After several years of not touching the subject, Advertising Week's annual New York festival explored the growing phenomenon of smart TV sets and TV-connected devices, now available and in use among at least two-thirds of all U.S. TV households. For a kickoff to last Monday's all-smart-TV track, organizers swiftly arranged a session with Brian Lesser, CEO of Xandr, AT&T's new unit that will incorporate smart sets and devices with its overall strategy of transforming the nature of TV advertising. Just one week earlier, Lesser unveiled his venture in public before an invited audience of sponsor and media buying executives in California.
"Advertisers want to buy advertising on an audience-driven basis," Lesser said in the session's opening minutes. "They do it for digital services. Advertisers love TV. It's better produced content, and it's a much better way to tell a story. Advertisers want TV to work harder for them."
If they had their druthers, advertisers would spend far more on TV than digital, especially those advertisers growing more disenchanted with the formatting of digital commercials and unfavorable metrics these spots and their placement get, Lesser asserted. Hindering them from diverting more dollars to TV are concerns about declining audience share, sparked in part by viewer sentiment over the number of commercial breaks and the number of commercials inside each break, particularly in primetime programs.
Xandr's solution is a multi-part strategy addressing the design and placement of messages on TV, covering broadcast, cable and smart TV/device ad sales. "We're building a marketplace for the entire industry," Lesser said.
Other AT&T divisions are taking part in stage one of Xandr's approach. DirecTV now uses the unit's resources to sell the two minutes of ad time per hour on various cable networks that they allocate for local and national spot cable system sales. TBS, TNT, truTV and other channels from the Turner stable of recently acquired Time Warner (now renamed Warner Media) will experiment in the months ahead with new formats out to give viewers a more relevant, interactive experience. Similar experiments will be conducted with Warner Media's lineup of programming services distributed through smart TV sets and devices, such as the upcoming DC Universe from Warner Bros. and DC Comics.
Lesser hinted that some of the formats under study will not show up as commercials and will perhaps deliver messages within the programs themselves. He labeled Warner Media "a sandbox we can experiment in, not just with ad breaks."
Separately, Xandr has launched partnerships with multichannel system operators Altice USA and Frontier Communications to rep them in national ad sales. Other operators will be invited to reach similar rep relationships in the coming weeks. Lesser expects to have a sizeable ad revenue stream coming from both approaches -- channel time buys and smart TV/addressable campaigns -- by the end of 2019.
"The goal here is to have TV advertising be less interruptive and more interactive," Lesser declared. "We've never had a time like we have now. People [are] watching less linear TV, and that's scary. We should all be helping each other to some extent and create a platform we share. We're going to sell TV that performs better. The future is about how you distribute content in a data-driven way to consumers and the advertising that goes with it. If all we do is optimize (the current TV ad environment), we will fail this effort. This is about reinvention and bringing back the magic of creativity."
Xandr will introduce a number of new data research tools and ad services for general use over the next six months, Lesser promised. His venture and others -- already existing or soon to be -- will incite all sorts of ad format experiments during the next 18 months.
Lesser had a message for attendees who believe that Netflix, Amazon and other noncommercial programming services with smart TV clearances will eat up more of their potential ad viewing base: They will not remain noncommercial in the long run, because as they spend more billions for original content, they will have to find new revenue streams to subsidize that strategy. Non-traditional advertising will be one of those avenues.
In what was arguably the most dramatic moment of Lessor's session -- and Advertising Week 2018 overall -- he was asked if Netflix will deploy such a model. "I believe so," Lesser answered, with no elaboration.
Click the social buttons above or below to share this story with your friends and colleagues.
The opinions and points of view expressed in this content are exclusively the views of the author and/or subject(s) and do not necessarily represent the views of MediaVillage.com/MyersBizNet, Inc. management or associated writers.