Television

OpenAP and the Future of Connected TV

February 3, 2021  |   LiveRamp

What lessons did 2020 teach the TV industry and how will that change the future of connected TV? In this episode of our “Saying the Quiet Part Out Loud” podcast, LiveRamp’s Jay: Prasad, Chief Strategy Officer for TV at LiveRamp and David Levy, CEO at OpenAP, discuss the importance of data-driven advertising, driving growth in 2021 and beyond, what it takes to create better customer experiences across screens, and the challenges the TV industry faces. 


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Transcript:

Jay:
I’m really excited to have special guest David Levy, who is the CEO of OpenAP. Dave, welcome. Before we get started, it’d be great to have you introduce yourself and give some details about your background. 

David:
Back in 2005, I, along with Joe Marchese and a few others, started a company called True[X], which was focused on how we could get more efficient with consumers’ time and attention. We focused on the idea that if we could get consumers to interact with a rich ad experience up front and then have the rest of the show be commercial free, it could be an advantage, not only for advertisers, but also for publishers.

We were lucky when Fox acquired True[X]. At Fox, our mission was very similar. How could we bring new technologies to bear so Fox could reduce ad time and also be more efficient with the time it actually had.

The product that got the most scale for us at Fox was a six-second ad format. During the world series, we could transition to a quick six-second ad during a pitching change instead of having a complete break from the programming.

Jay:
Right. It was like an overlay, if you will. The broadcast didn’t go to a commercial break. The ad was part of the experience.

David:
Yes—and YouTube had already done a lot to evangelize that. They already had a six-second ad format, and creative agencies and media agencies were already producing them. So instead of trying to push for the most innovative thing possible, we thought if we could get more consensus across the industry and agree on standards to innovate successfully at scale and across more publishers, we could all have a lot more success, because brands and agencies could buy a new ad product across a much bigger swath of inventory.

That’s what got us to lean into OpenAP. For me, working on some of the challenges of bringing new innovative ad formats to bear into the market was an exciting opportunity, and one that I decided to do full time about a year ago. It bridged my entrepreneurial interests with my love for the TV space.

Jay:
It seems like a natural progression, and Fox was one of the first partners in OpenAP as well, right? So you were probably getting some exposure, as this was just a concept.

David:
Yes. We sat down with Viacom and Warner and discussed the idea that if we could compromise and come together on some standards around how we do advanced advertising, we could be a lot more successful together. 

Jay:
How would you describe OpenAP now? How much do you think it’s changed from its original charter to how you’re taking it to market today?

David:
Well, it initially began as a consortium, but we’re now operating it much more like a traditional company. We have a central team now, as well as a board. All the decision-making is done centrally. OpenAP has two core value propositions for the market. Both are centered around advanced, audience-based advertising. Instead of transacting on traditional age and sex demographics, brands are able to have a guaranteed campaign across linear and digital on a more sophisticated audience segment, like a first-party data set or auto-intender segment.

OpenAP serves two core propositions there. We onboard audiences for advertisers and then distribute those audiences to the television publishers they want to work with. We also enable availability to publisher inventory for agency buy-side tools. Agencies have been building up their own sophistication around data and we’re enabling them to plug into our inventory sources so they can take the keys and do their own optimization around these sophisticated segments.

Jay:
Supply-side platform for linear is sometimes a different paradigm than what most might hear from the digital point of view, as linear availability isn’t often given in impressions. You described your mission to create sophisticated audience activation and distribution for television, which is important because marketers are moving more that way, right? They want parody with what they can buy from Amazon, Google, and Facebook, and television is transforming to that model. I think LiveRamp’s TV offerings and OpenAPs are very symbiotic in that way. How do you adapt a digital concept such as an SSP to linear and do that for up to ten programmers at once?

David:
It’s certainly not an easy challenge. I would say first off, our ambition and plan for this is not to be linear only. This SSP will span all platforms at the moment. It’s just contemplating linear inventory. But the plan is to quickly march towards executing across platform, SSP for port television, and I think that’s really necessary at this moment in time. 

Buyers are investing heavily in these data products to figure out not only who they want to reach, but what types of goals they want to optimize for, and the only way they can do that successfully is by having inventory awareness. It’s a heavily competitive, very restrictive market for supply and demand, so it’s incredibly important to have awareness around what is actually available relative to who your audience is. What we are attempting to do is take the basic premise of digital and, where possible, bring that level of transparency to linear buying. It’s been a pretty massive undertaking. It’s taken us over eight months to get it done, and we’re excited to finally launch it.

Jay:
So you’re basically bringing the other side of your two-sided marketplace life, right? Letting buyers take the data that the agency has, or that has been onboarded from the brand, and bump that up against the inventory. 

David:
I think what we’re doing in linear today is more of an incremental improvement, but where we’re really focused for our 2021 road map is on unifying the platforms. How do we get better at having a unified notion of identity, and therefore having campaigns bought and measured cross-platform? There’s a huge value proposition for the buy side to make that happen. I think everybody realizes that what they really need from an advertising perspective is to understand who they’re reaching and where. Understanding identity across different platforms is a big challenge, but I do think that within the next 18 months, we will have a viable solution for cross-platform buying and measurement. Once that’s in place, I think we will see a step function in brands demanding that their buys get measured on a cross-platform basis, and I think buyers will move towards identifying and measuring an audience cross-platform as well.


Jay:
That also seems to be something that will help make viewing and customer experiences better—the notion of a more relevant delivery of ads across platforms, and things such as frequency capping, sequencing of creative, or new factors in creative. Do you think all of us are doing this in part with the desire to improve customer experiences?

David:
The biggest challenge that the TV industry has in my view, at least for ad-supported television, is how does it compete with ad-free environments? Advertising is an incredibly important part of the economics that produces great storytelling, but the reality is that there are new models with different funding mechanisms and different economic realities that have put a new sense of competition and pressure on ad-supported models, and the biggest threat to the TV industry at the moment are these ad-free models competing for consumers’ time and attention. How does the TV industry respond to that? The only way is to get more efficient with consumers’ time and produce better experiences.

Jay:
So it’s safe to say broad-based advertising that only looks at age and gender, and does so in silos, produces a more frustrating advertising experience for the consumer. The consumer has both digital and social competing for their attention, and now we have premier prestige television without ads. So for those of us who are heavily invested in the ad-supported industry, this is do or die.

David:
When you have these very broad demographics, you’re just accepting a large bucket of waste. I think we all need to get better at valuing people’s time, thinking about our consumers when it comes to how much messaging we’re putting in front of them, and determining how much waste we are all willing to live with.

Jay:
All of this progress actually relies on better quality data and efficient use of that data. This is all happening at a time when data regulations and privacy policies have never been more front-and-center. But we can still do both, right? We can figure out how to efficiently do what you just described in an environment where we have to be much more cognizant of data, authentication, and privacy. Do you think we’re on a good path as an industry to be able to do both at the same time?

David:
I’m not sure if we’re on a good path yet, but I do think that the TV industry is well positioned in a data-driven advertising world with new regulations in place. We need to be more transparent with consumers around what data we’re collecting and how we’re using it, and we need to get their consent.

I think the content managers and publishers who will be successful are the ones who produce valuable content that consumers are willing to pay for. As television publishers, our job is going to be to provide good user experiences where we can also make it clear what choices are available to the consumer. You’ll likely have the option for ad-free experiences, but you’ll also have choices that include advertising. I think television has a better opportunity to have that conversation with folks than a lot of other publishers do.

Jay:
We’re definitely seeing a trend because of the nature of being data-driven and the notion that as video becomes more and more IP-delivered, every impression could be addressable. But in order to do that, you now have to have consent, which not only helps you be on the right side of regulations, but also builds a direct value exchange with the viewer or customer. It’s not easy to do, and it’s going to take time. In recalibrating, companies will inevitably have some initial rollback in terms of volume capability, but by doing it this way, they’ll be in a much better place a year from now.

David:
I think a lot of us would benefit by putting ourselves in the consumer’s shoes and thinking about what we would all be comfortable with. For those of us who are active on social media, advertising can sometimes be incredibly creepy if you don’t understand how and why it’s being served to you. But when we think about things like Pandora or Spotify, or customizing an experience for ourselves, a lot of times we’re really engaged with making sure that that algorithm is custom and relevant to us. I think we need to do a better job of communicating with consumers about how we’re using data, why it can be good for them from an advertising experience, and then learn what they’re comfortable with. Ideally, that conversation can lead to a lot less advertising, but it’s much more effective and relevant.

Jay:
You’ve just described an interesting concept. On a platform like Spotify or even Netflix, you are interested in the recommendations they offer and want to know what the next song will be, but that hasn’t been done for advertising. We’re now in a position where the ads you see are more like a fine-tuned playlist.

David:
The more interaction and feedback you have with advertising, the better, and I think consumers will lean into that. The more we can make advertising not only relevant, but also be messages that people like and are comfortable with, and as long as we’re open and clear about how we’re using that data and information, I think we’re going to be on the right side of things, and that will result in more consumers coming to these platforms. I often find that I curate my online experiences because I know if I click on something, I’m going to see more of it. I think that’s something we have to start instilling more in our advertising.

Jay:
It goes without saying that 2020 was a challenging year in many aspects. It almost seems trite to say, because it’s so obvious, but there were a lot of lessons learned and new skills developed. What would you say your biggest lesson learned was, and what new skill did you have to employ to manage such lessons?

David:
2020 was definitely a difficult year on many levels for everyone. I think the biggest lesson I learned was how resilient we are. We quickly adapted to a virtual environment and in many ways were incredibly productive and efficient. The resiliency I’m seeing from small businesses around the country is incredible. I’ve taken a lot of inspiration from restaurant and gym owners and folks who have had everything thrown at them. They’re continually innovating, even with very few resources. It’s inspiring to see in the face of adversity.

I think the majority of folks out there will move towards innovation. They won’t stay stuck in the mud, and I think that’s really important. When you get through adversity, you always come out stronger on the other end. All of these businesses are now going to have a new set of tools to employ. Tools that work not only in a difficult situation, but also in a more normalized world as well. 

Jay:
So being that we’re both in the TV and video business, which shows have you gotten into lately? Name a show from a subscription-based platform and one with ads.

David:
The COVID world inspired me to build a makeshift gym to maintain my exercise routine, and I’ll have a show on at the same time, so I’ve been able to binge a little bit. I found myself drawn into rewatching West Wing on Netflix. I enjoyed seeing how that White House was run; it was a good comfort show for me. I’m a big L.A. sports fan, so my ad-supported television in 2020 consisted of watching the Dodgers and the Lakers win, so in that way, it was quite a good year. 

Jay:
That’s, fantastic. David, I thought this was really fun and entertaining, and also insightful.

David:
Yeah, it was nice talking to you as well.