Consumer TV Viewing Habits Are Changing and You Can Take Advantage

A Conversation with Simpli.fi’s CRO James Moore
 

 

Transcript

 

Ann Kraus:
Hello, and welcome to the Simplifi Webinar Series. I’m Ann Kraus, Senior Manager for Training, Learning & Development. Thank you so much for joining us on the second Monday of each month for industry news, interviews, and all things related to targeted advertising and connected TV. If you miss us live, you can always catch us on simplifi.com/webinars or request access to our learning management system. It’s October 2022, and of course, CTV continues to grow. More and more consumers are embracing streaming television, which means agencies are adding CTV into that advertising mix. So joining me to discuss this today about what agencies need to know about CTV is James Moore, Chief Revenue Officer for Simplifi. Hi, James.

James Moore:
Hey, Anne, how are you?

Ann Kraus:
I’m doing well. Thank you so much for joining me and for taking the time.

James Moore:
No problem.

Ann Kraus:
I’m going to dive right in here, okay?
James Moore:
You got it.

Ann Kraus:
All right, so it’s very clear, the dynamic of how we consume TV has definitely changed. CTV is growing like crazy. You can’t miss it in any of the headlines, for the number of devices per household or how many people are watching them. How has Simplifi adapted to helping agencies adapt to this changing in consumer behavior?

James Moore:
Yeah, let me just start by agreeing with you that consumer behavior’s changing and continue to accelerate and change, and the television set and the battle for eyes that are observing content and advertising on the TV continues to heat up. Connected TV’s the fastest growing product in our portfolio. It’s the fastest growing product in the history of the company. I don’t think that should surprise anybody given the sheer magnitude of advertising dollars that exist in linear advertising. I think there are basically two things to consider here. One, the proliferation of web connected TVs. Almost every television set in America that’s being produced today has embedded Wi-Fi technology and the ability to connect to streaming content. Certainly, there’s literally dozens and dozens of devices such as Amazon Fire Sticks and Apple TVs and Roku devices and things like this that people are plugging into TVs to access web content. And so, it’s becoming quite normalized that people are consuming content when they want, how they want, and often are doing it through apps that exist on the television set.

I think the flip side of that is the sheer magnitude of households who are severing their pay TV cable subscription and/or satellite subscription and/or fundamentally no longer reachable via linear advertising. So you’ve got this rapid, rapid growth of connected TV that’s happening concurrently with this rapid deceleration in the volume of eyeballs that can be reached with linear advertising. And that’s happening certainly across locations and across demographics. There are now entire demographics that are virtually unreachable who either have severed their connection to be reached via linear or were cord-nevers in that they were never reachable. They simply went straight to streaming as their byproduct of what they’ve normalized.

As a company, we’re trying to do everything we can to produce value and solutions to take advantage of this massive opportunity. From the DSP side of things, obviously we specialize in data-driven advertising. The term addressable in advertising is a term that’s been around for a long time in TV, but it was always associated with a very subset of inventory made available to local cable and very limited amount of data that was typically gleaned from set-top boxes. Today there is literally near infinite flow of data of various types, whether it be online behavioral data, offline purchase behavior data, retailer data, client first party data that can be brought to bear so that different households can be exposed to different ads based on what you know about those consumers and those households in a privacy compliant way. So making targetable, addressable advertising normalized at scale nationwide, whether you’re targeting nationally or in a hyper-local basis is a real focus of ours.

And then I think we’re trying to solve some very real problems such as how to ensure incrementality versus the linear investment if you are planning and executing those in concert, how to solve the de-duplication of conversions if you’re a performance TV advertiser and measuring linear advertising and connected TV, how to solve reach and frequency concerns as you are messaging people across different screens and different creative types. These are all things that we are working on. We’re working on that not only in our DSP, but we’re working on that within the agency softwares that are part of the simplified portfolio, the Advantage agency software and the CoreMedia DRTV software.

Ann Kraus:
I had some stats that you mentioned with the numbers of stuff, so I ran into a couple headlines because you can’t not run into a couple headlines saying that there are now an average of four devices per household for streaming television compared to 3.2 in 2020, and in 2017 there was only 2.4. So this stuff is growing like crazy.

James Moore:
Yeah, it’s not only growing like crazy, but consumer viewing behaviors are just fundamentally changing, and they’re not normalized across all consumers. I mean, I think everybody could predict that if somebody was watching a piece of content, they were doing it on the device that was hanging on the wall or sitting on the piece of furniture in the living room. They knew what content was being showed at what time. And so, today, because these are web-enabled applications where people are streaming or using video on demand to access the content either live or post live, you’ve got all kinds of consumer preference. My own daughters who are in college or just graduating from college may have a television set in their bedroom and may prefer to frankly pull out their phone or tablet and lay in bed and watch the episodic content that you would associate with the television set but on the small screen that they’re using. It’s just a general preference.

And so, taking into account not only the fact that people are simply viewing across different devices, but the opportunity that that creates in the way of sequential messaging is important. Because the way privacy compliant identity works, there are device identifiers and then there’s household identifiers that are unifying multiple signals from multiple devices. That creates this really unique opportunity that didn’t really exist before to produce sequential messaging such that you can definitively execute advertisement, for instance, on a large screen TV, a non-skippable advertisement when somebody’s watching episodic content on a large screen TV. And then to definitively take the consumers who have been exposed to that and opt them into a completely different campaign with a completely different creative type such as a display campaign served on a mobile device or an audio campaign served on an audio device, or vice versa, to start in one area and then to opt those audiences in to then serve them a connected TV ad.

So it’s creating a near infinite flow of opportunity for creative innovation, for sequential innovation to try to find what’s the right cocktail mix to drive brand exposure, to drive conversions and business impact.

Ann Kraus:
So this campaign audience retargeting that you’re talking about, I think this sequential marketing, I think is just so cool because now you can get them at the higher end of the purchase funnel as well as that lower end, and advertisers can do this, agencies can do this, start at higher CPM, right, and then go down to a lower CPM.

James Moore:
Yeah, I mean, I think that’s the general practice here. Every campaign’s a little different. Every campaign objective’s a little different. But in theory the concept is that you’re leveraging a higher cost medium such as a connected TV ad on a large screen TV, and you’re beginning that upper funnel exposure and then taking advantage of the sheer magnitude of reach and the lower cost CPMs of lower cost products such as display or pre-roll, mid-roll, post-roll video to be able to provide supplemental exposure to your brand and message to guide them through the brand purchase funnel if you will. I think we’re doing a lot of things both automated and non-automated to try to help our advertisers find the right cocktail per advertiser, per campaign to produce the kind of outcome using those kinds of sequential capabilities.

Ann Kraus:
That’s great. That’s great. Let’s talk about agencies now. Are they having to change any of this internal structure because linear and digital, the budget allocation has to be commingling a little bit, right? Is there any type of things that you are hearing about that’s happening within agencies to adjust for this change?

James Moore:
Yeah, no, it’s super interesting. The thing is connected TV, on the one hand, most agencies historically have had clear separation between the planning and buying of linear and the planning and buying of digital or programmatic advertising. They have different resources. They have different teams. They have different technologies and vendors that they’re using for those things. As the television, the set, becomes web-enabled, there’s a battle for the heart and soul of who owns that execution. Is it digital because it’s now web enabled? Is it linear because that’s the device that it’s serving on or because there’s still some dollars being allocated to non-connected TV and will be for the foreseeable future.

All data points toward the fact that at some point in the next year, two year, three year, five-year, 10-year period as connected TV continues to grow in scale and size, as the linear audience and those who are accessing episodic content from networks to a reduced normalized level, what’s going to happen is I think any agencies are inevitably going to be under pressure from the brands they represent to be able to plan, execute, and measure across all screens and all media types. They’re going to be under pressure to produce maximum value at the lowest possible cost. All of these things just point toward team consolidation, technology consolidation, vendor consolidation. I think those things are very much a battleground that we’re all going to experience over the next one to 10 years at various levels depending on the agency.

And it’ll be interesting because linear buyers tend to curate inventory as a proxy to reach audiences. They’re very used to looking at a marketplace, trying to reach a target TRP or GRP, saying, “This is the audience I want to reach,” and then buying content in an effort to try to get exposure to a particular audience. Whereas, digital advertising has quite normalized the idea of buying audiences and having that dictate what content we serve across. One is very much a reach frequency and exposure type metric. The other one has normalized direct response, conversions, incrementality, that sort of thing. So as you blend these teams together, there is going to be a battle for what’s the right measurement. There’s going to be a battle for what’s the right dollar mix allocation. There’s going to be a battle for which technologies and vendors are best suited to be the planning and execution solution providers that are behind the scenes. And so, I think we’re all in for a great deal of fun as this consolidation of television and digital continues to happen.

Ann Kraus:
I think we’ve been into a great deal of fun for quite some time. We’re just going to keep riding that roller coaster, right? The roller coaster now is leading us towards direct response television, which to me was always those two-minute spots on a Saturday or 30-minute paid program on a Saturday in broadcast television, but we are definitely going into a different area here. This is another way Simplifi’s moving forward. Can you tell me about this?

James Moore:
Sure. The thing is Simplifi acquired CoreMedia, which is a linear direct response buying and measurement platform. They have access to performance marketers who have been buying linear TV under the guise of performance. They’re measuring impact to website within seconds or minutes after a linear spot airs. They’re measuring phone calls that are taking place and orders that are coming in, that sort of thing. They’re seeing advertisers spend billions of dollars. Campaigns tend to be national campaigns. They tend to be very much measuring the effectiveness of linear ads based on the outcome, on just how many transactions transpire as a result of that placement.

With connected TV and with digital, that’s very native to how we do business and how we’ve been doing business for the longest time. I think that there is a real opportunity for television to become more performance centric. And the things you would associate with direct response and linear TV or late night TV and some of the products that you see, the 1-800 number to call and order, and that sort of thing. But I think you’ll see that companies like direct to consumer brands, which are the fastest growing segment of the retailer marketplace and retail brands and locations with brick and mortar stores trying to drive foot traffic and that sort of thing, that really there’s an opportunity for all advertising that’s taking place on the television set to be held to a higher standard from an accountable media standpoint and to become essentially performance marketing.

We embrace that. We think that’s quite native and natural to how digital does business. We see an opportunity because the software that we acquired has so much exposure to linear TV performance dollars, and we, of course, are dealing in direct response from a digital perspective. We have an opportunity to work with our own heuristics, our own technology, and with third parties to roll our sleeves up and to help solve some very difficult questions such as the incrementality of conversions or business impact when buying across both.
As an example, when a linear act gets placed and you see this spike in website traffic or phone calls and then that spike go down and then you’ve got this undercurrent of digital execution that’s producing these conversions, how do you de-duplicate at any given time? What is being driven by the digital ad impressions? What’s being driven by the linear ad impressions? We think we are in a very prime position and are currently very focused on solving that very problem so that we can put solutions in the marketplace that are scalable both nationally and locally for solving those kinds of problems.

Ann Kraus:
Another thing that obviously we cannot read anything in the trades without catching is about privacy. It’s moving in and out of the press all the time, Apple, Google, legislation, cookies, everything. Just that bimonthly check in with you guys to see what are we doing to make sure we’re on top of this

James Moore:
As a consumer and a human, I care about privacy. I mean, I certainly don’t want my personal things out in the marketplace for everybody in the world to see and to utilize and to tag me. I just think the thing about privacy is a lot of the topics we hear around Apple iOS 14 plus and every evolution forth and some of the changes that they’re making around the approximation of location data and some same site rules and that sort of thing. And then you’ve got legislation. So you’ve got the state level legislation and then state level legislation part two, part three, and then you have multi-state legislation. Now there’s the threat of federal legislation.

We’ve been saying all along incidentally that it’s not scalable for all these different states to have different legislation, that ultimately the best thing that can happen for this industry is that some federal statute comes in and normalizes. Because in a world where different states have different rules around data collection and privacy, the only scalable way to do business is to adopt the strictest standard that’s in the marketplace so that you can apply that across the board and be compliant.

I would just say as somebody who’s been in this business for a long time, this has been top of mind and part of the discussion dating as far back as I can possibly remember. It has been an ongoing effort from the very beginning to ensure that we are never using PII, or personally identifiable data, that we’re always privacy compliant in the way that we collect information, not only the information we collect, but the manner in which we store that data. One-way encrypted it goes in. There’s no way for anybody to actually access that information. It’s not tagged to any one identifiable person, but it’s typically tagged to some sort of device identifier or household identifier.

So we’re very attuned to that. We’ve got attorneys on staff. We’ve got privacy consultants and technologists on staff. We are looking at all the many different identifiers that are getting normalized in the marketplace, LiveRamp IDL, Trade Desk UID, Intent IQ. There’s just many, many of these identifiers. I think there’s over 80 to 100 identifiers out there. You’ve got retailer-specific identifiers. Identification at this point is a team sport. You have to have a technology that can ingest multiple forms of identity from multiple sources and then unify that and normalize that. We have been doing that for a very, very long time. We’ve seen really improved match rates and continue to see great scale in terms of our ability to target and measure consumers in a privacy compliant way.

I would also just add, the fastest growing subset of connected TV in our business is household level addressability. And really the concept there is that we have a single identifier for every physical address in this country. And then we are identifying the web connected devices that are persistently present through multiple identifiers within that physical address where you’re essentially creating a multi-consumer identifier, which is really not all that different than when you hear Google talk about their FLoC technology, their Federated Learning of Cohorts, and that sort of thing. It’s basically saying, rather than targeting an individual consumer or device, can I take multiple individuals or device and unify them? So they’re essentially a segment of one, so that you’re no longer a single person but a multi-user entity at a fairly granular level that by definition protects the individual identity and individual browsing habits and that sort of thing?

We think that there’s real promise in the concept of addressability and household level identifiers and that sort of thing to not only ensure that we’re being legally privacy compliant, but that we’re implementing best practices that allow you to target and measure consumers in a way that just inherently makes it impossible to identify them at an individual level.

Ann Kraus:
You mentioned earlier, the legislation going state to state and changing, as well as some of it might need to go federal, but one of the things that comes to mind when you mention that is political. I know that already is a big thing for us this year, obviously going into next year, and all of these different restrictions state to state and different things that have to be part of the screen and all kinds of different rules. How are we adjusting to that? How can we help agencies make sure that they’re on par with us?

James Moore:
Really, any media partner that’s buying business with Simplifi, I think we recognize that political advertising is certainly heating up and soon to peak where we’re six weeks or so from the election. I don’t know where that is in relation to when this airs. But at the end of the day, we’re very close to the general election for these midterms. We’ve learned a couple things. We’ve learned, number one, political is not just a political year thing. It happens to be heating up and we’ll be peaking out right now, but there’s political advertising happening virtually every year. Some of it is candidate, some of it is advocacy, some of it is proposition, some of it is fundraising, any number of things.

And you’re right, there’s all kinds of legal potholes and requirements and that sort of thing. We have spun up a very specific internal team for political. We’ve got some of the nation’s leading political council on demand here working with us. We’ve got a dedicated team. I think we know that most of the partners who are in the political landscape are looking for a lot of the speed and control of self-service, but yet they want to work with a partner who, frankly, will do a lot of the heavy lifting. So we’re having to run longer hours. We have to be prepared to activate, pause, stop campaigns after hours on weekends, conduct creative swaps when necessary. We’ve got to be able to activate where we can, if there’s any pre-approvals or anything that need to be done that we’re accelerating those approvals on creatives and things across various inventory partners.

And so, we’ve got a fairly well-oiled machine that is set up to run just as hard and as fast as humanly possible. But our number one priority is to ensure that we deliver and perform while ensuring that you and Simplifi do not end up on the cover of a Wall Street Journal article for doing something illegal or nefarious. And so, I would say that we are going through great pains to make sure that we are not just a yes shop and that we have your personal protection at heart while we’re also moving fast to fulfill those campaigns to ensure that we are compliant, that you are compliant, and that ultimately that your end client is compliant.

Ann Kraus:
This has been great. We covered a lot of different topics here today, and I appreciate this check-in with you to see what’s going on at Simplifi and how we’re helping agencies. And so, thank you so much for joining me today.

James Moore:
You’re very welcome. We’re so grateful to all of our partners. And Ann, thanks for letting me in. Thanks for letting me chime in today.

Ann Kraus:
And thank you all out there. Thank you so much for joining the Simplifi Webinar Series. If you have any questions about Simplifi’s offerings, please reach out to your Simplifi account manager or send an email to hi@simpli.fi. That’s hi, H-I, @simpli.fi, F-I. If you have questions about training, please send them to training@simplifi. A copy of this webinar along with a complete transcript of our conversation will be available on Simplifi’s website at simpli.fi/webinars. So please continue to join us on the second Monday of each month for more in the webinar series. I’m Ann Kraus, and I’ll catch you next time.