Watermarks and the Future of Addressable Advertising
The way audiences consume premium video has changed dramatically. Traditional TV programming once dominated, with shows scheduled and confined to specific times and channels. Then came DVRs and on-demand services, allowing viewers to watch when they wanted. Today, we’re in a full-fledged streaming era, where viewers demand on-demand content. Subscription-based platforms like Netflix and Amazon Prime initially eroded TV viewership, but soon, even they recognized that subscription fees alone couldn’t sustain the costly endeavor of original programming. Advertising made its way back, even to streaming.
Despite this shift, over half of ad-supported viewing still occurs on traditional linear TV. This fragmented ecosystem now poses a challenge for advertisers trying to reach audiences across multiple platforms.
Addressing the Fragmentation Problem
The Consortium for Innovative Media Measurement (CIMM) aims to unite the industry and tackle this fragmentation issue. By establishing a cross-platform measurement system based on an open watermark standard, CIMM envisions a future where content and ad impressions are consistently tracked across all media types. With watermarks embedded in both ads and content, a device-level reader can recognize which ad played, regardless of the delivery platform. This could replace the current fragmented system, where ad identifiers often vary across different distributors.
Moreover, a watermark-based system could allow for a deeper understanding of viewer engagement. It could measure dwell time at a more granular level than the broad quartile metrics of today’s VAST 4.0 standard. The result? Enhanced reporting and analytics for advertisers.
The OEM Challenge: Incentivizing Adoption
For this approach to work, consistent watermark-based measurement must be implemented at the device level, especially in Smart TVs. However, many TV OEMs already use Automated Content Recognition (ACR) to gather data, which OEMs also rely on this data to generate revenue—a necessary supplement to the slim margins on TV sales. While the data is useful, ACR lacks the accuracy and uniformity needed for a universal measurement system that crosses media types. A more robust system that is not OEM specific is needed.
To entice OEMs to participate in this new measurement system, the industry must offer something valuable in return: the ability to insert ads directly into linear content. Previous attempts, like Project OAR, demonstrated technical feasibility but failed commercially. However, market conditions have evolved, and there’s reason to believe that with the right approach, TV-based ad insertion can succeed.
Unified Campaigns: Content Providers’ Urgent Need
Content providers today juggle multiple advertising systems that don’t always play nicely together. Most rely on a single ad server for streaming, while linear systems remain separate. Providers want a unified national addressable service with the capabilities of local addressable advertising, but current collaborations between distributors and ad-tech partners haven’t delivered sufficient reach. Efforts like Go Addressable aim to unify this landscape, yet challenges persist—particularly with distributors slow to enable national inventory, as it competes with their own sales priorities.
The linear TV sector also operates with its own longstanding business norms, such as competitive separation. Ad servers that fail to maintain competitive separation discourage content providers from exploring addressable options. This, too, hindered Project OAR’s success and remains an obstacle for current national addressable initiatives.
The OEM Role in Bridging the Gap
OEMs could have a unique role in national linear addressable advertising by extending the reach of advertising campaigns into linear inventory where addressable advertising has not been enabled. For OEMs, this approach isn’t competitive with existing ad services but rather an opportunity to strengthen their value to the industry. This would create a new revenue stream based on broadcast and national cable network inventory that was not previously available to the OEMs. It would also bolster their Free Ad-Supported Television (FAST) network revenue given the wider reach provided by the combination of FAST and national addressable advertising. For content providers, this would extend the addressable reach of cable and broadcast networks and reduce their dependency on local distributors. Ultimately, device level ad insertion could make all premium video addressable and measurable, providing the much-needed reach and control required by advertisers.
The Path Forward: Lessons from Project OAR
The last major attempt to introduce Smart TV-based ad insertion was Project OAR, which used a signaling watermark to alert TVs about upcoming ad breaks. The TV would then pull ads from an ad server via VAST protocols and prepare them for insertion. Although technically successful, OAR faced several barriers:
- Limited Market Influence: As a Vizio-led initiative, OAR struggled to gain wider adoption.
- Insufficient Scale: Vizio’s reach wasn’t broad enough to impact the market.
- Inconsistent Technologies: Content providers used varied technologies, leading to incompatible marketplace offerings.
- Lack of National Linear Support: Without national linear addressability, OAR’s impact was isolated.
- Competitive Separation: The inability to ensure competitive separation hurt the broader non-addressable business, ultimately sidelining the project.
Why Now? Market Conditions Have Shifted
The industry has changed in the years since OAR. Streaming services have grown, splintering audiences and prompting advertisers to demand cohesive solutions. Declining subscription fees add pressure on content providers to maximize ad revenue, and OEMs have yet to realize the full potential of their FAST offerings. Advertisers and agencies increasingly feel the limitations of a fragmented media landscape and are pushing for unified solutions.
A Call for Unified Standards
The time is ripe for industry players to come together, embracing open standards that benefit everyone. This next step forward should ensure that content providers’ needs are met while encouraging “coopetition” among ad-tech players and streamers. Adopting unified standards can move the industry forward, fostering a sustainable ecosystem where proprietary protocols and exclusivity don’t prevent innovation.
Those who embrace this standardization will likely lead the way, leaving non-adopters to watch from the sidelines as industry momentum builds around a unified, addressable future.
