Magnite Buys SpotX

RTL, the Euro TV powerhouse that bought Denver-based SpotX in 2017, sold it this week to Magnite, the streaming TV ad-buying company created by the melding of Rubicon and Telaria. (Not to be confused with Magnetite, the iron ore mineral you learned about in Earth Science or Maglite, the best-selling brand of flashlight.)

Why It Matters

For starters, Magnite is paying $1.17 billion for SpotX, which must be making RTL investors jump for joy, given that they only paid $289 million ($144 million in 2014 to purchase 65% of the company and $145 million in 2017 for the rest.)

That’s a Game Stop level investment. (Or a Game Stop as of last week level investment, anyway.)

On a broader front, it’s not surprising to see consolidation within the independent streaming TV ad tech community. The market is growing, dollars are starting to shift and the one thing that brands and their agencies continually tell us is just how complicated the whole process is.

So the fewer boxes to check, the better.

Independent buyers like Magnite operate outside of the walled garden systems maintained by many of the main players in the industry, who sell the choice inventory on their platforms or devices and then use the programmatic capabilities of the indie players to find buyers for the rest.

It’s a complex arena, one that very few people fully understand. For instance, many networks are looking for ways to bundle their VOD set top box inventory and their streaming inventory together for sales purposes, and that’s something Magnite, despite its size, has yet to fully conquer. 

That said, there are plenty of things both Magnite and SpotX do well and efficiently--there’s a reason both are so highly regarded and work with a stellar list of blue chip clients.

Complicating matters still is the fact that we’re in a strange, albeit temporary, transition period right now, as viewing shifts from mostly linear to mostly streaming and the infrastructure that supports TV advertising struggles to keep up.

It’s tricky because there are brands whose target audiences are still largely on linear and brands whose target audiences are largely on streaming and more still where the audience is on both.

Combine that with the fact that most brand marketers and their agencies find filling out their taxes to be easier than creating a cross-platform media plan, and there’s a real danger that dollars will not follow eyeballs to streaming.

Meaning that all forms of cooperation, even mergers, are going to benefit the industry.

What You Need To Do About It

If you’ve got a walled garden for streaming TV, you need to get real: walled gardening works for Facebook and Google because there are no other options, but keeping those walls up in streaming TV is counterproductive because buyers do have other options and the more confusing the whole market seems, the less likely anyone is to spend big money on it.

If you’re a brand and you’re pulling back from spending more on streaming precisely because it is all just so damned complicated, don’t. Your audiences are all moving to streaming, will continue moving to streaming in larger numbers and the ads you run on streaming can be better targeted and will provide a clearer view of their effectiveness. 

While some of these players making your life complicated are just rebranded digital companies, many of them are actually using infrastructure that was purposely created to help buy, sell, distribute and track television commercials and they are the ones who will eventually win out. Just hang in there.

If you’re pretty much everyone in the industry and you are confused as to what the difference is between OTT, CTV and digital TV and why some people call networks “publishers” you are not alone. It’s confusing AF for everyone and there’s a simple solution: call it “Streaming TV” (STV if you desperately need an acronym) and the people who own the apps are “programmers.” (Though it is more than likely that consumers will begin referring to all those apps by less technical names like “networks”, as in “What network is Bridgerton on--Netflix or Disney?)

2. Pluto To Help Promote CBS Shows

ViacomCBS is going to use its FAST, Pluto, to promote two of its new series, Clarice and The Equalizer, in the hope that this will drive viewers to watch the shows on linear CBS

Why It Matters

This is not a bad use for a FAST, though a better use would be to use Pluto to tease shows that are on Paramount+, though given that Paramount+ is not scheduled to launch until next month, this may very much be in the cards, with the CBS promo as a dress rehearsal.

This was something that came up in our recent special report on the FASTs, the fact that one of the big advantages to larger network groups owning a FAST was that they could use them to promote their original series, teasing a few episodes and thus driving subscriptions. 

It seems pretty logical and lines up with the notion that the Flixes with their roots in traditional TV are all going to have a three-tier line-up, with a free ad-supported service, a subscription ad-supported service and a subscription ad-free service. By combining ad sales from the first two, they will be able to reach a bigger market and by using the free service to promote their subscription services, they should be able to more easily convert viewers.

This, if you recall, was one of Netflix’s original plays--they struck deals with networks like AMC to show older episodes of series like “Breaking Bad” that were not yet ready for syndication with the promise of driving viewers back to linear to see all the new episodes once they’d caught up.

As for Pluto, there will be a period where VCBS needs to promote both their linear and their streaming shows, but I suspect that in about three to five years, that line-up will be one and the same, as it will no longer make financial sense to create big production budget comedies and dramas for linear, given that most viewers are on streaming.

What You Need To Do About It

If you’re one of the TV companies that’s setting up shop on streaming, teasing the originals on your subscription app via your free app is a no-brainer. Our friends at Peerlogix can even provide you with the stats to figure out which shows are most likely to turn viewers into subscribers. (Check out our recent report on their Moneyball Approach.)

If you’re a FAST that’s not affiliated with a subscription service, this might be a good money making deal for you--strike a deal with an independent subscription service to show episodes of series they are trying to make happen and take a cut of any subscriptions you drive.