We will experience a historic renaissance for the TV industry, creating a boon for content producers and publishers and more and better content choices.

By Jason Fairchild, Co-founder & CEO of tvScientific

Without fireworks or fanfare, something happened 25 years ago at an Internet incubator in Pasadena, CA, that changed the world.

An entrepreneur had a crazy idea – actually, two ideas. And like many revolutionary concepts before them, their far-reaching impact (in this case, how products and services would be sold in the future) wasn’t obvious at the time. In fact, they were derided and dismissed by many.

Idea #1 seems fairly straightforward, at least from today’s vantagepoint. Instead of trying to convince people they have the need for a product or service – marketing’s M.O. for a century or more – what if you could identify people who already have a need for or an interest in something and put a relevant ad in front of them at the exact moment when they express it? This simple notion ushered in the era of paid search advertising.

Idea #2 was, it turns out, even bigger. Historically, goods and services were marketed in high-friction ways – in stores and via newspapers, radio, direct mail, outdoor (and TV, but we’ll get to that in a minute). All were derivatives of the “town market” that had been around for most of human history. The Internet fundamentally and irreversibly changed the game by enabling the connection of global versus local communities. Bill Gross looked at this and asked: what if media were sold in an automated marketplace, where any marketer could reach a global audience instead of just a few, a few hundred or even a few thousand people?

This marketplace model was first implemented in Bill’s paid search engine, GoTo.com, which launched in 1997 and generated startlingly quick adoption by enabling millions of businesses to advertise to mass audiences. And that was just for starters – the marketplace model ultimately led to the re-invention of all digital media, from paid search (Yahoo, Google, Bing) to social media (Facebook, Snap, etc.) to display and video advertising (Yahoo, The Trade Desk, etc.), as well as new categories including ride sharing (Uber), food delivery (Instacart), event tickets (StubHub), real estate (Realtor.com) and property rentals (Airbnb).

How impactful were Bill Gross’s ideas? Today, nine million businesses participate in digital marketplaces like Google and Facebook, spending more than $200 billion annually, generating trillions of dollars in economic activity, creating millions of jobs. All told, the marketplace models are responsible for 12% of US GDP.

Cracking the 70-year-old “TV problem”

Which brings us back to TV. The marketplace model disrupted and redefined marketing across industries and channels, but TV has remained an elusive holdout, anchored in 1:1 sales processes, expensive ad buys and notoriously poor measurement and attribution. These factors have resulted in the roughly $70 billion TV market being dominated by 500 advertisers driving 85% of TV ad spend.  Largely because of that, the market has stagnated while performance-based digital media, with its sophisticated approaches to audience engagement and precision ROI, has seen virtually unimpeded growth.  

Back in 2015, I joined the board of a CTV data company and received an accelerated education in the emergence of connected TV. From this perspective I came away with a few observations:

1. With consumers adopting streaming entertainment services in record numbers – today there are nearly half a billion paying subscribers between Netflix and Disney+ alone – streaming TV is quickly becoming the dominant way consumers watch TV. This trend will only accelerate.
2. Today’s connected TVs are basically computers. They are connected to the internet, equipped with technologies very similar to computers, and create the foundation for digital-like advertising, measurement and attribution on TV.
3. The TV industry is remarkably concentrated among just a few hundred national advertisers (see above), whereas search and social are thriving marketplaces.

These observations led to a simple question that would result in the founding of tvScientific:  what if we could do for TV what we did for paid search back in 1997? That is, democratize access to TV advertising and enable digital-like precision so advertisers could measure actual outcomes and ROI that result from TV ad viewing.

I called Bill Gross, with whom I’d worked in the early days at GoTo, to pitch the idea. Bill is the chairman of Idealab still housed in that one-story brick building in Old Town Pasadena and now the longest-running internet incubator around. It took about 18 seconds for Bill to stop me and say, “I get it. This is paid search 2.0. We have to do this. – I’ll help arrange funding. Let’s go.”

While Bill is double-booked by his duties as CEO of Idealab’s clean-energy offspring Heliogen [NYSE: HLGN], he’s never been one to miss an opportunity when he sees it.

The tvScientific CTV buying and measurement console launched in May 2021. Since that time, we’ve experienced encouraging results. Our growth trajectory is steeper than GoTo’s at the same stage – as our platform deterministically connects the dots between TV ads and actual outcomes (website visits, app installs, ROI) – and we’ve attracted investment from Norwest Venture Partners, Comcast/NBCUniversal and Hearst Ventures. Speaking of NBCU, tvScientific will power the Peacock Ad Manager beginning in Q4 of this year.

Where does TV advertising go from here?

From everything we know today, I believe there are a few certainties:

• The vast majority of TV consumption will be streamed atop connected TVs.
• Enabled by digital-like tools, new advertisers will flock to TV in record numbers. By 2024, more than 100,000 search and social advertisers will be active on CTV.
• Because current advertiser participation is so limited, 1,000,000+ new advertisers will have a dramatic impact on TV economics and the entire TV ecosystem.
• TV will (finally) be proven to drive higher ROI than any other medium as new datasets will prove it to be the highest-performing, outcome-driven media.
• Propelled by ROI and massive advertiser adoption, average TV CPMs will hit $100+ within the next five years.

In short, we will experience a historic renaissance for the TV industry, creating a boon for content producers and publishers and more and better content choices for consumers – all set in motion by one entrepreneur’s crazy idea, whose 25th anniversary is well worth remembering and celebrating.