Most broadcasters experience monetization challenges when they first launch their Connected TV and mobile apps. Under a CPM model, it’s hard to both effectively monetize and grow your audience at the same time. So how do you launch your Connected TV apps revenue positive? Here are some lessons from innovative local broadcasters like KSL and WRAL.
SOV vs CPM
After seeing other broadcasters struggle with their Connected TV sales strategies, Alan Blackburn, KSL-TV Director of Sales, tried a different approach. Instead of selling based on a CPM, Alan initially sold KSL-TV’s OTT inventory by share of voice (SOV). This gave a select group of advertising partners an opportunity to be a part of the KSL-TV’s apps and grow with their audience. As KSL marketed their new mobile and Connected TV apps, the advertisers became part of that process. Their brands were prominently featured in TV promos, contests, screenshots and other marketing materials promoting the new apps.
The experiment was a success. After a year of app promotion and audience growth, KSL-TV had enough audience to transition from SOV to a CPM model. In addition to selling local direct ads, they also secured several programmatic partnerships to help guarantee 100% fill rates and effectively monetize out of market audiences.
Connected TV Revenue Strategies
Some brands prefer the “learn as you go” approach when launching new business endeavors. Launching the product first and figuring out the revenue later does have some advantages. Companies like Twitter and Instagram both launched this way. But unless you figure out your revenue fast, most executives won’t continue funding your efforts.
Developing a revenue strategy up front is a lot more work, but in the long run, it’s often worth the extra effort. You will undoubtedly encounter numerous unplanned costs and resource requirements with your Connected TV app. Generating revenue, even if it’s small at first, will help ease concerns.
Year 1:
- Sales: Sell discounted share of voice (SOV) to a small group of trusted advertising partners. For example, $500 for 10% SOV per month. That will generate $5,000 per month and help fund additional growth effects and your hard costs. Bonus them with inventory or opportunities to help justify their spend in your apps.
- Audience:
- Video Plays: Focus on growing your audience to match market CPM standards. Pure Connected TV CPMs with unskippable inventory is typically around $40-$50. Set a daily video plays goals and rally your teams to help meet it.
- App Downloads: There are a lot of options for audiences to get content. Try to become the default resource for your local market.
Year 2:
- Sales: Transition your SOV advertisers to a CPM. For example, 50,000 ad impression at a $40 CPM will be $2,000.
- Audience: Build your live content library. Most broadcasters see about 75% of their TV app traffic on their live streaming content. Here are some thought starters.
- Yule Log: KSL-TV in Salt Lake City, Utah made history in 2016 by streaming the first local OTT Yule Log. In the following years, they’ve monetized the idea and sold sponsorships of the KSL Yule Log to advertisers like RC Willey.
- Weather Graphics: WRAL in Raleigh North Carolina takes the output of their live Doppler weather computer and streams it live on their Connected TV and mobile apps as well as their website.
- Radio You Can See: KSL NewsRadio pioneered putting a video stream of their radio broadcast on TV with their award-winning Radio You Can See strategy. Most people don’t own radios anymore in their homes. But audiences can use their Roku, Apple TV, and other OTT or Connected TV devices to listen or “watch” radio.
Year 3:
- Sales: Most programmatic advertising partners will require certain minimum traffic thresholds. By year 3, you hopefully should have enough traffic to secure these partnerships. Some programmatic video brands to consider include Spot X, VueHub and StickyAds among others.
- Audience: Continue to secure scalable partnerships.
- RSL on KSL: KSL-TV made headlines in early in 2018 when they announced the first local OTT content partnership with a major sports team in history. In the innovative OTT deal, KSL-TV was able to secure the local streaming rights for any Real Salt Lake (RSL) soccer games without national TV distribution. In addition to Real Salt Lake, the deal also included the franchises women’s and academy teams, Utah Royals FC and Real Monarchs. The partnership was so groundbreaking that the lawyers for Major League Soccer had to rewrite the rules to make room for local streaming in their distribution agreements.
- UVU on KSL: Continuing to expand on their successful sports streaming efforts with RSL, KSL looked to local universities for their next endeavor. KSL secured sports streaming rights from Utah Valley University. As the largest public university in the state of Utah, Utah Valley University has a wide fan base across the state and beyond.
RSL on KSL puts MLS content in the users’ hands and on their streaming Connected TV devices.
The Pros And Cons Of Dynamic Ad Insertion
One of the biggest revenue opportunities for local broadcasters is dynamic ad insertion (DAI). Instead of retransmitting your broadcast commercials in streaming content, you can dynamically replace and even geotarget digital ads. This gives smaller brands, like a local toy store, an opportunity to buy targeted advertising with more strategic budgets. But there’s a tradeoff. If you use DAI to break your broadcast stream, then you might be sacrificing audience from your Nielsen’s liner ratings.
Another solution might be to only enable DAI during certain dayparts and keep your broadcast stream intact during key programming times. The pros and cons of DAI will vary from broadcaster to broadcaster.
The Difference Between Broadcast & Digital Advertising Buyers
There are two types of buyers interested in Connected TV advertising and they both want to see different types of data. Broadcast buyers accustomed to Neilson ratings usually ask about ratings points, households or other types of data points common in the broadcast world. However the currency of Connected TV, mobile and web is cost-per-thousand (CPM). Most digital ad units are bought and sold by CPM and you don’t always know exactly who is watching. Sometimes you just know the type of device (ie. Roku, Apple TV, Smart TV, etc.) and its location.
Automated Content Recognition
But there’s some hope for advertisers looking for some additional data from Connected TV platforms. Smart TV technologies like ACR, or “automated content recognition”, give brands more information about who is watching. Based on your viewing habits, ACR can suggest relevant content to the viewer. If your device has ever recommended video content to you, then you’ve already experienced some form of ACR.
Not only does ACR create opportunities for a better viewing experience, but the technology can also be valuable to advertisers. Using ACR, TV devices can build a profile based on your viewing behavior similar to how cookies are used to deliver advertising info to you in your web browser.
ACR is both exciting and scary at the same time. There will be some privacy issues to overcome, but hopefully, the industry can work together on a solution that works for everyone, especially the viewer.
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