Time to Rethink OTT

The keys to building a TV walled garden
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"Today’s emerging TV players need to be building their own digital walled gardens, akin to the models that have proven so successful for Facebook and Google." -Seif Hamid, head of partnerships & corporate development, 4C

Seif Hamid

Seif Hamid

For incumbent and emerging over-the-top (OTT) TV content providers alike, now is a time of significant transformation. For many players, the past five years have seen legacy, direct-selling ad business models clashing with the introduction of new automated buying technologies. The result has been a state of limbo in which one unmet need has become clear: Today’s emerging TV players need to be building their own digital walled gardens, akin to the models that have proven so successful for Facebook and Google. Advertisers have come to expect efficient, auction-based buying experiences in digital. Replicating this experience for connected TV products is critical for OTT players—but it can’t come at the expense of data security and the proprietary audience intelligence that gives these platforms an edge.

It’s a tall order given that Hulu, Roku, Disney and other connected TV players—unlike Facebook and Google—don’t have the luxury of building their walled gardens from the ground up. Instead, they’re tasked with transitioning from traditional programmatic digital stacks built for open web buying to API-based ecosystems, all while still trying to contend with legacy mindsets associated with how premium TV inventory should be bought and sold. It’s a formidable yet achievable task, provided these players prioritize three transition areas: Organizational, Technical and Transactional. Consider these the O-T-T requirements for success in OTT. Let’s take a look at each.

Technical

Let’s start with a T, rather than the O. If TV players don’t get the technology right then all else is lost. It’s also where they have a lot of fundamental catching up to do. After all, Facebook and Google were purpose-built to monetize digital content , and the technical expertise invested in their ecosystems was always laser-focused on creating easy-to-use interfaces and seamless marketplaces. OTT players, on the other hand, were built for content delivery.

In shifting from open programmatic sales to an API-based approach, OTT players are tasked with rebuilding themselves on the fly, while still ensuring the content pieces of their business remain competitive. This is no small task, and it isn’t something that can be wholly offloaded to a Frankenstein network of partners. When the name of the game is regaining control over your audiences and data, you need to either buy or build a lot of the needed elements from a technology standpoint—and those elements need to be improved, built upon and maintained over time. You need a functional, scalable, increasingly intelligent API-based stack that results in strong performance, and you need to house it all in a single smart box.

Transactional

Of course, while the technology component of the transition to a walled garden is where a lot of OTT players are focusing their efforts right now, they can’t stop there. Establishing the backbone is one thing, but thought also needs to be given to how the limbs are going to move. In this regard, we’re talking about auction mechanics—how you charge, how you get paid and what parameters influence how auctions are won.

The technical aspect of becoming a walled garden is about creating a seamless, scalable advertising auction. The transactional aspect is about creating sustainability and maximizing yield while being high performing and meeting advertiser goals. Auction dynamics have to be decided with an eye toward ensuring an OTT player’s new premium closed environment works as a business and positions it for continued growth in the future.

Organizational

Finally, let’s not forget the human component to all of this. The scope of the organizational challenge spans the entire enterprise. All stakeholders must be motivated, aligned, and incentivized to move in the API direction - and they must understand why. But if there is one area to highlight amid the organizational push toward this new reality, it is in sales. Quite simply, you can’t take a bunch of programmatic folks with no API-driven experience, dump them into a walled garden and expect them to thrive overnight. There is a learning curve.

The new way of selling in connected TV requires sales teams to embrace both new and old sales approaches. At the same time OTT players are trying to prepare their sales teams for selling within walled gardens, walled gardens like Facebook are trying to become more consultative and relationship-based, as evidenced by the company’s quiet presence at the upfronts this year. In other words, sales teams need to be able to walk the line of knowing their auction dynamics and selling accordingly, while also maintaining the relationships that matter when it comes to courting Fortune 500 brands and their agencies.

For the most part, today’s OTT players—those born of OTT and those who inherited it—understand the obstacles that stand before them. Falling short in Organizational, Technical or Transactional realms could be the slip-up that enables competitors to leap-frog a given company at this crucial moment of industry transition. Ultimately, the pressure is on execution, and that’s where tomorrow’s TV competitive landscape will be decided.

4C is a global data science and marketing technology company that delivers self-service software for brands to execute video-centric marketing and optimize business outcomes.

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