Connected TV and Project OAR: Is it time to revisit connected TV?

In the ever-evolving landscape of premium video advertising, one of the most significant challenges has been the fragmentation of advertising services. This effects advertisers why are interested in unduplicated reach which given the number of independent video services becomes almost impossible to achieve without driving viewer burnout on a significant portion of the target audience.  Content providers have a different problem in that much of their viewership still watches video on traditional linear channels that are delivered through cable and satellite systems.  Both conditions affect the ad spend and consequently, reduces the funds available for generating new content.  It may be too soon to declare the industry to be unhealthy but the number of recent layoffs certainly is a leading indicator.  In looking at this problem, it may be educational to examine a recent attempt at providing addressable advertising across both linear and digital services.  Project Open Addressable Ready (OAR), was initiated to bring addressable advertising to linear TV and provide the targeting capabilities that were available on streaming services. 

Addressable advertising was already available from distributors such as Comcast, DirecTV, DISH Networks, and Verizon but campaigns had to be run in each distributor independently and it was only within the inventory that was allocated to those distributors as part of their contracts with the content providers.   While the CPMs were much higher than that of linear spot-based ads, content providers did not realize any of that revenue.

Content providers needed to unlock the potential of addressable advertising for TV, but several issues stood in their way: 

1. National Signal Limitations: Content providers typically broadcast a national signal, but targeted ads need to be specific to individual viewers or households. This national approach didn’t allow for the precision needed in modern advertising strategies. 
2. Limited Reach: Distributors like DIRECTV and DISH Networks had a national addressable footprint, but their reach covered less than 50% of households, limiting the effectiveness and scale of targeted advertising campaigns. 
3. Resistance from Distributors: Some distributors were reluctant to open their addressable capabilities to content providers, fearing it would create competition for their own advertising offerings. This resistance created a barrier to broader implementation of addressable ads. 
4. Inconsistencies in Capabilities and Measurement: Although most major distributors embraced addressable advertising, there were inconsistencies in their capabilities and measurement methods. This lack of standardization made it difficult to achieve uniform campaign execution and accurate audience measurement. 
5. Broadcast Network Practices: Affiliates and owned-and-operated stations of major broadcast networks (ABC, NBC, CBS, and FOX) processed signals in ways that disabled set-top box-based ad insertion, further complicating the deployment of addressable advertising. 

Additionally, linear addressable advertising systems, used by distributors, were only effective with linear TV, treating digital services like OTT, AVOD, and FAST separately. While offering addressable advertising capabilities was critical, it would only be a first step toward providing the unified footprint and the unduplicated reach that advertisers need.

Changing Market Dynamics: 

The TV remains the preferred viewing platform for a large percentage of the audience but the capabilities in TVs have changed dramatically over the last ten years.  Several market dynamics indicated the possibility of a new ad delivery mechanism: 

• Smart TV Adoption: Almost all new TVs were smart TVs with internet connections, making them capable of connecting to streaming services. This technological advancement made smart TVs a central hub for both linear and digital content consumption. 

• TV Replacement Cycle: The average lifespan of a TV is seven years, meaning newer sets would replace outdated, unconnected TVs. This regular replacement cycle provided an opportunity to introduce new standards and capabilities into the market. 

• Market Dominance: A few major players dominated the TV market, including Samsung, LG, Vizio, and Hisense. Understanding their market share and influence was crucial for driving industry-wide changes. 

Objectives of Project OAR: 

Recognizing the changing market dynamics and the availability of connected TVs, the industry started to examine the use of the internet connection as a means for ad decisions and delivery.  This differs from the current definition of CTV in which the TV receives a unique stream and ads can be inserted at the origination of that stream.  This so called Server Side Ad Insertion (SSAI) system works well for digital delivery but does not work for a broadcast stream in which all viewers receive the same signal.  The idea here would be to imbed information in the common stream and allow the TV itself to insert a targeted ad. 

Efforts from Gracenote and Sorenson fell flat due to proprietary techniques and a lack of buy in from content providers and advertisers. In fact, these efforts failed before they were even launched.  For a connected TV based addressable system to take hold, there needed to be more of a concerted industry effort – enter project OAR. 

Project OAR (Open Addressable Ready) was launched with the vision of establishing an industry-wide standard for addressable TV advertising. The primary objectives included: 

• Creating a Common Technology Standard: Developing a unified standard for delivering dynamic, addressable advertisements on connected TVs. This standard aimed to enable more relevant and personalized advertising experiences for viewers across various platforms, including linear and on-demand formats. 

• Enhancing Ad Delivery and Monetization: Implementing addressable advertising to better monetize TV impressions through segment-based audience targeting. This involved using real-time data to insert targeted ads, thereby improving the efficiency and effectiveness of ad campaigns. 

• Ensuring Privacy and Compliance: Establishing standards that include provisions for privacy compliance and impression verification to adhere to industry best practices and regulatory requirements. 

• Fostering Industry Collaboration: Bringing together major media companies, such as Disney, Comcast, CBS, Discovery, and Warner Media, to create a scalable and interoperable ecosystem for addressable TV advertising. This collaboration aimed to benefit all stakeholders involved, from content creators to advertisers. 

Implementation and Challenges: 

Launched in 2019 at the CES trade show, Project OAR took time to develop working systems, which were piloted within a couple of years. Initial content providers included major media companies who varied in their ad-serving capabilities, from basic versioning to selecting the best ad for each TV. 

However, several challenges emerged during the implementation phase: 

• Lack of Coordination with broadcast systems: There was no coordination between ads inserted by OAR and those in the broadcast stream. Without ad metadata or rules for interaction, long-established sales tactics like competitive separation couldn’t be fully supported. This often limited the number of ads that could be inserted to avoid conflicts. 

• Inconsistent Impression Reporting: OAR could provide second-by-second viewing durations, but some systems reported less granular data, following the IAB’s quartile reporting standard. These inconsistencies hindered the ability to achieve accurate and comprehensive audience measurement. 

• Inconsistency among content providers:  OAR focused on the messaging to and from the TV but didn’t specify the advertising capabilities that had to be provided by OAR participants.  Consequently, service characteristics varied by provider confusing advertisers who needed to buy across content providers.   

Despite these hurdles, several OAR participants successfully launched services and made progress. Addressable ads were being inserted based on viewer characteristics and impression data was being returned.  It was generally felt that OAR was still in its infancy and that. The problems would be worked out.  However, the largest barrier to success remained. OAR inly worked on newer Vizio TVs which represented less than 10% of the market.  Larger manufacturers like Samsung and LG did not embrace OAR and without these TVs, the desired reach could not be obtained. Ultimately, the service didn’t reach critical mass and was shut down.   

Possible reasons for the lack of adoption by TV manufacturers include: 

1. Perceived competition: Manufacturers may have wanted to be seen as the driving force behind CTV and might have seen the use of a system proposed by Vizio as a competitive threat. 
2. The deployment of ATSC 3.0: This standard is slowly making its way into the video landscape.  In theory the protocols will allow for ad insertion.  ATSC 3.0 is supported by broadcasters and affiliates with one of the major backers being Sinclair.  Unfortunately, ad support in the standard, likely years away, may be seen as the best path. 
3. Revenue concerns: Manufacturers may be looking at OAR and seeing a small market opportunity as compared to other areas for investments such as FAST. 
4. Competition with the own advertising offerings: advertising services from Samsung and LG were launched at around the same time as OAR. In theory, these were two different services, in separate inventory, and sold by different teams, the fact that the ads would target the same household may have been an issue. 
5. Past Experiences: Samsung was disappointed by the lack of success of Sorenson Media which had promised tens of millions of dollars in revenue each year. 

Lessons for the Future: 

Project OAR’s journey highlights several lessons that future initiatives can learn from: 

• Universal Signaling: Use an industry-standard, non-proprietary signaling system to ensure broad adoption and compatibility. 

• Signal Integrity: Ensure the signaling survives downstream systems, maintaining its effectiveness throughout the ad insertion process. 

• Manufacturer Integration: Provide significant incentives for dominant TV providers to adopt the system, making it attractive enough to drive action. 

• Content Versatility: Ensure the system supports various content types and delivery methods (Linear TV, VOD, TVE, and FAST), providing a comprehensive solution for all forms of content. 

• Detailed Reporting: Implement second-by-second granularity in impression reporting to achieve accurate and comprehensive audience measurement. 

• Enhanced Metadata: Include comprehensive ad metadata for competitive separation and inventory metadata for ad servers, ensuring optimal ad placement and viewer experience. 

Project OAR’s experience underscores the complexities and potential of addressable TV advertising. By fostering industry collaboration, adopting standardized solutions, and focusing on both technological and market-driven incentives, the future of TV advertising can be transformed to better meet the needs of both viewers and advertisers. 

In conclusion, the lessons learned from Project OAR provide a valuable roadmap for the future of connected TV advertising. By addressing the key challenges and embracing innovative solutions, the industry can move towards a more unified, efficient, and effective advertising ecosystem. This transformation will not only enhance viewer experiences but also unlock new revenue opportunities and drive the evolution of the media landscape.