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News Analysis 13 Apr 2022 - 7 min read

Follow the money: Frequency capping threatens BVOD rocket if advertisers, audiences turn off; Brands, agencies, supply chain, networks face UX-profit crunch

By Brendan Coyne - Editor
Michael Stephenson, Lucinda Barlow, Kurt Burnette, Mark Frain

Frank exchanges and broader supply chain conversations required: Nine's Michael Stephenson, Uber's Lucinda Barlow, Seven's Kurt Burnette, Foxtel Media's Mark Frain.

Complaints of terrible BVOD user experience from Uber’s top regional marketer have struck a chord and threaten to hobble TV's great white hope. TV execs and advertisers weigh in on frequency capping fails but some suggest Australia's big video publishers have a fundamental decision to make: short term ad dollars or viewer experience. Networks reject accusations they are putting commercial interest over UX and point to programmatic supply chain apathy, increasingly complex technical challenges and a supply-demand imbalance. But ultimately the experience buck stops with them.

What you need to know:

  • Uber marketer Lucinda Barlow’s complaints of a “shit” user experience as repetition and back-to-back ads running on BVOD have struck a chord with marketers and media agencies.
  • Some suggest networks risk foregoing sustainable growth by taking short-term profit and focusing too narrowly on revenue targets.
  • TV network execs say agencies and the programmatic supply chain need to shoulder their share of responsibility.
  • While BVOD players should take ownership of frequency capping over buys they control, programmatic buys and poor buyer-implemented control of ads coming from multiple sources is causing problems such as the same ads from the same advertiser running in the same ad break, sometimes back-to-back.
  • While some advertisers champion Youtube as an easier buy and better experience, Google’s ad server is a key cog in BVOD infrastructure and must be part of better quality control, say network execs.
  • The so-called ‘BVOD Marketplace’ being worked on by FTA networks will help with frequency capping challenges, but won’t solve them.
  • Agency programmatic and TV buying teams need to better understand what each other is doing to avoid risk of the same ads running simultaneously via direct campaigns, programmatic guaranteed and non-guaranteed in the same ad pods.
  • But some suggest TV networks must ultimately “tighten up” frequency capping over the aspects they can control in order to keep viewers and advertisers from switching off.

Technical limitations are a challenge, but there are technical solutions to those limitations. Ultimately, we have to decide that user experience trumps revenue.

TV exec

TV companies have baulked at advertiser claims they risk stuffing their emergent golden goose by failing to get to grips with BVOD frequency capping, turning viewers off by playing them the same ads over and again.

BVOD ad revenue excluding SBS nudged $363m in calendar 2021, soaring 68 per cent year on year. With demand still running hot and SBS claiming its ad revenue matches its on-demand audience share, the market is likely north of $400m.

But BVOD does not yet have the same set of robust commercial placement rules as broadcast TV and the small advertiser krill that sustains big tech's whales is yet to surface, leaving a relatively tight group of bigger brands running the same ads across the main networks.

That imbalance may be coming to a head. Advertisers, while pushing more media dollars into BVOD, have voiced agreement with Uber’s Apac marketing boss Lucinda Barlow that the networks are delivering a “shit” user experience. Though few are as brave in owning their opinions, a perceived lack of UX action from the networks could ultimately soften BVOD’s growth trajectory.

“We’re marketers, but we’re consumers first and foremost,” one marketing director told Mi3. He cited watching Underbelly on 9Now via connected TV and seeing “the same government ad eight times in the same programme across six ad breaks. Two of those breaks carried the same ad twice. None of the ads were targeted or relevant.”

The marketer said he had tried watching on a tablet to gauge the difference. “The ads were more targeted, but there was still high repetition. There's a fair way to go before I'd call it a good ad experience.”

Another senior marketer and significant BVOD advertiser cited ad repetition issues with Foxtel’s Kayo, which they said should be “held to a higher standard” because of its dual subscription and ad-funded model.

“But broad-brush I’d include all of the networks [in that criticism]. None of them are doing a good enough job. Something needs to be done and hopefully the comments [made by Uber’s Lucinda Barlow] will force some overdue changes. Linear TV is not going to disappear overnight and all of the BVOD players need to put the consumer first.”

Foxtel Media, Nine and Seven accepted there are problems to fix. But network execs suggested advertisers and the programmatic supply chain must shoulder some responsibility.

The limitations of the technology are linked to the people that deliver it. The great irony is Google provides that delivery mechanism.

TV exec

Commercial or technical challenge?

Uber’s Barlow, a former Youtube exec, hailed her previous employer’s viewer experience. She said Uber weights campaigns with Youtube first and is “struggling” with TV buys – which can be harder and more involved to do programmatically, with limited visibility and data available to buyers.

But TV executives pointed out that the main TV networks all use Google’s ad server for BVOD.

“The limitations of the technology are linked to the people that deliver it,” said one. “The great irony is Google provides that delivery mechanism.”

While some may question the sanity of that arrangement, given TV’s need for quality control around reach and frequency, classification and adjacency rules, plus the risk of ceding greater data and commercial advantage, the networks argue there is little alternative in a market where Google has an almost total monopoly. While ad serving alternatives exist, aligning the entire local market around anyone but Google may prove challenging.

“Should we consider alternatives? Yes,” said one network exec. “But if we are going to solve the [frequency capping] problem, then Google needs to be part of that solution.”

We don’t want to run multiple ads in the same break. That is commercially bad, not commercially good. User experience is critical.

Michael Stephenson, Nine

Nine: programmatic challenge, not dollar-driven

Nine sales chief Michael Stephenson said multiple demand sources pose “complex problems” and that Nine has grappled with duplicate ads in the past, but insisted the network is “continuously working to improve user experience.”

Stephenson refuted claims that Nine continues to regularly run the same ads back to back, claiming it occurs “in less than one per cent of all hand-sold advertising”, i.e. ads booked direct versus the open programmatic exchanges. But where a campaign has been bought programmatically, he admitted ads running twice in the same BVOD pod “could happen”.

Stephenson said Nine is working to improve the aspects it can control, with the majority of BVOD ads running with frequency caps in place. “But if a campaign is done programmatically, that is a buy-side issue. It is not something we can control, press a button and solve. There are multiple demand sources, multiple ad servers and a combination of hand-sold and programmatic [buys]. There are a lot of moving parts.”

Stephenson flatly rejected suggestions that TV networks are prioritising commercial objectives at the expense of viewer experience.

“We don’t want to run multiple ads in the same break,” he said. “That is commercially bad, not commercially good. User experience is critical, so ensuring we improve that experience… is one of the most important focuses for our company.”

Frequency capping is not a new issue and it is not isolated to BVOD. It is a global video challenge that exists among all of the video players.

Kurt Burnette, Seven

Seven: Nobody's nailed it

While many argue BVOD players have had years to bring frequency capping under control, the networks suggest the challenges are real – and there are few houses fully in order.

“Frequency capping is not a new issue and it is not isolated to BVOD. It is a global video challenge that exists among all of the video players,” according to Seven revenue chief, Kurt Burnette.

He pointed to Seven’s deal with SSP Magnite for its ‘Unified Decisioning’ tech as evidence that the network is serious about tackling the problem.  “It gives the buy-side a better understanding of what ads are running where,” said Burnette.

But across the piste, he admitted, “nothing is foolproof. There are so many different devices and so many different calls across a multitude of platforms – and nobody has really nailed it.”

Agencies must also play their role in terms of [the frequency management] they do through their own trading desks.

Mark Frain, Foxtel Media

Foxtel: Ad loads too high, advertiser growth to solve repetition

Free-to-air networks provide a poorer overall viewer experience because adloads remain too high, suggested Foxtel Media CEO Mark Frain. That is partially due to US content arriving “with a significant amount of time to fill and therefore a default of high ad loads”, but Frain thinks viewers have far lower tolerance when it comes to streaming. Viewer experience is therefore a balancing act for BVOD players bringing a relatively new market to maturity, especially those blending subscription and ad-funded models.

He brushed off one advertiser's claims that Kayo runs the same ads on high repeat within sports broadcasts, retorting that the Kayo “holding page”, which “occasionally” displays a Toyota logo, may be a source of irritation for some marketers.

Frain claimed Kayo’s sponsored holding page often runs precisely because strict advertiser frequency caps have been reached, stating its use will decline as audiences grow and more advertisers join the platform, subsequently enabling Foxtel to raise frequency caps. He added that “300-plus new advertisers have joined Kayo in the last 12 months”, but said across the sector, agencies “must also play their role in terms of what they do through their own trading desks” in terms of adequate frequency management.

I don’t think it’s fair to say [the networks are chasing the money above all else]. Maybe it has not been their primary focus but … overall the broader BVOD user experience is so much better than free-to-air TV. But there is room to improve.

Nick Thomas, MediaCom

The investment director’s tale: Programmatic nirvana, dystopian fiction?

“I’ve experienced the same thing, literally,” said MediaCom investment chief, Nick Thomas after watching the NSW Government’s bowel cancer ad “about fifteen times” while watching The Handmaid’s Tale.

The effect was “Tomorrow I want to do a poo and poke it with a little stick”, he admitted. “I remember thinking this is tough going… but maybe that was their strategy. I haven’t forgotten it. So I know what [Uber’s] Lucinda Barlow is talking about.” 

Thomas said he called the Finecast team – GroupM’s centralised programmatic TV buying unit – seeking reassurance his clients would not be subject to BVOD’s equivalent of The Ludovico Technique due to repeated exposure to the same ad.

They aren’t, Thomas claims: “[Finecast] aggregates inventory across networks and can give a household an identifier. So the worst-case scenario is that you move between Nine, Seven, Ten, SBS, and you get served one impression across each of the networks. But once a set frequency cap has been reached, it won’t run again.”

Thomas said MediaCom’s BVOD buying split is roughly 80:20 programmatic versus direct and said frequency problems mainly arise when brands “aren’t using programmatic technology in the right way”.

Suggestions networks are placing commercial imperatives above UX are wide of the mark, reckons Thomas. 

“I don’t think it’s fair to say [the networks are chasing the money above all else]. Maybe it has not been their primary focus but … overall the broader BVOD user experience is so much better than free-to-air TV,” said Thomas. 

“But I do buy into Lucinda’s point of view, there is room to improve.”

Can ‘BVOD Marketplace’ solve frequency fail?

Seven, Nine and Ten are working on plans for a BVOD Marketplace that uses OzTam IDs as a common identifier to deliver better reach measurement. It should also provide another means of delivering targeting and capped frequency buys across networks. Other intended aims are to regain control of programmatic inventory and pricing.

While Nine’s Stephenson said the project is now travelling under a different identity – 'BVOD Connect' – and is primarily a reach solution, it could go some way towards solving frequency issues for advertisers.

“BVOD Connect [because it is not a marketplace] measures reach. So it doesn’t per se measure frequency. But yes, reach and frequency are linked and, yes, using the OzTam universal ID will help in enabling a frequency cap to be placed across the [three main TV] networks involved within the initiative.”

Seven’s Kurt Burnette said his understanding is that frequency capping will be “a key pillar” of the BVOD Connect plan.

“The solution is there to provide a better viewing experience. So better frequency capping is the ambition or one of the main by-products of that initiative.”

Another TV network exec agreed.

“[BVOD Connect] will help solve the frequency capping issue to a degree, though across the networks using the OzTam ID rather than within an individual network’s programming,” they said. “It won’t solve the issue of repeat ads within a show or pod, that is a separate issue. But right now, you have to buy Seven, Nine and Ten separately, so you probably are getting some duplication, and it will help in that respect.”

A network insider’s view: technical challenges but profit key issue

Another TV executive agreed that frequency capping and broader quality control is much harder when BVOD is bought programmatically. But they also suggested TV networks are prioritising short-term revenue targets.

“[Within open programmatic] you've got lots of different systems, campaigns are starting and stopping from different places, and sometimes no one is doing any quality assurance over the top,” said the exec. They added that complexity – or lack of end-to-end interoperability and visibility – is getting worse.

“Some programmatic exchanges don't recognise certain CTV device IDs because they haven't been here for that long. Samsung has a Tizen ID, which is new. Telstra TV uses something called Roku ID, but that's not handled by all exchanges consistently,” per the exec.

“The exchanges are used to cookies, Apple IDFAs and Android AAIDs. But the rest of these IDs are all relatively new. So it's hard to get everything to technically work. Then you've got multiple variations of the same thing, with each network working with its own chosen SSPs, DSPs and ad servers and its own instances of direct trading – so you can imagine the multiplication effect makes things even harder.”

How ad duplication happens

Ad duplication within the same ad breaks can happen when ads are feeding in from different sources.

An advertiser – Tasty Burgers – may set up a campaign through their agency for an integrated buy within a tent-pole show. The agency also does some programmatic guaranteed buys because they have relationships with certain technology providers. They might also buy some non-guaranteed programmatic spots across the exchanges when they require a boost for branding or for direct response.

That standard approach can put three different types of buys from the same advertiser using the same creative into the same network, the same programme – and even the same ad pod. To fill its BVOD ad slots, the TV network will prioritise direct demand, then programmatic guaranteed before going to the open market. But if the Tasty Burgers ad has run direct or from programmatic guaranteed pots, it could also then appear via non-guaranteed programmatic sources – potentially within the same short ad break and at worst an immediate repeat. Which is what is annoying viewers and advertisers alike.

While the mooted ‘BVOD Connect’ initiative aims to address some of that complexity, “it won’t address all of it, and buyers need to be accountable”, said the network exec. “If they are spending money programmatically, agencies have to be aware that some of the systems are not set up to do that properly and be accountable for managing bookings consistently.

“The programmatic buying team needs to talk to the team that books the campaign direct with the publishers at the beginning of the year, because technology fixes can only do so much.”

Equally, publishers “need to be a bit tighter,” said the exec. “They should be accountable for stricter frequency management within their own environments”.

Misaligned incentives, a decision to make

Agencies are incentivised to buy programmatically “because they can make more profit and add a margin that isn’t talked about”, added the network exec. “So publishers get squeezed and are forced to trade a certain way. That means they end up foregoing some of their quality controls, yet they are the ones that have to deal with all the fallout.”

In the end, the UX buck stops with the TV companies.

“I’m not sure any of the networks are applying totally stringent frequency management. We're opening up the thresholds because we have revenue goals. So you relax some of your internal frequency caps – and the user experience suffers,” they said.

“Technical limitations are a challenge, but there are technical solutions to those limitations. Ultimately, we have to decide that user experience trumps revenue.”

Mi3 sought comment from Ten and SBS. Both declined.

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Brendan Coyne

Editor

Market Voice

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