Why Traditional Programmatic Structure Fails for CTV – Just call it automatic ad-sales

The rise of Connected TV (CTV) has revolutionized how audiences consume content, but the traditional programmatic advertising structure has not kept pace. This outdated model, riddled with inefficiencies and multiple intermediaries, significantly diminishes the revenue that content owners receive. Let’s delve into the details of why this structure fails and how it impacts FAST Channels and AVOD library owners.

The Complex Web of Programmatic Advertising

Programmatic advertising involves the automated buying and selling of ad space in real-time. While this sounds efficient, the reality is far more convoluted due to the numerous parties involved in each transaction:

1. Advertisers: Brands looking to promote their products or services.
2. Demand-Side Platforms (DSPs): Platforms that allow advertisers to buy ad space programmatically.
3. Ad Exchanges: Marketplaces where ad inventory is bought and sold.
4. Supply-Side Platforms (SSPs): Platforms that help publishers sell their ad space.
5. Data Management Platforms (DMPs): Platforms that collect and analyze data to help target ads more effectively.
6. Ad Networks: Companies that aggregate ad inventory from various publishers and sell it to advertisers.
7. Publishers: Content owners who provide the ad space.

Each of these parties typically takes a commission of around 20% for their role in the transaction. This means that by the time the revenue reaches the content owner, a significant portion has already been siphoned off.

The Revenue Breakdown

Let’s break down the revenue distribution for a typical programmatic ad transaction:

1. Advertiser spends $1.00 on an ad.
2. DSP takes 20% ($0.20), leaving $0.80.
3. Ad Exchange takes 20% of the remaining $0.80 ($0.16), leaving $0.64.
4. SSP takes 20% of the remaining $0.64 ($0.13), leaving $0.51.
5. DMP takes 20% of the remaining $0.51 ($0.10), leaving $0.41.
6. Ad Network takes 20% of the remaining $0.41 ($0.08), leaving $0.33.

Finally, the platform (e.g., a streaming service) takes half of the remaining $0.33, leaving the content owner with just $0.165. This means that less than a tenth of the original ad spend reaches the content owner.

The Impact on FAST Channels and AVOD Library Owners

For Free Ad-Supported Streaming TV (FAST) channels and Advertising Video on Demand (AVOD) library owners, this revenue model is unsustainable. These content owners bear all the risks, costs, and marketing efforts to create and distribute their content, yet they receive a fraction of the revenue generated by their ad space.

Automated ad-sales technology, which is supposed to streamline the process, ends up earning two to three times more than the content owners themselves.

The Need for a New Model – Well View TV did!

The inefficiencies of the traditional programmatic structure highlight the need for a new model that prioritizes content owners. By reducing the number of intermediaries and their commissions, a larger share of the revenue can be directed back to those who create the content. This is where innovative solutions like Kapang’s CoMo (Content Monetization) model come into play, offering a more sustainable and profitable approach for content owners.

In conclusion, the traditional programmatic advertising structure is ill-suited for the modern CTV landscape. With too many parties taking a cut, content owners are left with a meager share of the revenue. To ensure the viability and growth of FAST channels and AVOD libraries, a more efficient and equitable model is essential.