CTV Has An Embarrassing Fill Rate And Frequency Problem. Can AI Fix It?

In the last decade, smart TV adoption has?skyrocketed?— from 11% to 73%. Yet, despite this explosive growth, the connected TV (CTV) industry still grapples with low programmatic advertising fill rates. But artificial intelligence might have a solution to this problem. New AI tools are making the video creative process and ad trafficking more accessible to small- and medium-sized businesses (SMBs). This could not only address the industry’s longstanding inventory utilization issues but also usher in a new era of diverse, targeted advertising on CTV platforms.?

(Originally published in TVNewsCheck by Jon Accarrino)

How Low Are CTV Programmatic Fill Rates?

The CTV advertising market is projected to reach $30 billion by 2025. A July 2024?study?by Premion shows 60% of ad executives plan to increase CTV ad spend by over 20% in the next year, highlighting the industry’s faith in CTV’s targeted advertising potential.?

However, the industry’s fill rates tell a different story. According to a recent?report?by One Touch Intelligence, ad fill rates for the FAST channel market are notably low, at an embarrassing 38%.

“Premium CTV inventory fill rates can range from 60% to 90%, with top publishers achieving over 100% by combining local direct sales with programmatic,” says Jason Pedrick, VP of sales at Aniview. “However, those relying mainly on programmatic often only see fill rates between 30% and 60%.”

This disparity highlights a critical issue: Despite growing advertiser interest, many streaming platforms struggle to fully monetize their ad inventory. Even though local stations may sell out their video ad inventory on their O&O platforms, their content can often go under-monetized programmatically. It’s an especially frustrating situation for local stations trying to monetize their FAST channels with distribution partners.

Even when content is properly tagged, there simply aren’t enough ads to fill the available inventory without popular CTV platforms removing frequency caps. That’s why audiences see the same ad over and over again every commercial break. Or another popular tactic is stuffing commercial breaks with house ads (i.e., Amazon Alexa, Disney Scentsy).?

Using AI To Help Simplify The Video Ad Creation Process

One of the primary barriers to filling CTV ad inventory, especially for SMBs, has been the high cost and complexity of creating quality video commercials. This is where AI is starting to make significant inroads.

From Runway AI to Sora, there are dozens of tools that can help you create AI-generated videos. But companies like Waymark and streamr.ai specialize in using AI to create complete video ads.?

Sales teams can sit down with a local advertiser and use an AI commercial generator to brainstorm different types of ad campaigns, quickly and affordably, without the need for technical skills or expensive equipment.?

Hayden Gilmer, CRO at Waymark, says that “about 45% of all Waymark projects are rendered out for production use.” But even if assets aren’t fully rendered out, it doesn’t mean the platform isn’t providing value.

“We frequently use Waymark as a spec spot tool,” says Kurt Christopher, VP of television digital strategy at Hubbard Broadcasting. “It’s a great way to help local advertisers visualize what a campaign can look like. It’s also a good option for smaller clients who don’t have the budget for a full spot production.”

With multi-user accounts, branded video previews for clients, SSO integration and a major focus on quality creative, Waymark is a popular choice for local media sales teams and larger businesses.

In comparison, streamr.ai has focused its efforts around speed and free sampling. If you want to try streamr.ai, you don’t even need an account. Directly from its homepage, you can enter your website URL and streamr.ai will generate a commercial for you in less than a minute, for free.?

This ease of use is highlighted by a recent success story shared by Jonathan Moffie, CEO and co-founder of streamr.ai. “We didn’t realize exactly how easy we had made our platform until a fitness influencer at the gym created and launched a video commercial from their smartphone in only 30 seconds.”

To test the platform myself, I had streamr.ai scrape the TVNewsCheck website. In about a minute, it gathered context, collected photos, wrote a voiceover script, created a custom QR code, and used an AI-voice from 11ElevenLabs to narrate the ad.?

Similar to working with AI tools like ChatGPT or Midjourney, your first result might not be a final product. But with a few tweaks to the script and the photo selections, I was happy with my test ad for TVNewsCheck.?

Integrating AI Creative Ad Tools Directly Into Content Platforms

Increased access is another way these AI tools are helping make it easier for SMBs to advertise on CTV. Both Waymark and streamr.ai recently forged strategic partnerships to help scale access to their platforms.

In July 2024, Paramount announced its self-serve options for SMBs to advertise on platforms like Paramount+. This collaboration follows Waymark’s other successful white-label partnerships with media companies such as Scripps, Fox and Spectrum Reach, resulting in millions of dollars from AI-generated local ads last year.

Also in July, streamr.ai announced?a new partnership with FAST network?STIRR. Advertisers on STIRR now have access to a STIRR-branded GenAI ads manager. The STIRR ads manager is part of?streamr.ai's GenAI Solutions,?which enables Broadcasters, AdTech Platforms, and Agencies to attract incremental SMB ad spend by leveraging GenAI.?

How AI Is Helping With Ad Trafficking, Optimization And Personalization

The strategic platform integrations with Paramount, Scripps, STIRR and others can help advertisers get their message in front of viewers quickly, but what if you want to advertise beyond these audiences?

Many local stations will have their own audience extension platforms. Platforms like Vibe.co offer an easy and affordable self-serve option to traffic CTV campaigns. But one of the advantages of the streamr.ai platform is a built-in advertising network.?

After an advertiser creates an ad using streamr.ai’s GenAI tools, they can traffic it across a variety of CTV platforms including Netflix, Max, Hulu, ESPN and NFL. Streamr.ai’s minimum ad buy is only $250.?

By controlling the ad network that the advertiser is using to distribute their creative, streamr.ai can also optimize both the A/B testing and personalization of a campaign.

“We just launched a feature in beta we call streamr GenAI∞ (infinite). We automatically create and test an infinite number of video ad variations to identify the best-performing creative for your campaign,” Moffie said. “Once the best creative wins, your budget is automatically shifted to it.”

How AI Is Democratizing Access To CTV Advertising

Traditionally, CTV has been dominated by large brands due to high minimum spend requirements and complex buying processes. Only around 500-600 advertisers have dominated TV ad spend, but nine million businesses advertise on search and social media. However, emerging AI-powered platforms like streamr.ai and Waymark are changing this dynamic. Making it easier for millions of SMBs to create and traffic video ads could potentially unlock a $300 billion opportunity, benefiting the entire CTV industry, including local stations.?

Hopefully, the low fill rates and mind-numbing ad repetition we see on CTV today could soon be nothing more than a distant memory.Selfishly, I hope it happens sooner than later. No matter how many times Disney+ shows me a Disney Scentsy house ad, I will never want my home to smell like the crab from The Little Mermaid.