The future of connected TV advertising

Canned Intro [00:00:04] Welcome to The Partnership Economy. This podcast explores the power of partnerships through candid conversations with industry leaders. Join our host, David Yovanno, CEO and Todd Crawford, co-founder of impact.com as they unpack the future of partnership as a lever for scale and an opportunity to put the consumer first

Todd Crawford [00:00:25] Welcome back to The Partnership Economy podcast. I’m your host, Todd Crawford, and I’m excited for you to hear today’s episode with Jason Fairchild. He is co-founder and CEO of tvScientific, and he’ll share a unique perspective on CTV, otherwise known as connected TV. Jason is a leader of innovation at the intersection of media and technology. He broke into the industry and became an early executive at GoTo.com, the inventor of paid search business before Google. Here he explored connected TV, which led to the founding of tvScientific. Today, tvScientific is the first CTV performance advertising and attribution platform offering a self-managed solution. In today’s discussion, Jason shares his thoughts on CTV similarity to paid search in the past and how it contrasts with TV, the rise of performance marketing in CTV and the importance of TV creators. This was a conversation full of fascinating stats and I hope you enjoy. Hey, Jason, thanks so much for joining us on this episode of The Partnership Economy. Its great to have you on.

Jason Fairchild [00:01:35] Thanks for having me.

Todd Crawford [00:01:36] Yeah, I think it’ss exciting and new and a lot of people maybe don’t have a either don’t know about it or don’t have a complete graph. So I’m hopeful that we can go through that today and get everybody educated on, you know, what tvScientific does. And I guess really I think the thing that’s got me the most curious is how did this actually come into being as a founder? What in the past happened and you said, I’m going to create this company, tvScientific?

Jason Fairchild [00:02:05] Yeah. My first job in Internet advertising was with a small startup out of Pasadena called GoTo.com, that later was renamed Overture and ultimately acquired by Yahoo!. And what we did was he pioneered or invented the paid search business long before Google existed. And that was a defining career experience for lots of reasons. And it led directly to the founding of tvScientific because know, if you fast forward, I went on to co-found OpenX programmatic platform. And towards the end of that career run, I was researching connected TV and as the observation said me, one is the cord cutters were moving to streaming services in record numbers and that train was unlikely to slow down even, five years ago pre-COVID. Two, as the internet TV themselves were connected to the Internet. So the potential for a feedback loop between an ad viewed and an app existed at least technically. The third thing, TV industry is quite large at $70 billion a year advertising industry, but 85 percent of that is concentrated to 500 advertisers. So the founding moment was really when I said, wow, paid search and social following a nine million network. What if we did for TV what we did for paid search back in the day, which is democratize access through a self-serve buying and measurement console like Google or Facebook, and two introduce performance KPIs so marketers could buy TV and measure outcomes in the same way you do on digital or person social channels. So cost per website visitor, cost per sale, full ROAS, cost per app install, etc. etc.. That was the founding moment.

Todd Crawford [00:03:46] So when did you start the company?

Jason Fairchild [00:03:47] We incorporated in August, three years ago, and then we launched the platform, I want to say six months after that. And the platform is it looks and feels and operates remarkably like Google or Facebook, in that you can set up and execute a campaign across any streaming service or most streaming services in minutes. And more importantly, and you can measure the outcomes as I described. And the way we do that is we deterministically connect the dots between an ad viewed on a CTV or OTT device and an outcome or an outcome could be a website does that purchase, etc.. So there’s no panels involved, there’s no fuzzy math involved. It’s connecting of the dots between a TV ad and an outcome. Now, what makes it interesting and nuance, like any new channel, is that you can’t click on a TV. You have to really back up the assertion that TV are thriving outcomes with lots of data and lots of analysis. That’s one of the strengths of the platform, is we want to make the reporting self-evident. So when you look at a report that shows TV ads viewed at a household and outcome, you’re like, Oh, well, clearly that’s the cause and effect, which is something we think we’re pretty good at.

Todd Crawford [00:04:57] Yeah, I definitely want to get into that, but I want to start off with the most basic of questions, and it harkens back to my early days in affiliate back in 98 where I had to explain what affiliate marketing was three times to a CEO before the light bulb went off on his head. And he went, I can’t believe I didn’t think of that. That’s brilliant. But I guess when you think of advertising on TV, everybody’s seen TV commercials, but you know, you’re using connected TV or CTV versus TV, right? And so what is the difference in the sense of where can you be and where can you not be when you buy ads on TV?

Jason Fairchild [00:05:40] Broadly speaking, the traditional TV market is driven by cable companies, and in order to advertise either buy at national level or at the local level a TV ad. As people cut the cord, which means are moving, they disable their cable company and they move to a streaming services like Netflix or there’s several of them, now they’re watching on that same big screen TV that’s wall mounted, but it’s through the Internet. It’s piping in content that’s very much very similar to what you normally watch on a TV. It’s just getting to the living room in a different way, through the Internet, through the streaming services. So there’s well over I think it’s 120 million households that have regular TVs, and now there’s over 100 million households that receives streaming TV content. So in a very rapid period of time, the streaming services have gained massive adoption. So in all of that, just to put it well, the perspectives over half of all streaming services is ad supported. So it’s actually a huge footprint. And then the last thing I’ll say is we don’t think it’s our platform is limited to just streaming services. We think over time we’ll also be able to work with cable companies in a very similar fashion, deterministic measurement of exposure to outcome.

Todd Crawford [00:06:56] So what types of brands does this really fit best with today? Who are adopting this tvScientific?

Jason Fairchild [00:07:05] I think there’s two answers to that question. We very deliberately started the company and focused on called the top 15 or 20 percent of Google and Facebook marketers, the very performance oriented advertisers who all has very specific KPI. Usually it’s ROAS, return on ad spend or cost per install or cost per sale type of metrics that require one very deterministic measurement of the media. So we’ve focused our efforts and sales go to market on that category to basically prove it out against a very discerning, demanding customer set. And by the way, that is the big opportunity of moving search and social advertisers to TV because it’s far larger than TV advertising in terms of addressable market. That said, what we believe is the traditional brand advertisers, the top 500 advertisers that buy through ad agencies and account for 85 percent of the 70 billion dollar traditional TV market. They’re already having to move to streaming services to reach their audience. And as they do move to the streaming services, they’re learning that you can actually do a lot more and streaming TV advertising than you could in linear. You can actually measure sales at TV ad exposure to sales. You can measure TV ads to website visits to QR code swipes, to walk in traffic. There’s a bunch of very deterministic measurements that were not possible on linear TV that are in streaming. So my belief is, while that’s not a high priority for us now, because most of those brand advertisers have been doing it the same way for many decades, I think over the coming years all advertising will be performance advertising, because why would you spend 100 million dollars a year knowing that you’re wasting half of it if you did have to do that. So you could be more surgical about the targeting and the measurement and the performance. Of course, the dollars are going to flow in that direction, but I think it’s a phased approach. And for phase one, we’re focused on performance oriented advertisers. And these guys are, these advertisers are quite large. Many of them have 100 million dollar a year pipe budget.

Todd Crawford [00:09:13] Yeah. So this is all falling under the CMO and digital marketing, right, for these brands. What team tends to own this or is it still going through an agency and where does this typically fall?

Jason Fairchild [00:09:29] So for the most part, I would say it’s either brand direct in a VP of marketing where the growth team or the CMO is that these performance oriented marketers. We also work with performance oriented agencies who understand these performance KPIs and work with brands, whether it’s in the affiliate space or in other categories to drive scale for their brands through channels like, search, social TV, etc.. What we don’t do is go after the big agency, holy groups who represent Coke and Pepsi and Delta Airlines because they’ve been buying TV in a very specific way, reaching frequency against target demo for for decades and it’s going to be a slower process of change for them.

Todd Crawford [00:10:12] And that’s obviously a lot bigger of a brand play. Like you’re not going to Coke, buy Coke, even though you go to Delta to buy Delta. It’s really about if you’re going to travel, if you’re going to get on an airplane, fly Delta. Right. So the brands that you’re currently working with are really about buy my product or service or download my app.

Jason Fairchild [00:10:32] But that’s a probably discussion for another time. But I’ll just say this, I’m guessing that Delta Airlines, when they do their quarterly reports and I haven’t listened to one in a while, they talk about sales. When Coke does their or McDonald’s do their quarterly Wall Street reports, they talk about sales. So in my mind, all advertising should be ultimately connected back to impact on sales, which gets lost in translation when people talk about reaching frequency against target demos. Their demos get lost in the forest for the trees. What they forget that the whole point of advertising is to drive sales of a product or service. And I think being grounded in that true north is vitally important in CTV and the way we do things on performance, very tight performance KPIs, I think will open the eyes up to these major brand advertising that they should be anchored in marketing activities that actually drive sales.

Todd Crawford [00:11:26] Yeah. And I think the big difference is deterministic versus probabilistic. The billboards, the out of office, out of home advertising doesn’t have as easily correlated sales. They know they’re have sales, but they’re not as easy to correlate, like what you guys are doing. So I hundred percent agree performance is the way to go and I think a lot of companies want that. Wasn’t it Proctor and Gamble of several years ago said, everything has to be performance. So I think everybody gets it. It’s just, it’s hard to give up a lot of those big branding budgets that are more probabilistic in the measurement versus deterministic because it’s just not as prevalent. And you guys are one of the few that that can do that.

Jason Fairchild [00:12:07] Well, the good news is there are there are there is a whole industry ecosystem around performance, whether it’s affiliate or are performance agencies. I think it’s growing and growing. And I’ll just I’ll point out that, IAB said that last year, 22, there’s about a $300 billion U.S. advertising market, give or take a bit. And if you do the math on it, close to 200 billion of that is on performance oriented channels. So affiliate search, social email, all was pretty hard core KPIs. And so it’s already dominant. I think it’s just a matter of people understanding that there is technology available to market, whether it’s on TV or otherwise, and tie back to a sales KPI.

Todd Crawford [00:12:53] So the reason we’re talking is obviously this is The Partnership Economy podcast and we’re all about performance based partnerships, which you’ve alluded to this being a form of that. Where does this intersect between affiliate and performance and TV Scientific? How’s the brand paying for it and how do you pay for it? How does it all work the mechanics?

Jason Fairchild [00:13:20] Yeah. So just maybe one other note as a background say gets important is is we think it’s a big opportunity to TV. We think it works and we have the data to support that. And it’s a big opportunity because if you look at what happened in paid search, it obviously worked out for Google connecting search media to outcomes, worked out well for Amazon, connecting e-commerce online activity to outcomes. Same thing with Facebook. Somebody is going to win in TV and connecting TV media it’s outcomes. We think what the components of that out of the winning formula are, you got to be a platform first. And to us that means one is radical transparency because marketers won’t trust you grading your own homework in a world where you can’t click on a TV. So you’ve got to see the data to convince marketers that a TV ad led to a sale. So radical transparency is one, and two is you can’t grade your art homework. So you may have a point of view, but you have to be open a platform first open, so interoperable with other platforms in other ecosystems. So if a marketer in the affiliate category, for example, says, “Look, my source and truth is impact or whomever it is, our position is we’ll take we’ll put that data and we’ll put it wherever you want”. Honestly, it’s your data. It’s not ours. We’re not a walled garden. And so having being interoperable and partnering with all the companies in the ecosystem is foundational to being a platform first, widely distributed TV marketing platform. We need to be we need to be interoperable with all of the platforms and technologies they want to work with. So it’s not optional from our point of view, it’s mandatory. And from the very beginning we’ve been in over with all the folks in up and lots of categories from mobile MMPs to affiliate platforms, to you name it.

Todd Crawford [00:15:08] So what are some of the analytics and how do you create them so that there’s trust in those numbers, right, and believability so that after maybe a test, they’re jumping in to the deep end?

Jason Fairchild [00:15:24] So I’ll tell you our approach. And in there it does require a learning process on the marketer side because again, the industry has been so well- trained on last click attribution that it’s going to it’s going to require reading away from that since you can’t click on a TV. By the way, I think last click attribution has been fairly disproven and even Google’s backed away from less click up attribution. So the way we do it is we as we go live with the campaign and we usually we usually set up so it goes broad, so broad targeting and then we follow the data and use it. That means we work with the marketer to set up an attribution window. And then we look at the ad exposure to outcome trends within that period of time to show just basic correlation, that kind of level one recording. Level two, reporting and saying, What’s the path to purchase? Though technology making click on a TV, then where did, what did that user do to click? And so we’ll show ad exposure to last quick channel, could be paid search could be social, could be affiliate, could be whatever. And we just basically show that to the marketer, to let them know the consumer path of purchase. And when we tie that all the way to order ID. So it’s not it’s not this analytical kind of abstraction. And the third thing we do is we help marketers understand incrementality of TV as it relates to driving outcomes, and that’s built into our platform. So you can run a control group and see what the impact of a TV exposed audience versus a TV not exposed audience. And that tells a really compelling story. And by the way, that’s a very data science tried and true methodology to understand the impact of any of your marketing channel, not just TV. And they need to know that we make money as a company. Are we arbitrage and how’s all working in order to trust it? And without trust you don’t scale. So that’s their approach. And it could be as simple as we integrate with Google Analytics. So if they want to just look in their Google Analytics and show which last clicks have been previously exposed to TV ads, we can easily do that. So it all but any or all of those things are available to every advertiser on our platform.

Todd Crawford [00:17:26] And because this type of advertising is more synonymous with ad serving Internet, right, I imagine there’s far greater targeting capabilities. So can you talk a little bit about the targeting capabilities that brands have through tvScientific?

Jason Fairchild [00:17:44] Yeah, it’s pretty advanced. The way I explain to most people is if you’ve done digital advertising where you you can target based on hyper geo literally polygoning around a target location or you want to do just the code targeting where you want to do in third party intended target like auto intenders or college education, higher ed intender or whatever it is, is 100,000 segments or more that are digital. We’re plugged into that entire ecosystem. So there’s some newfangled third party data that’s like steering comes up what we can apply it to targeting on TV. So that’s kind of bread and butter. You can do website to TV retargeting. So let’s say you’re BestBuy, you’re an e-commerce company and you get on an I’ll call it a million visitors a month to the website. You can then cookie those users and through privacy compliant onboarding, we can identify the households that those visitors came from, IP addresses really, although we resolve all the way down to the address and we can deliver ads to those households that have been to the BestBuy website. In this case, incredibly effective retargeting is a fact that was on display advertising as in it’s even more effective on TV that we can do all of those things. Anything you can do on digital you can do on TV.

Todd Crawford [00:19:03] Yeah, I think that probably gives brands a lot of confidence in maybe initial testing especially and then slowly broadening it just like they would online, which I think from a mental model, it makes the the marketing team really comfortable with this form, right, because it’s aligned with what they’re used to doing.

Jason Fairchild [00:19:22] The one example I use is as Ford Motor Company hypothetically wanted to reach all previous Ford F-150 pickup users owners. They could onboard that through live ramp or other onboarding services and then deliver TV ads to those households. So it’s pretty advanced, again, as fancy as digital advertising. Todd Crawford [00:19:41] Yeah, that’s fascinating. It’s really exciting. So can you talk a little bit about the budget ranges and then we’ll get into how the creative is done?

Jason Fairchild [00:19:50] Sure. So we right out of the gate, we were philosophically, I would say, adamant that and I was there in the early days of paid search and there were no minimums in paid search. It was self-serve. You could spend $100 or $100,000. So we built tvScientific in exactly that model, there are no minimums, that said, the warning we get is from marketers is they want to spend enough money to get an accurate read on the channel. So you don’t want to just spend $100 and say, oh, that didn’t work. And it could be different for every product or every advertiser. And we can help coach down or by category make recommendations that you want to get an accurate read on whether or not it works, whether it’s $500 or 5000 or 25,000, depending on the marketer as your local caterer, and that wants to promo your catering shops. You could probably do it for a couple of grand a month and get really good success. If you’re a large D2C teeth whitening company was a national footprint, you might want to spend more to make sure you get an accurate read of the incremental less that’s associated with TV advertising. But net of it is, we wanted to make the barriers really low because in a lot of ways that creates easy testing and more people participating in the market and more people learning and winning. That’s what our platform is all about.

Todd Crawford [00:21:05] Yeah, so this gets to the creative, which really is the the thing that drives the results. I mean, a bad commercial, you could have the best targeting and everything should have worked and it didn’t. So the creative is key here. What’s the process to creating these spots? And I assume there’s a multitude of ways to do it, and possibly you guys have solutions there. So I’d love to hear learn more about that.

Jason Fairchild [00:21:30] So the first thing is, not all, but most of the advertisers we work with already have some form of video creatives for Instagram or Facebook. So it’s really not that hard to track to take those assets. And we have a team in-house that can turn those into TV, high quality TV ads that can pass muster with the most discerning channels Peacock or Hulu or what have you. For folks who don’t have creative for whatever reason or it’s dated or whatever it is, there are platforms now that have democratized access to video creatives for exactly this purpose, for social and for TV. Vidmob is one. There’s Scale Creator is another. There’s several of them. So you can go and get a creative done pretty inexpensively. I mean, that’s another option. Yet another option is, you know, a company called Spaceback. And they take your they take your social footprint and they turn it into a static but with motion TV ad. It basically costs nothing and you could run it. If you’re a pizza shop, you can run it or if you’re D2C, you can run it. And it’s high quality. It didn’t cost you really anything extra. And we’re learning about performance. But the tower tests show that it performs on par or nearly on par with extensive high production value creatives. So I guess the net of all that is we’re not in a in the world, we were, say ten years ago where TV ad cost 10 or $20,000, you can do it for far less. And then as you gain confidence getting results and seeing sales and you can start to invest behind new creatives or new creative iterations. And I would say in five years we don’t have to sidetrack the conversation, but I think it’s going to develop pretty far along, so you can probably get to a full creator without involving an emir at all.

Todd Crawford [00:23:15] And to your point earlier about starting budgets and things, you could go into paid search with $100 and not get good results. And that’s not saying paid search is a bad place to spend money. It’s really about having enough of a budget to actually optimize and see the end results. And I think that’s probably the challenge for a lot of brands, is being able to carve out a little bit to go into this market or go into this channel, I guess we would call it, to see if it works.

Jason Fairchild [00:23:44] I’ll tell you a quick story. When we just started paid search, I had a friend that ran a company called Vagas.com, but it was in the nascent early days and they were all about Vegas travel and went to pitch and paid search and they were just confused like, wait a second, one click cost a penny, the next one costs 30 cents, the next 50 cents, like how do we rationalize all this, how do we instrument and make all this make sense? And they tried and failed. Tried and failed. Fast forward not even a year or two, they start spending millions, and I want to say there are, many tens of millions of dollars of paid search business. Just because they invested in testing, learning, iterating, TV is it’s I think it’s the most powerful medium in history. If you think about a message on a TV, I’m looking at a 70 inch big screen. There’s no clutter, there’s no mixing of messages with whatever clutter is around the page. I think TV’s then, as has always been, way more all than we realized. And the reason we don’t realize it, because we’ve never been able to measure it. Now we can. And wow, we’ve seen some incredible success.

Todd Crawford [00:24:44] Well, this has been a great conversation and I’m glad we got to unpack all this because it’s new and exciting and think even if you’re not ready to do it, just knowing about it is kind of the first step, right, as awareness, marketing, like top of the funnel is awareness and there’s consideration and then the transaction. I guess just as a parting kind of thing is what do you wish more people knew about your business?

Jason Fairchild [00:25:09] I think it comes down to you can embrace television as a growth driver for your business without trusting fuzzy metrics, but trusting metrics that look, feel and calculate just like paid search or social. That does exist today. You can drive material growth through your business using the platform like key tvScientific and getting all the same data you’d get from a search and social campaign, actually far more. Because one thing about search and social, they are walled gardens and they’re careful about what they share with you. We are almost to a fault with shared data. I think the thing that people should take away as it’s possible and it’s just a question of getting in and testing, learning, iterating and scaling over time as you gain competence.

Todd Crawford [00:25:54] Awesome. Well, again, I want to thank you for coming on and sharing everything that you guys have been doing and this opportunity. I’m excited for this and I love our partnership and I wish you guys continued success. Thanks for coming on.

Jason Fairchild [00:26:07] Yeeah. Thanks for having me into The Partnership.

Todd Crawford [00:26:10] I hope you are all able to learn more about CTV and tvScientific’s role in it. TV has always been impactful. Now we’re able to measure its effectiveness in a much more granular manner. CTV is becoming a huge opportunity for brands looking for new media placements to increase their influence in advertising’s main goal of driving sales. It was great chatting with Jason and learning more about CTV’s role in performance marketing. Thanks for listening and I look forward to next time.

Canned Intro [00:26:40] Thanks for listening to The Partnership Economy brought to you by impact.com. If you enjoyed today’s episode, be sure to subscribe to the show and rate and review it on Apple Podcasts.