wide changes.

Project OAR (Open Addressable Ready):

Recognizing the changing market dynamics and the availability of connected TVs, the industry started to examine the use of the internet connection as a means for ad decisions and delivery. This differs from the current definition of CTV, in which the TV receives a unique stream and ads are inserted at the stream's origination. This so-called Server Side Ad Insertion (SSAI) system works well for digital delivery but does not work for a broadcast stream in which all viewers receive the same signal. The idea was to embed information in the common stream and allow the TV itself to insert a targeted ad.

Efforts from Gracenote and Sorenson fell flat due to proprietary techniques and a lack of buy-in from content providers and advertisers. In fact, these efforts failed before they were even launched. For a connected TV-based addressable system to take hold, there needed to be a more concerted industry effort—enter Project OAR.

Launched with the vision of establishing an industry-wide standard for addressable TV advertising, the primary objectives included:

• Creating a Common Technology Standard: Developing a unified standard for delivering dynamic, addressable advertisements on connected TVs. This standard aimed to enable more relevant and personalized advertising experiences for viewers across various platforms, including linear and on-demand formats.
• Enhancing Ad Delivery and Monetization: Implementing addressable advertising to better monetize TV impressions through segment-based audience targeting. This involved using real-time data to insert targeted ads, thereby improving the efficiency and effectiveness of ad campaigns.
• Ensuring Privacy and Compliance: Establishing standards that include provisions for privacy compliance and impression verification to adhere to industry best practices and regulatory requirements.
• Fostering Industry Collaboration: Bringing together major media companies, such as Disney, Comcast, CBS, Discovery, and Warner Media, to create a scalable and interoperable ecosystem for addressable TV advertising. This collaboration aimed to benefit all stakeholders involved, from content creators to advertisers.

Implementation and Challenges

Launched in 2019 at the CES trade show, Project OAR took time to develop working systems, which were piloted within a couple of years. Initial content providers included major media companies who varied in their ad-serving capabilities, from basic versioning to selecting the best ad for each TV.

However, several challenges emerged during the implementation phase:

• Lack of Coordination with Broadcast Systems: There was no coordination between ads inserted by OAR and those in the broadcast stream. Without ad metadata or rules for interaction, long-established sales tactics like competitive separation couldn't be fully supported. This often limited the number of ads that could be inserted to avoid conflicts.
• Inconsistent Impression Reporting: OAR could provide second-by-second viewing durations, but some systems reported less granular data, following the IAB's quartile reporting standard. These inconsistencies hindered the ability to achieve accurate and comprehensive audience measurement.
• Inconsistency Among Content Providers: OAR focused on messaging to and from the TV but didn’t specify the advertising capabilities that had to be provided by OAR participants. Consequently, service characteristics varied by provider, confusing advertisers who needed to buy across content providers.

Despite these hurdles, several OAR participants successfully launched services and made progress. Addressable ads were being inserted based on viewer characteristics and impression data was being returned. It was generally felt that OAR was still in its infancy and that the problems would be worked out. However, the largest barrier to success remained. OAR only worked on newer Vizio TVs, which represented less than 10% of the market. Larger manufacturers like Samsung and LG did not embrace OAR, and without these TVs, the desired reach could not be obtained. Ultimately, the service didn't reach critical mass and was shut down.

Possible Reasons for the Lack of Adoption by TVnbsp;Manufacturers

• Perceived Competition: Manufacturers may have wanted to be seen as the driving force behind CTV and might have seen the use of a system proposed by Vizio as a competitive threat.
• The Deployment of ATSC 3.0: This standard is slowly making its way into the video landscape. In theory, the protocols will allow for ad insertion. ATSC 3.0 is supported by broadcasters and affiliates with one of the major backers being Sinclair. Unfortunately, ad support in the standard, likely years away, may be seen as the best path.
• Revenue Concerns: Manufacturers may view OAR as offering a small market opportunity compared to other areas for investment, such as FAST.
• Competition with Their Own Advertising Offerings: Advertising services from Samsung and LG were launched around the same time as OAR. Although these were theoretically separate services, the fact that ads would target the same households may have been an issue.
• Past Experiences: Samsung was disappointed by the lack of success of Sorenson Media, which had promised tens of millions of dollars in revenue each year.

Lessons Learned

Project OAR's experience underscores the complexities and potential of addressable TV advertising, both linear and digital. Distributors see themselves in competition with content providers and are content to slow-walk solutions. Major streamers see their subscriber base as a competitive advantage and are unwilling to open up their walled gardens. Ad tech vendors want to maintain a competitive advantage and are slow to embrace open standards. And, nobody will move until they see substantial short-term revenue—the proverbial chicken and egg. At times, you learn more from failure than from success. With that in mind, Project OAR's journey highlights several lessons that future initiatives can learn from:

• Universal Signaling: Having an industry-standard, non-proprietary signaling system will remove some of the competitive issues associated with proprietary mechanisms. A standard signaling system should also preclude the need to pay royalties or a per-impression fee, leaving more room for margin among the participants.
• Signal Integrity: Solving the problem just for addressable linear TV helps, but it is not sufficient. The signal must be usable across media types and survive through the various downstream systems that have altered the stream in the past.
• Manufacturer Incentives: TV manufacturers and SSAI/CSAI must recognize the signals and enable ad insertion, including ad decisions and creative delivery to the device. To foster adoption, there need to be substantial financial incentives, which may include both serving fees and the potential to combine their own inventory with that provided by content providers to maximize CPMs.
• Content Versatility: The system must support various content types and delivery methods (Linear TV, VOD, TVE, and FAST), providing a comprehensive solution for all forms of content. This will enable cross-content provider and cross-platform campaigns, breaking down the silos and overcoming fragmentation.
• Detailed Reporting: Having a common currency is the white whale of addressable advertising. The lack of data and inconsistent data will serve to maintain separation between campaigns on different services. At best, the system should have a single definition of an impression and provide second-by-second granularity.
• Enhanced Metadata: Traditional content providers are unlikely to put the majority of their ad inventory into addressable advertising for the next several years. A sizeable portion of their revenue will continue to come from traditional spot sales offered with traditional capabilities, including competitive separation. The portion of the inventory with addressable ads must not counteract these features. Inventory metadata, creative metadata, and campaign rules must be sent to the addressable ad server to ensure compatibility between addressable and non-addressable (linear) sales.

Where Do We Go from Here?

The need for a more universal video advertising system has not abated. If anything, fragmentation has gotten worse. Every major network has a streaming service. FAST channels are proliferating. With the exception of a few large streamers like Netflix, Amazon, and Hulu, the number of subscribers per service is not enough to provide the unduplicated reach required by advertisers. This is not news to anybody involved in the business, but there has not been sufficient movement to alleviate the problem.

The lessons learned from Project OAR provide a valuable roadmap for the future of connected TV advertising. By addressing the key challenges and embracing innovative solutions, the industry can move towards a more unified, efficient, and effective advertising ecosystem. This transformation will not only enhance viewer experiences but also unlock new revenue opportunities and drive the evolution of the media landscape.

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