Measurement, currencies and walled gardens: how do we solve the video industry’s headache?

No comments

Ophélie Boucaud, Principal Analyst - Media & Telecom at Dataxis, provides a European perspective on overcoming the current challenges associated with fragmented viewer and advertising metrics.

Following weeks of conferences focusing on the challenges and opportunities of the video industry in Europe, my head has been buzzing with keywords like measurement, ad currencies, data clean rooms, first-party data, or consent framework. All those terms were wrapped up around discussions that attributed the scapegoat role to “fragmentation” and “walled gardens” when it came to addressing the video advertising industry’s shortcomings. But is that really where the problem is?

Source - Ophélie

Ophélie Boucaud, Dataxis

In the previous eras of advertising (when TV first started putting several channels on the same tube), measurement tools were built from the ground up in each domestic market. They were developed as a consensus around a single source of truth in each country. For a vividly competitive industry, it obviously took years to reach that point, and a lot of stakeholders are still questioning or even arguing about TV ratings methodology. Panels aren’t perfect, and it is an inherent problem to their very nature: they aim at using a sample to draw out a landscape that should represent the masses. But they won’t ever grasp the whole picture. Broadcasters still complain about the remanence of many 0-rated channels, which can’t be properly monetised without accurate measurement.

“We moved from one imperfect source of truth to multiple incomplete sources of truth, all competing with one another” Ophélie Boucaud, Dataxis

As we rapidly moved toward an IP-based TV landscape, everyone became frantic about leveraging the unprecedented amount of data that could now be collected to resolve legacy measurement shortcomings. So what did the new era of advertising bring us? Well, we moved from one imperfect source of truth to multiple incomplete sources of truth, all competing with one another. And that boiled down to two key points of discussion: the risks associated with building walled gardens around each media asset, and the desperate need for radical collaboration between industry partners.

From one imperfect source of truth to multiple partial sources of truth

In the CTV landscape, the same pattern is replicated across TV manufacturers’ OS ecosystems, telco operators’ set-top boxes, all the way to each single streaming platform: data is the precious ring that no one wants to see falling into other hands. First-party data on consumer behaviour and content consumption patterns have become the bloodline that each platform depends on. But as this line doesn’t flow smoothly between all stakeholders, it starts getting clogged.

Direct-to-consumer platforms gave the upper hand to content owners who now have a direct view over the consumption of their IP and their viewers’ preferences. But this view is limited to their own digital distribution (and doesn’t even reach external assets online), which is still far from broadcast TV in terms of audience. And this is still true for every region of the world. Distribution platforms and aggregators on the other hand get access to a whole new range of data on peoples’ app and channel consumption, but this generally stops at the entry point of each partnering content owner, right at the door of the next walled garden.

While there are only two operating systems for virtually every smartphone in the world (excluding countries that have built walled gardens of their own on technology accesses), there is a multitude of CTV and set-top box operating systems out there, which creates a highly fragmented and extremely complex landscape to navigate. On the other hand, the push for direct-to-consumer strategies during the 2010s has multiplied interlocutors in the content market.

This created a two-fold issue:

- First, an impact on the user experience: each platform looks at a small part of the truth, which leads them to have a limited understanding of viewers’ behaviour and consumption patterns across media assets. This also potentially means poorer decisions on the viewing experience, on the platform’s interface, and on content scheduling.

- Second, an impact on media buyers: advertisers and agencies are navigating in an environment where they can’t directly crosscheck information from different assets as each one of them uses different metrics, methods, and tools. The reconciliation of the consumer journey across media assets has to be done through indirect means, using partial datasets, and there is no view over ad exposure and frequency capping across platforms.

That is the current paradox of the media industry: we are now navigating in a world where we get access to an unprecedented amount of data, yet we actually can’t navigate through it much better than we used to in the analogue era.

Panels are still the main (if not the only) way to catch audience patterns on linear TV. They are currently used for on-demand viewing as well, which is genuinely counter-intuitive in a unicast world but is often the only available method, considering each platform is keeping its precious data under lock and key.

Local or global? Putting audience measurement in perspective

How do we then measure content viewing in this new era? Traditional measurement bodies have adapted to the evolution of media consumption in their respective markets. The problem is, as mentioned previously, that each broadcast measurement solution has been set up locally, around a consensus with local actors (commercial TV broadcasters). In Europe, this means we have BARB in the UK, Médiamétrie in France, KEK in Germany, Auditel in Italy, NMO in the Netherlands, KRRIT in Poland to name a few, along with various alternatives built by either Nielsen or Kantar in smaller markets.

As we entered the realm of OTT, content services became globalised assets. National measurement bodies who want to capture content consumption across all platforms must look at foreign actors, with global interests, to update their measurement tools.

This brings us to the question: can we think globally while doing locally? This seems to be a contradictory premise in a world where IP-based services are eating into traditional broadcast, and where global platforms (mostly American-based) have taken a considerable lead ahead of local media owners with streaming. European actors are particularly distanced in volume as their footprint is limited to national markets in a highly fragmented region of the world.

If we think globally, however, the whole industry is likely to be forced into aligning interests with existing metrics set up by quasi-monopolies. YouTube has hijacked the ad-supported digital video segment (it accounted for 60% of digital advertising video revenues in Europe last year; source: Dataxis). It also allowed Google to set up industry standards on what a video ad spot is, how much it should cost, and on which metrics its performance should be assessed. Other actors, with very different business propositions, are trying to shift industry standards in their favour, advocating for premium inventories inserted in premium content, contextual ad breaks, and unskippable ad spots. From this perspective, fragmentation actually guarantees a wider variety of inventories, and access to media assets that answer a wide variety of consumer needs and advertisers’ goals. Fragmentation of viewer data also led content owners to focus on their first-party data, putting the light on what actually works for their users, rather than shifting their attention to what could work based on a wider benchmark.

But the cohabitation of different types of platforms means we should consider them in the same bucket, at least for comparison sakes, regardless of their singularities. If thinking locally, we might end up alienating a whole (and rapidly growing) share of the industry. Taking the risk of excluding global platforms from the equation at a time when Netflix and YouTube are undisputable leaders in the OTT industry is a major mistake.

What it means for advertising currencies in an IP-based world

“The answer to the industry’s headache won’t be tearing walled gardens down, but to try and put them all on the same plan, by levelling the floor under them” Ophélie Boucaud, Dataxis

The natural evolution of TV advertising will follow digital video, and not the other way around. Advertising currencies will evolve accordingly, and gross rating points (GRP) will eventually be replaced by cost per mile (CPM). But digital ad currencies have been expressly thought and built for digital native media assets, and not with TV and mass reach in mind.

Due to the complexity of the measurement ecosystem for CTV, universally accepted currencies don’t exist yet in this space. Currently, we can’t identify users, content pieces and ad spots across platforms, thus we can’t associate them with a market value that genuinely reflects the general situation.

There is thus a need to bring universal identifier solutions to the market. The answer to the industry’s headache won’t be tearing walled gardens down (this likely won’t ever happen outside of full consolidation, which isn’t a better option for the media landscape), but to try and put them all on the same plan, by levelling the floor under them. This shouldn’t be limited to CTV and should embrace the wider ecosystem of digital media assets, to step up CTV advertising and enable its new advanced inventories to thrive in a much larger space.

What are the alternatives?

Collaboration is the keyword moving forward, whether it happens within the framework set up by an external (and neutral) party, or through the direct cooperation of industry stakeholders. In Europe, several initiatives are flourishing to enable cross-platform measurement, but each of them is still on a testing basis and has its limitations.

National measurement bodies in Western Europe have been the most reactive and are trying to answer the market’s need to better understand content consumption across multiple platforms. BARB opened its solution beyond broadcasters to streamers. In late 2022, Netflix, which just launched its ad-supported tier in the UK, signed up to BARB and thus endorsed its status as a “single source of truth” for the British market, by bringing the largest SVOD platform locally in the same playing field as its linear competitors. But there is still a thorn in BARB’s side: they couldn’t get YouTube onboard yet, despite it representing the largest free content platform in the UK in volume and value, way ahead of homegrown services.

In France, a new measurement and currency challenge erupted on the TV landscape as segmented TV spots started replacing linear ones in late 2020. Médiamétrie, the national measurement body, was solicited by both operators (in charge of ad replacement) and ad sales houses (in charge of ad monetisation) to establish a new method that accounts for those replaced spots and ensure that ad buyers were getting the right value out of their investment in linear TV. It is the role of such organisations to align measurement with the evolving nature of media consumption, and it was the cooperation from industry stakeholders that led to a technical and commercial consensus supporting the development of addressable TV in the French market.

Beyond measurement, bringing together first-party data from publishers is also a way to better assess each inventory’s performance and properly understand the combined and incremental value of various media assets. That’s what CFlight is aiming for, a platform set up to “capture the vast majority of live, time-shifted and on-demand commercial impacts and impressions” across British broadcasters’ assets. The technology came from the American broadcaster NBCU, part of the Comcast group, and was brought to the UK by Sky Media, who onboarded ITV Media and 4 Sales in 2021, bringing together the three largest national commercial broadcasters’ ad sales houses.

The quest for pan-European solutions

As Europe remains a very fragmented region, with national broadcasters still very much focused on their domestic markets, pan-regional initiatives have been harder to push. RTL has recently brought together its ad tech stack and digital sales house under AdAlliance to simplify digital media buying across multiple channels in various territories. But this is still limited in terms of scope.

On the other end of the spectrum, platform owners also started coming together. Utiq was launched in 2023 under the impulsion of four shareholders: Deutsche Telekom, Orange, Vodafone and Telefonica. Those four telco groups lead the European market and collectively represented a 38.9% market share over the region’s fixed network access market in volume in Q1 2024 (source: Dataxis). Through Utiq, their objective is to offer a common consent framework to ensure their users’ privacy under their own rules, and to leverage and monetise their first-party data within a unified overarching data infrastructure. Telco data is way more granular and complete than what panels can offer, but the main issue with using it is bringing together datasets from companies that usually act like fierce competitors with one another.

Bringing together first-party data triggers strong concerns on both legal and technical aspects. The GDPR framework has set the tone for European actors on the first point, and triggered the depreciation of cookies, making it increasingly more difficult to map the consumer journey online. The cookie model is simply not doable on CTV, due to technical limitations around data tracking.

An alternative that has emerged in recent years is data clean rooms. Actors like Infosum or Liveramp enable retailers and other data providers to plug their dataset with publishers’ first-party data on viewers, to improve targeting capabilities while ensuring user privacy. This seems like a good way to move forward, but the industry must be careful not to recreate new walled gardens on top of existing ones. Those solutions are currently limited to a small section of ad inventories, and we are already witnessing duplication with the creation of multiple clean room environments, with various providers coexisting, and publishers also creating their own ad-tech ecosystems. Disney and Amazon already did it, and Netflix is following: it just announced the creation of its own ad-tech platform last May.

How do we move forward?

The current media and video landscape is marked by a failure of collaboration. It’s not a surprise though, as most actors have been acting like competitors for their entire existence. But this approach is detrimental to the actual lending hands of the media landscape: viewers and advertisers.

We have the data and the technology to build overarching measurements. The answer is not turning down walled gardens, as data is now the bloodline of the media industry and fuels the entire relationship between content owners, distributors, and consumers. But there are ways to jump above those walls and create common identifiers, through strong collaboration between stakeholders and a radical change of paradigm in the media industry. The media landscape structured itself through collaboration, mutual understanding, and the establishment of common standards through compromises.

We might just need to go back to that approach and bring people to the same table to eventually unite around one method and one currency. As a wise man and veteran of the industry said: “Currencies don’t need to be right, they just need to be agreed on.”