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Interviews with Industry Leaders: Matt Van Houten, Vice President, Product Development, Xandr Media

16/08/2019

The Pay-TV Innovation Forum is a global research programme for senior pay-TV and content executives, developed by NAGRA and MTM, and designed to catalyse growth and innovation across the global TV industry, at a time of tremendous change and disruption.

As part of the programme, we are publishing a series of interviews with leading TV industry executives from around the world to explore their views, perspectives and experiences of innovation. In this interview, Matt Van Houten, Vice President, Product Development at Xandr Media, the advanced TV and media solutions arm of AT&T's advertising company Xandr, shares his views on how advanced TV advertising technology is reshaping the pay-TV industry.

How do you see the US pay-TV industry evolving over the next few years?

Today there are around 90M pay TV households in the US. Yes, I do foresee connected TV and over-the-top continuing to gain traction among consumers, but I don't think that predicts the death of traditional TV by any means. Demographics, marketing bundles and other factors will make set-top box viewing stickier than many predict. Whether the number of pay TV households declines and then normalizes at 30M, 50M, 60M households... no one really knows at this point.

Rather than concentrating on subscriber numbers, however, I am more interested in the story told by our TV advertising revenues, which are growing year-on-year.

What is prompting this growth in TV advertising?

The development of new technologies, such as addressable TV advertising, have helped TV operators increase the value of their ad inventory, driving growth across the sector. Traditional TV advertising serves the same ad to the total broadcast audience, offering great reach and economies of scale. The rise of digital advertising over the past decade, however, has changed advertiser expectations about the degree of targetability and accountability they can expect. Digital ads can be matched to highly specific audience segments and can be measured for effectiveness against granular KPIs such as viewability, click-through rate, and conversion rate.

In the last few years, AT&T have built a technology stack to bring the best capabilities of digital advertising to the TV experience. Instead of only using broad-based demographic targeting by age and gender, we can now offer buyers highly segmented target audiences. Furthermore, we provide cross-screen solutions, allowing buyers to reach audiences ontheir TVs, mobiles and laptops - and coordinate attribution data across each.

What challenges do pay-TV operators face in developing advanced TV advertising technologies?

Advanced advertising technologies require significant data resources. To offer advertising buyers highly specific target audiences, pay-TV operators need to have vast user bases, and significant insights. Generating visibility into effectiveness requires access to insights on what viewers do after watching an ad. Brands dont want to know that a viewer saw the ad, brands want to know what it made them do. As an MVPD with a vertically aligned distribution strategy, we can unlock more value in TV because we have data on every audience engagement, down to each click of the remote, in a privacy-safe manner. Furthermore, besides being the largest pay-TV provider in the US, we are the second largest mobile phone provider and the third largest broadband provider, so we have a tremendous number of customer interactions available to help connect those dots.

Technology, data, distribution and premium content are important factors to help advertisers drive business outcomes and to create more relevant advertising for the consumer.

How do you see these technologies impacting the shape of the TV advertising industry in the future?

What is going to differentiate pay-TV operators in the future are the insights and attribution analytics they can provide. Developing new advertising technologies will require resources and scale - I think we will see significant consolidation across the market to achieve this. In the future, we might have 3-5 major marketplaces for purchasing inventory, and it will be much harder for individual cable networks with limited audiences to command premium value.

Addressable TV advertising has helped drive double-digit growth in the TV industry year-on-year, but there is still a long way to go. We are the market leader in terms of scale, with almost 16 million addressable households, but compared to an upfront buy, which might typically be reaching 900-100 million households on a cable network, it's still small. We need to scale those addressable audiences, which was the underpinning of our effort to expand reach with Altice and Frontier.
LINK: https://dtv.nagra.com/interviews-industry-leaders-matt-van-houten-vice...
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