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Three steps to becoming a modern media company

Kelsea Longanacre, Senior Product Marketing Manager, Permutive
Feb 02, 2023

With the decline of cable subscribers, the surge in connected TV (CTV) choices, and a decline in profits for media companies, the TV industry has been through a dramatic change over the past decade. 

With change comes opportunity, and the combination of viewership across CTV environments surpassing broadcast and cable for the first time in 2022, cord-cutters and cord-nevers, acquisitions, and bundles, all signal that the CTV takeover is permanent.  

But as consumers have continued to subscribe to over-the-top (OTT) video services, how can media companies keep pace and monetize this content with the advanced capabilities advertisers have come to expect from digitized media? 

The CTV ad ecosystem is ripe for innovation regarding audiences and targeting, so here are three ways to become a modern media company. 

Step 1: Prioritize profitability in CTV

Ad spend on CTV (18%) has not caught up to its viewership (36%), and this discrepancy between demand and ad spend is costing media companies a significant amount of potential revenue. And as subscriber counts increase, mass media companies are exposing operating losses in their streaming segments. The owned and operated streaming platforms of every major media company have been operating at a loss for the sake of getting subscriber numbers; this has proven to be unsustainable.

Without the appropriate advertising revenue, the average revenue per user (ARPU) is too low to compensate for the high expenses associated with creating and purchasing the rights to the content. Subscriber numbers aren’t enough, subscriber profitability is critical to survival.

Targetable inventory and addressability across platforms will result in higher CPMs. Last year, a media company we work with was able to move from zero targeting visibility on their CTV environments to up to 96 percent targetable inventory. As targetable inventory demands higher CPMs, the company was also able to start selling those placements at higher costs while providing value to its advertisers.

This year, advertisers must make their ad dollars work harder and deliver on ROI. 

Step 2: Build a sustainable first-party data strategy

Third-party cookie deprecation has caused two actions for publishers and advertisers: a shift to first-party data, and seeing CTV as a premium video placement, knowing their buys weren’t reliant on third-party cookies. 

Today, user consent and user choice over what data they share with third parties are limiting addressability. Already today, advertisers can only reach around 30% of consumers. This leaves a whopping 70% of consumers unavailable to advertisers. 

Advertisers will need to rely on publishers and adtech partners who are capable of changing the way they operate based on what a user has communicated, resulting in a wealth of unique first-party data.

Media companies have access to rich, valuable first-party data at scale that they can use to create coveted targeted audiences for advertisers. Often people think of first-party data as being just the data received from users who have logged in to sites, but it’s much more than that. The types of first-party data media companies have include viewership data, device data, email, location, and the tier of service, i.e. ad-supported, subscription, premium services, or basic. 

Digital converged audiences built on first-party data provide a holistic campaign solution that drives value for both media companies and advertisers.

Step 3: Move beyond age and gender

First-party data is especially invaluable when it comes to the content and intent surrounding your original programming. Viewers are highly engaged if they’re using your DTC platform for exclusive content, for example, HBO Max and House of the Dragon. 

Selling campaigns based on third-party age and demo data can’t deliver the campaign results that can be achieved with first-party data around context and intent. 

Why? Because age and demo do not target effectively today. Advertisers can understand more about their audiences from viewer profiles than household data, contextual affinity is more powerful for discovering untapped audiences, and modeling audiences based on owned first-party data will drive far better results. 

Media companies can elevate CTV and web CPMs by selling digital converged audiences across properties. Sell advertisers a holistic campaign, not just an audience in an ad slot, and scatter inventory can be packaged alongside more premium inventory. 

More than ever, advertisers are looking to spend places where their ad dollars work harder, campaigns deliver against goals, and waste is minimized – all without needing to navigate a complicated and fragmented supply path. Reach out to the Permutive team to assess your targetable inventory and potential incremental lift in addressability.