By Ross Flynn, Mobile Ecosystem Forum
TV advertising spend has experienced some major changes over the last decade. Platforms have increased beyond what seemed impossible just twenty years ago. Audiences are ever more fragmented, and technology has changed the way advertising is bought and measured. And the changes show no sign of slowing. So, what does this mean and who or what will win the battle to attract the biggest share of ad-spend?
TV Upfront week in New York is the ultimate litmus test for this. It came and went this year with something of a whimper, a victim of the tectonic changes shifting around it both in the advertising industry and the wider world.
A war in Ukraine has led to mass inflation which is hurting consumers’ wallets just at a time when the massive TV conglomerates are finding out that the streaming model isn’t quite as profitable as they might have hoped. 
Add to this a writer and actor strike in Hollywood that has decimated the media production line leading to movies and shows being put on hiatus with no clear resumption in sight.
The rise of the programmatic ad deal
Unsurprisingly, it is difficult to sell a future market to advertisers when the future you are selling seems more uncertain than ever with the possibility of the entire paradigm shifting in the span of a week, let alone a year. However, there is one recent and massive change to this year’s upfront (and for the wider world of advertising too) that is here to stay and that is the rise and dominance of the programmatic ad deal.
What is programmatic ad buying? Essentially, it is the use of automated technology to buy ad space at scale. Instead of choosing media space manually, ads are served algorithmically to the right user at the right time across their digital devices in a process called Real-time bidding (RTB). This is happening with billions of devices at speeds beyond comprehension and can be measured in real time.
For far too long programmatic ad buying was an afterthought of the event but now is an integral part of the discussion. This was signalled by Netflix presenting at the Upfronts for the first time ever. It comes at an apt moment for streaming as last year, also for the first time, overall streaming viewership overtook cable viewership. 
The very existence of the legacy Upfront event itself could be under threat. Some are theorising that the shift to programmatical deals will lead to marketers adopting an ‘always on’ model in which steady streams of ads are delivered to consumers and bought on the fly as opposed to being bought in bulk at an earlier date. And perhaps advertisers are right to do so. Perhaps they need flexibility to adjust ad spend on the go or turn it off altogether at certain times to avoid being associated with whatever terrifying world event appears around the corner next.
Marketers seem to be becoming more and more comfortable with this form of ad buying in general, as fewer of them are doing one-off purchases and more are beginning to set up recurring executions of programmatic ad buys. Many traditional linear ad buyers bought less at the Upfronts this year, giving them room to increase their programmatic spend.
What does this all mean?
It’s highly probably that linear ad buys will survive this transformation in one shape or another but it’s clear that digital is becoming the dominant ad buy. With that shift in spend comes the new battleground: the device wars. Which devices will attract the biggest advertising spend?
Right now, the clear winner is the mobile phone. US mobile ad spending accounts for two-thirds of total digital ad spending in the USA, and it is expected that both the dollar amount and the percentage will grow steadily in the coming years, rising to $247.68 billion and 68.3% respectively in 2026. 
It’s not hard to see how we’ve arrived here. The mobile smart phone offers the greatest penetration of users that advertisers have ever seen. Plus, engagement seems to grow year on year with many adults spending four or more hours a day on their device. Younger users are getting smart phones earlier and advances in targeting technology provide advertisers with succinct placement opportunities in front of their desired target market, no matter how niche or small that market may be. Even for those who traditionally buy linear TV placements, there is a growing awareness of people ‘second screening’ or browsing on their phone while they are watching TV.
Challenging mobile phones
While its dominance today is untouched, going forward the mobile phone will face steeper competition than ever. While the tablet has failed to present a meaningful threat with average usage appearing to decline year on year, there is a hunger among advertisers for a more ‘premium’ form of digital ad. The answer has emerged in the form of CTV (Connected TV). Much sought after for many years, this ad format promises to be the fastest growing of any available currently.
Connected TV is a more costly video placement that plays on a smart TV via your streaming service. It currently holds a relatively low market share. It averages less than 10% of total US ad spend but it is set to skyrocket in the coming years as there is a growing desire among marketers for it. 
The high CPM (cost per thousand ads served) is a clear indicator of this with advertisers fighting tooth and nail for the relatively low amount of inventory that is available. Streaming giants are happy to comply. When Netflix reversed its long-held policy not to offer ads, marketers began frothing at the possibility of buying this inventory. That inevitably led to the exorbitant price tag of $55 CPM (initially $65 CPM). This is especially the case as the major media conglomerates attempt to extract more profit from the streaming model.
It’s uncertain to what extent this emerging format will carve out from mobile devices. There may be less excitement for CTV as some of the sheen and freshness begins to settle but it’s clear that will not be happening anytime soon.
While understanding the strengths and weaknesses of each device you are advertising on is important, I think most marketers will favour the age-old principle of spreading their ad spend across different devices. We live in an age where frequency can still be managed effectively while also achieving device spread. When it comes to the streaming wars, no one streaming service has come out as king; many of us have multiple subscriptions on the go, so too do we have multiple devices – all of which advertisers can buy space on in order to reach us.
What the desire for CTV does signal is that marketers want to advertise on the latest much-hyped high-budget TV shows without sacrificing the flexibility that comes with digital, programmatic buys and the advanced targeting.
The deciding factor will always be whether you can get your ad to the right person at the right time. And one thing I’ve learned is that marketers, much like consumers, aren’t willing to go back to the older, less efficient ways of doing things.
ABOUT THE AUTHOR
Ross Flynn is Project Manager at MEF (Mobile Ecosystem Forum) a global trade body established in 2000 and headquartered in the UK with members across the world. As the voice of the mobile ecosystem, it focuses on cross-industry best practices, anti-fraud and monetisation. The Forum provides its members with global and cross-sector platforms for networking, collaboration and advancing industry solutions.