The Innovation and Evolution of TV - Dynamic Transformation with GoogleDoubleClick

7 dynamics
transforming TV
THE EVOLUTION OF TV
1

The convergence of TV and internet video
Television: An industry of innovation and change
People prefer TV on their terms
The internet TV opportunity:
7 dynamics transforming TV
Delivery
Reach across screens
Internet TV streaming
TV distribution and the cloud
Advertising
Measurement
Programmatic ad technology
Addressable advertising
User
Viewer engagement
TV from 2015 to 2020
thinkwithgoogle.com 1

The convergence of
TV and internet video
It used to be that watching TV meant you had to turn on a TV set. But now
thanks to high-speed internet-enabled devices, anyone who’s watched
their favorite show or sports team on a smartphone or tablet knows that
“watching TV” can pretty much happen anytime, anywhere. In other words,
TV programming these days is no longer limited to just the TV screen.
This ubiquity and the convergence of traditional linear TV and internet
video requires a shift in TV programming from delivery over the air, via
satellite and via cable to delivery over the internet. Seems simple, right? But
it’s actually much easier said than done.
The shift to TV over the internet is having a profound impact on
television delivery, advertising and the viewer experience driven by the
transformation of seven dynamics of the TV industry and advertising
marketplace. These seven dynamics: reach across screens, internet TV
streaming, TV distribution and the cloud, measurement, programmatic ad
technology, addressable advertising and viewer engagement represent
new and old challenges that TV programmers and distributors have been
dealing with for the past 60 years. The path the industry embarks on today
will have a lasting impact on the future of TV as we know it.
Measurement
Reach across
screens
TV distribution
and the cloud
Internet TV
streaming
Programmatic
ad technology
Addressable
advertising
Viewer
engagement
Delivery Advertising User
7 Dynamics Transforming TV

Definitions
Linear TV:
A predictable schedule of
television programming that
works like a television channel
and streams throughout the day.
TV programmer:
The owner of one or more
television channels.
On-Demand TV:
Television programs that
stream on-demand at the
request of the viewer.
Smart TV:
A TV set with media storage
and internet connectivity
like a computer.
Over-the-Top (OTT) box:
A device through which
television services are
delivered over the
internet.
Live TV:
A live or near-live,
stream of television
programming such as
live sports or live news.
TV Everywhere:
When distributors extend
access to their TV content
over the internet to existing
customers.
TV distributor:
A service provider
that delivers television
channels to viewers.

Source: Luma Partner, May, 2014, Future of (Digital) TV
Time Spend by Format / Device
People are choosing to watch TV how and where they want.
The increased flexibility seems to be driving the entire TV
industry’s growth.
Traditional TV
Digital Video
Time Shifted TV
Mobile Video
TV on Computer
75%
16%
12%
4% 3%
0%
1%
11%
2%
86%
2011
2013
Each of these fundamental dynamics are undergoing transformation and
present their own risks and opportunities. Questions are being raised
about who owns the consumer relationship, how viewership should be
measured and rewarded, which business models drive the most revenue,
and how the consumer can engage with programming.
And we are now seeing the industry proactively take steps to address
the changing landscape. More direct-to-consumer ad supported and
subscription options are likely, as shown by the launch of CBS All Access in
2014, HBO’s planned direct-to-consumer launch in 2015 and the continued
growth of TV Everywhere apps. According to the Adobe Digital Index from
Q1 2014, TV Everywhere video consumption grew 246% year-over-
year across devices. Furthermore, since it’s recent introduction in 2013,
Google’s streaming media device Chromecast has consistently held
the #1 spot on Amazon’s best selling consumer electronics ranking,
having sold millions of devices.
Services like Netflix and Hulu have proven that direct-to-consumer
subscriptions can work. 47 percent of households subscribe to Netflix,
Hulu Plus and/or Amazon Prime Instant Video, according to the Emerging
Video Services VIII report by Leichtman Research Group. TV over the
internet also provides a tremendous opportunity to transform viewing
from one-way broadcast model to two-way interactive model. We’ve
seen YouTube creators engaging with their audiences to create content
relevant to their global fan bases and supply them with infinite choice. This
approach to content has resulted in more than 1 billion unique users
that visit YouTube each month.
Advertisers follow their audiences, so ads will continue to be a primary
source of revenue from programming delivered over the internet. This
undoubtedly will have major implications for what eMarketer reports as
$68 billion in annual US TV ad spending. The TV sell side (programmers and
distributors) and TV buy side (marketers and their advertising agencies) are
highly motivated by their bottom line to create and operate the internet
TV ad market as efficiently and effectively as possible. As traditional TV and
internet video converge, television ads can be more relevant, engaging, and
effective. Through advances in video ad decisioning and dynamic ad insertion,
campaigns can deliver the right message to the right user at the right time
in the highest-quality context. Cross-channel campaigns can be measured
holistically and advertisers will discover new insights, all at internet scale.
Embracing this shift can benefit each player in the TV ecosystem. By
assessing each of the dynamics in transition we can better understand the
multiple risks and opportunities that the shift to internet delivery creates.
Our hope is to provide a perspective that will help marry what users
want--ubiquity of TV programming in a user-friendly way--with what TV
programmers, distributors and advertisers require for success--accounta-
bility, monetization, efficiency, scalability, and engagement. We’ll provide this
detailed perspective in this eight-part series, diving into each industry-dis-
rupted dynamic that the shift to anywhere, anytime programming will affect.
To kick off the series, let’s dive more deeply into this notion of consumer
demand for anytime, anywhere programming, by looking at how TV has
evolved to where it is today. Then we’ll explore in detail the complexity,
risks, and opportunities that this shift creates for programmers,
distributors, and advertisers.

The Future of TV:
Infinite viewer choice - The content, information and people that viewers want to watch,
when they want to watch it and where they want to watch it.
Built on fans, not just audiences - The move towards engagement and lean forward viewing.
Viewed on demand - Time-shifted viewing and catch-up TV will make it critical for content
owners to focus on content discovery and UI.
Global - With access to billions of viewers worldwide, the internet will make it easier deliver
content and programming to viewers globally.
Streamed over the internet across all screens - Television programming being delivered
over the internet will become one of the dominant modes of TV delivery in order to enable
viewing across all screens.
Addressable - The convergence of TV and internet video will result in more addressable and
relevant advertising.

Television: An
industry of innovation
and change
As the TV industry navigates this shift to anywhere, anytime programming, it’s
important to ground that shift in the history of change in the television industry.
The pace and nature of change have raised people’s expectations of how and
when they get their programming.
Innovation is nothing new to the TV industry. And the industry continues to
demonstrate tremendous growth--both in scale and in form. TV size and
form factor aren’t the only noteworthy changes to which the industry has
adapted. Delivery is another massive shift that continues to evolve. We’ve
gone from broadcast to cable and then from analog to digital. Now, the
industry is making a third huge change in delivery with its transition to TV
over the internet.

Within this third wave of change, the TV industry is making more and more
content available on any internet capable device, while experimenting with
varying combinations of ad and subscription revenue models. It started with
TV clips, then on-demand episodes, then TV apps. Now, it’s “live, linear, and
on-demand TV anytime, anywhere.”
Three waves of change in TV Delivery
1980 1996 2010
Third big transition: Digital
cable, satellite and over the
air TV to delivery over the
Internet
Now, the TV industry is making another major
transition from digital delivery of content via
over the air, cable and satellite to include
delivery over the internet.
75.2% of all US households will have an
internet connected TV device by 2018
according to a June 2014 eMarketer
report.
Second big transition:
Analog cable and satellite
TV to digital
From 1996 to 2009, the TV industry
transitioned again from analog to
all digital broadcasting, in response
to a mandate from the Federal
Communications Commission (FCC). And
while digital TV didn’t directly affect the
TV viewer experience it did have a major
impact on how TV is actually made and
distributed.
First big transition: Over-
the-air broadcast to analog
cable and satellite TV
Beginning in the early ’80s, the industry
shifted from traditional broadcasting dom-
inated by three networks to the far more
numerous choices offered by cable and
other multiple video program distribution
providers (MVPDs).
Phase 1: TV clips
Programmers offer short clips for the web to promote
full-episode shows which viewers can only watch on
TV sets.
Phase 2: On-demand TV episodes
Programmers deliver full episodes on the web,
inserting mid-roll ad breaks at the same points in the
episode as on TV. Each episode is typically available
for a short time.
Phase 3: TV apps
The massive growth of the smartphones and tablets
market, through its ease of use, and advancements in
streaming video, drove personal TV viewing to custom
apps on devices. This is changing how a new genera-
tion grows up with TV.
Episode 1
Phase 4: Live, linear, and on-demand TV
anytime, anywhere
Programmers and distributors, realizing they’ve
tapped into a massive, on-demand TV audience
across connected devices, begin to add live and linear
TV to their successful on-demand programming.
Phase Future: The best of TV and
internet content formats converge
Recognizing the success and reach of video content
made specifically for the internet, programmers and
distributors develop or acquire next generation inter-
net video creative agencies or multi-channel networks,
delivering a blend of TV and internet content, blurring
the lines between traditional TV formats and newly
developed “snackable” internet video formats.
Third big transition: Evolution of TV over the internet.
1st 2nd 3rd
Episode 1

People prefer TV on their terms
TV delivered over the internet offers control over when, where, and on what devices people watch.
Limited options, like only being able to watch TV programming either live or as DVR are no longer
enough. OTT content consumption has seen steady growth on the backs of services like Netflix, Hulu
Plus, HBOGo, WatchESPN and YouTube, amongst many others, and is evidence of the viewers desire to
watch TV on their own terms. People want a full selection of TV programming, including live sports, live
news, linear channels, and complete on-demand archives. Anything less will disappoint.
Why? Think about how far technology and its adoption have come in a short time. Just a few years ago,
conventional wisdom was that no one would watch TV on a smartphone. The screen seemed too small.
But the convenience of essentially having a TV in your pocket trumped form factor. So much so that
we are now seeing 50% of all YouTube views coming from mobile devices and from the Adobe’s
Digital Index we are seeing that 58% of authenticated TV Everywhere streams in Q1 2014 coming from
iOS and Android devices. Couple this with the fact that eMarketer reported that in 2014 for the first
time ever, time spent on TV was outpaced by time spent on digital mediums--with mobile driving the
shift. So it turns out that people are very comfortable watching TV on any screen that suits them.
The continued growth of TV over the internet seems inevitable. The willingness to use nearly any
connected device to watch TV, combined with widespread access to high-speed connectivity, means
that TV will move to internet delivery very rapidly. People already stream content to an incredible
variety of devices, including smartphones, tablets, laptops, desktops, smart TVs, over-the-top (OTT)
boxes, game consoles, streamcasters and more.
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The internet TV opportunity: 7 dynamics
transforming TV
The TV industry is transforming to meet the opportunity that the internet offers. While it is still early days, the impact that the
internet is having on TV appears to be additive as TV dollars continue to grow. The stakes are high but so are the rewards to
programmers and distributors that successfully navigate the internet transformation of TV. We’ve identified seven TV market
dynamics that are in active transformation:
TV
Newspaper
Digital
Radio
$70B
$40B
1900 1993 2013
The continued growth in TV and Digital show that advertisers and media agencies are looking at these channels to drive brand engagement.
Source: Luma Partner, May, 2014, Future of (Digital) TV

1. Reach across screens
TV programs can now reach audiences across devices and over time.
The risk: Device and content fragmentation reduces audience reach
Without addressing the complexities of providing programming across
a variety of screens, devices, connection speeds, and video streaming
protocols (to name just a few), it will become harder for programmers and
distributors to offer advertisers the audience reach that they’ve come to
expect from TV. Additionally, the lack of consistent measurement across
screens will make buying complex and could stifle the flow of TV ad dollars.
The opportunity: Increasing audience reach
Programmers and distributors can increase audience reach by pursuing
ubiquitous TV programming across screens and devices. Advertisers will
value relationships with the programmers and distributors who offer
ubiquitous reach to their target audiences across all screens and reward
them with TV ad dollars. The multi-screen landscape could also offer
advertisers a range of new ways to engage with their audiences tailored to
the screen or device versus a one size fits all approach.

The risk: A poor advertising experience for new internet TV services
may stymie growth
Linear and on-demand TV have reputations for consistency and
quality. And users expect the same level of quality whether they
watch the same show on a 50 inch screen or a 5 inch screen. This
can be undermined for programmers, distributors, and advertisers
if the ad-monetization technology isn’t up to the task. Issues such
as stream buffering at the beginning and end of ad breaks, low
resolution/pixelated ads and ads with the same creative that are run
back-to-back can quickly drive audiences away to many other choices.
The opportunity: A TV over the internet ad monetization platform
that can deliver the full promise of TV ad quality and personalization
at scale
Advancements in technology allow TV over the internet to dynamically
adjust the quality of the TV stream, based on everything from device
type to screen size to connection speed. Also, ad-monetization
platforms will be able to dynamically select the best ad for each viewer
in real time and seamlessly insert them into TV commercial breaks so
that quality goals are met. The opportunity is to first meet and then
exceed the current consistency and quality of linear and on-demand TV.
2. Internet TV streaming
People want a TV over the internet experience that’s as good
or better than watching the same content on traditional TV.

The risk: Failure to design for the cloud will lead to unsustainable costs
To grow TV over the Internet offerings, programmers and distributors will
need to move key Network Operations Center (NOC) infrastructure and
workflows to the cloud in order to ensure sustainable cost structures at
scale to deliver the programming that TV over the internet requires.
Also, programmers syndicating their product globally will need to
change their operation workflows, if they want to maximize advertising
revenue both in and out of their domestic market. Determining what
parts of the workflow belong in the NOC versus the cloud should be
solved quickly for TV to successfully transition to the internet.
The opportunity: Cloud services offer agility and elasticity that’s ideal for
TV over the internet
The cloud has a history of transforming industries by delivering global
scale at much lower operating costs. The TV industry is set to benefit
from the cloud.
Distributors can reduce their costs and increase services by designing
their operations to scale.
Programmers also benefit from the “cloudification” of their TV
syndication workflows and new business models. Now they can
syndicate programming with distribution partners, while taking
advantage of uniquely addressable TV ad spots, even if the stream is
being watched on their syndication partner’s apps, sites, and devices.
3. TV distribution and the Cloud
To achieve TV scale on the internet, programmers and
distributors will need to migrate aspects of their production
and distribution workflows to the cloud.

The risk: Conflicting methodologies cause uncertainty and inaction
The Gross Rating Point (GRP) has been the standard for measuring the size and demographics of tradition-
al TV audiences for decades. However with digital channels, the real-time feedback loop inherent to digital
means that GRPs for TV over the internet and video can be calculated combining both panels and census-level
audience insights.
As GRP measurement shifts away from pure panel-based estimation, to combined panel + census approach all
parties must have confidence in the combined measurement approach. The lack of a consistent and trusted set
of measurement standards and methodologies across the multi-screen landscape could impede the continued
growth of TV over the internet.
The opportunity: Better, more accurate and more actionable audience measurement
With a trusted census + panel approach to digital GRP measurement, the exact size and demographics of an
audience can be known in real time. Ad sellers can get paid for every view and never undersell or oversell their
audience. Advertisers can improve campaigns with a far deeper, more accurate understanding of audiences.
A GRP that represents the total audience size and demographic across all screens, both traditional TV and
TV over the internet, is just the beginning. Real-time GRP insights and waste reduction will set the stage for
advanced measurement around brand lift, viewability and other innovative metrics that can help advertisers
measure effectiveness instantly and not after the campaign is over. Advertisers will be able to not only op-
timize their TV over the internet campaigns to their target audience, but to their key objective whether it’s
awareness, recall or consideration across screens.
4. Measurement
TV delivery over the internet will increase both the quantity and quality of viewing signals that
can be captured as well as the speed with which they are measured. This is driving TV viewership
and demographic measurement to shift from purely an estimation approach (where we used
small panels of viewers to estimate what everyone in the country is watching) to a combined
census + panel approach (where census level insights, that is insights from every ad viewed, is
calibrated against panels).

The risk: Not adopting programmatic ad technology to automate buying
and selling will result in inefficient processes that limit the monetization
potential of TV over the internet
Things quickly become unmanageable when you add the complexity of
cross-screen, cross-device advertising and uniquely addressable TV ad spots
to the already complex TV marketplace, with its upfronts, scatter buys, rider
and carriage agreements.
The opportunity: Programmatic ad technology can foster efficient buying
and selling to support monetization and ad effectiveness goals
Ad technology excels at simplifying complex processes and making them
more efficient and effective. For programmers and broadcasters, it can help
with ad decisioning, insertion and monetization across a spectrum of direct,
private, preferred or open trading scenarios that maximizes their inventory.
For advertisers, the use of audience insights to decision ads can help
uniquely address audiences across devices so that every impression matters.
5. Ad technology and
programmatic
Ad technology and programmatic will dramatically influence how TV
ads are bought and sold.

6. Addressable advertising
Advertisers can reach their audiences with greater precision and
relevance by investing in TV delivered over the internet.
The risk: Viewers may shift their viewing more quickly than anticipated to
devices and platforms where TV content is delivered over the internet
While the number of eyeballs watching TV over the internet is small com-
pared to cable and satellite TV today, viewership is shifting to the internet
and the velocity of this change could increase. If it does, the industry could
arrive at a tipping point sooner than anticipated. This may disrupt any pro-
grammers and distributors who aren’t prepared for a fast shift in how their
audiences watch their TV content, and could leave advertisers unprepared
to reach viewers across the new TV landscape.
The opportunity: Everyone benefits from a “broadly cast” content stream
with an “individually cast” addressable ad stream
Most ads on cable and satellite TV are broadly cast, just as the content
is—every viewer nationally or at best regionally, sees the same content and
ads. With TV over the internet, ads don’t have to be the same for everyone.
Tailored ad breaks open the possibility for improving the value of TV inven-
tory to programmers and distributors, the performance of TV campaigns to
advertisers, and the viewing experience for the user.

The risk: Advertisers who treat all TV programming as a one-way, mass-market
broadcast will miss opportunities to directly engage their audiences
The smartphone is a significantly more personal device than the large screen
in the living room. In this heightened personal environment, brands will need
to ensure that their messages are relevant to each of their viewers. These
tailored brand messages can outperform mass-market messages. And as TV
over the internet gains broader support for uniquely addressable TV spots,
advertisers who maintain a broadcast mindset may be at a disadvantage.
The opportunity: TV’s burgeoning 1:1 advertising capabilities and
engagement models can help advertisers who embrace them
Uniquely addressable TV spots empower advertisers to improve ad
performance by delivering a range of messages, depending on circumstance.
Imagine different ads for customers versus non-customers, for audiences
in snowy regions versus sunny regions, or for past website visitors versus
unknowns. It’s all possible. TV over the internet is also ripe for ad innovations
to engage viewers such as skippable ads, longer form opt-in advertising, or ads
with more direct calls to action. TV over the internet also poses the opportunity
to enable 2-way conversation between viewers and the brands/programmers.
7. Viewer engagement
TV is shifting to an individual experience on increasingly person-
al devices. This will continue to influence how advertisers engage
their audiences.

TV from 2015 to 2020
At $68 billion, the TV ad marketplace represents the largest portion of US advertising spend and has
done so for a long time. Will it remain the dominant slice of the ad spend pie or will it change as the mass
media audience attention is fragmented by unlimited media and entertainment choice?
What the TV industry will look like in 2020 is unknown, but if the current transformation is any indication,
it will be a much different landscape with TV over the internet at its core. It’s not often you get to witness
(let alone participate in) an industry this large navigating a transformation of this scale and magnitude
in real time. The monetization path programmers and distributors make and the enabling technology
partners they choose will have a lasting impact on the future of TV.
Join us over the coming months as we explore the risks and opportunities associated with each of the 7
dynamics undergoing transformation and their impact on the future of television.
To follow the rest of the series visit www.thinkwithgoogle.com
Measurement
TV distribution
and the cloud
Programmatic ad
technology
Internet TV
streaming
Reach across
screens
Viewer
engagement
Addressable
advertising

Ad server:
Supply side platform:
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Mobile apps monetization:
Ad exchange:
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marketplace:
Content distribution partner:
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for Publishers
Digital marketing platform:

Ad exchange:
Ad network:
Premium programmatic video
marketplace:
Media distribution partner:
Ad creative:
Demand side platform:
Ad server:
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