CTV resembles a precarious house of cards due to the intricate nature of programmatic advertising.

The Hollywood movie scene and the broader television industry are undergoing a significant transformation as traditional linear TV shifts towards streaming services. This transition, however, resembles a precarious house of cards due to the intricate nature of programmatic advertising. Unlike traditional addressable advertising, which guarantees full inventory utilization and predictable revenue based on marketing expenditure, programmatic trading introduces volatility and uncertainty.

Content owners and broadcasters who engage in programmatic advertising often find themselves at a disadvantage. The revenue lost to the complexities of programmatic ad-fill is not sustainable, particularly for local TV stations and independent content creators. These entities are discovering that their investments in content creation are not yielding the expected financial returns when compared to the revenues generated by automated ad sales platforms, which sometimes earn more than the content creators themselves.

Moreover, most Connected TV (CTV) content channels are yet to realize that platforms like YouTube could be more lucrative than the Free Ad-Supported Streaming TV (FAST) space. While this situation is rectifiable if all parties collaborate effectively, the current ecosystem is skewed in favor of ad-tech companies and ad-sales businesses. These entities have constructed an advertising sales model that prioritizes their own sustainability over that of content creators.

The solution for CTV channels lies in a return to addressable advertising. This model has a proven track record of success, with audiences appreciating the complete inventory utilization and advertisers favoring the traditional purchasing approach. To stabilize the industry and ensure fair revenue distribution, a collective effort to simplify the advertising process and prioritize content creators’ earnings is essential. Addressable advertising could be the cornerstone of this new, more equitable model for the television and streaming industry.

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