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Video advertising executive: Momentum growing in addressable TV ad market

? TV industry resilient despite growth in digital spend.

? TV advertisers adjusting to non-linear channels.

? Concerns around fraud a wake-up call for the industry.

The convergence of linear TV and digital video is at full steam as marketers scramble to keep up with evolving viewing habits. At the same time, concerns over ad fraud have resulted in cutbacks in digital spending by some of the world's largest consumer brands.

S&P Global Market Intelligence spoke with Justin Taylor, U.K. managing director at video advertising company Teads, to discuss the challenges and opportunities for the advertising industry.

S&P Global Market Intelligence: Digital ad spend is on the rise. How much of this investment has been extracted from traditional TV ad budgets?

SNL ImageJustin Taylor, U.K. managing director at Teads
Source: Teads

Justin Taylor: Growth in digital has migrated from some areas of traditional media such as print, and into display and video. That said, TV is very resilient and has remained buoyant in the last few years. TV has actually grown pretty significantly in quite a few markets. Where I see TV's growth going is towards the addressable TV advertising, which allows advertisers to selectively segment TV audiences for more targeted ads. We are seeing a lot more experimentation in this area in the market. Diversification of TV budgets will come from TV's natural evolution to digital. Five years from now, we will see pure merging of the screens and TV will become quite an antiquated term.

Has the TV advertising industry found its feet in the digital world?

TV has not yet fully embraced the digital world but has made great strides towards the connected, multi-screen experience. From an advertising point of view, the addressable element is still very small and targeting is still at a nascent stage. But from a content perspective, the way we consume TV has changed with a huge shift from linear to on-demand, particularly among young people. So advertisers are trying to keep up with the pace of change within the TV industry and we are certainly at the tipping point in movement from a linear function to a non-linear function.

What edge, if any, does digital advertising hold over TV?

Each delivery mechanism has its own benefits, but it is about connecting linear and digital experiences to create an ecosystem of opportunities for advertisers. Mobile is the one device that audiences carry on them throughout their day, making it beneficial in its own right. Not only do we check it numerous times a day, but we are also always seconds away from it. That said, the broadcast linear environment in the majority of markets still commands as many as two or three hours per day of linear TV.

To what extent have programmatic tools exacerbated the issue of ad fraud and lack of transparency in the digital advertising sector?

Fraud has been around for a long time, but buying from faceless or aggregated media properties does pose a risk. This year has certainly been a wake-up call for the industry, with research from Teads showing that in the last 12 months, 83% of chief marketing officers surveyed said they have become more concerned about brand safety, with 77% more worried about ad fraud than before. As a result, nearly half were reviewing their relationships with suppliers and reviewing agencies. This goes to show that when you have more machines managing your inventory, it is crucial to oversee the process in a much more consistent manner.

Diageo and P&G are among the brands that have pulled back on digital advertising due to concerns around viewability and fraud. Is this trend a threat to the industry?

From our point of view, it is a good thing because they are putting money out of a bad ecosystem and re-evaluating in order to ensure they deliver in the right, quality environment.

One of Teads' selling points is its premium video inventory. Do premium videos assist with issues of ad viewability or fraud?

Advertisers had always gravitated towards quality until programmatic came about, resulting in a marked shift towards an emphasis on audiences and various success metrics. Championing premium, quality content is essential for creating an experience for consumers that doesn't annoy consumers.