By Tal Chalozin
Before the COVID-19 pandemic hit, connected TV (CTV) consumption was growing rapidly, but it hadn't yet overtaken linear television. As stay-at-home orders were issued, consumers began to cut the cord at record pace, opting to access entertainment through streaming platforms. In fact, as Observer reports, a July study by Roku found that one in three U.S. households no longer pays for cable TV, and only 17 percent of respondents said they would return to cable TV once live sports returned, a clear sign that this shift is unlikely to regress even after COVID subsides. Additionally, Unruly research from late August found that 42 percent of U.S. consumers are planning to cancel their cable subscriptions and 79 percent are planning to try a new ad-supported streaming service.
Advertisers noticed the shift in consumer behavior this year and acted accordingly. As Business Insider reports, revenues from five ad-supported streaming platforms (Roku, Hulu, Peacock, Pluto TV, and Tubi) increased 31 percent year-over-year, while traditional TV advertising decreased 28 percent over the same period.
With streaming at an all-time high, having a CTV-focused media strategy is now table stakes for advertisers. But it's not smooth sailing just yet. At the same time as marketers shift ad dollars to streaming TV, they're waking up to a world with holes in identity resolution, which makes it difficult to accurately engage and report on the new CTV audience.
No Measurement Standard
While the digital ecosystem races to find a replacement for identity once third-party cookies are phased out by 2022, CTV is in a different boat. It doesn't support cookies and never has. While mobile devices feature a persistent identifier, called a device ID in both Android and iOS (although how widely such device IDs will be available in 2021 is uncertain), CTV devices still lack a consistent universal identifier that works across devices and apps.
This is partially because the world of television is a much more fragmented market than the other media ecosystems. The streaming wars have led to a plethora of new CTV platforms with unique — and disconnected — offerings. In the CTV ecosystem, there are both device manufacturers and apps. Consumers need to buy a Roku, Amazon Fire Stick, Apple TV, or another hardware device and then download apps such as Hulu or Peacock to watch content.
From marketers' perspective, they know they're buying media from Hulu, for example, but they don't necessarily know what device the ad is being served on since it's available across all connected devices. Both Hulu and the device will issue IDs in this situation, meaning the marketer won't be able to tell if an ID represents the same household. Hulu only has a grasp on identity if the consumer switches devices and logs into that app, while a device like Roku can only make the connection if the consumer switches apps on the device.
None of those dimensions see the full picture since they're not in the same ID space. CTV devices and apps vary in identifiers, with some using an email address or credit card information and others using an Apple ID or Amazon username, among others. Because of this, activities like frequency capping, audience targeting, and attribution, all of which have historically relied on universal identifiers, are impossible. With these new walled gardens, CTV marketers are experiencing challenges with complexity and scale that make it difficult to gauge the value of their CTV impressions.
Brands could be missing opportunities to reach consumers, or they could be over-saturating consumers with the same ad and wasting spend by targeting them too many times. The future of ad-based video-on-demand requires a uniform standard for CTV identification to give advertisers transparency into the audience they're reaching and how often they're reaching them.
The Solution Is Complicated
When it comes to creating a solution for identity on CTV, the shift toward privacy should be a primary consideration.
Where tracking was something consumers previously had to opt out of, it may need to be something that consumers have to opt into. Because of regulations like the CCPA and the GDPR, as well as the ways in which major online platforms like Facebook and Google approach data and identity, preserving consumers' privacy will need to be a key element of CTV identity resolution. There are complications around how to gather consistent identity and even more on how it is to be passed between providers only when needed.
Brands need to ensure that they can understand and collect identity without risking data leakage. No one wants to be in violation of GDPR and CCPA, but many of the ID solutions being introduced aren't privacy-compliant or based on quality data, and they lack unification. An identity vendor's ID is only as good as the number of platforms and publishers that recognize it.
Where Do We Go From Here?
There are three routes to establishing a universal identity solution.
The first, in which one company determines the identifier, seems unlikely. The ecosystem is too fragmented. Say the Apple TV became the main device, then the Apple ID would become the main identifier — that's not a viable solution for a company like Amazon that directly competes with Apple.
The second, in which a third-party company creates an ID that cuts across both app and device, faces a large hurdle. The platforms want to control access to valuable deterministic data on viewers — after all, they're competing for ad dollars and no company wants to hand over the keys to their castle. Getting everyone to agree and get on board seems impossible.
The third route, IAB's Project Rearc, seems the most viable. The goal of Project Rearc is "to rearchitect digital marketing." The project's current discussion is about a framework for that goal and not yet about a spelled-out solution. This framework is mainly geared toward designing a browser-based world with a replacement for cookies. However, CTV, which is largely nonbrowser-based, would still be included. The idea behind the project is that no single company should own identity and that the identifier should be based on traditional, consumer-provided systems, such as a phone number or email. With this identifier, everyone in the industry would be able to recognize and connect the dots for audiences across the ecosystem.
There is no absolute solution to how this would work, but the framework is promising.
A world of opt-ins, no cookies, and new privacy legislation has left major gaps in advertisers' ability to optimize for reach, frequency, and relevance. Putting consumers' privacy at the center of any solution is the most important step toward alignment; it's up to marketers and industry partners to work together to make that happen.
With CTV engagement continuing to surge during the COVID crisis, and no sign it will slow down afterward, advertisers must insist on resolving the key issue of identity to fulfill CTV's potential as a powerful channel in the future of marketing.
About Author: Tal Chalozin is the CTO and co-founder of Innovid, a partner in the ANA Thought Leadership Program.