No surprise, at last week’s SHIFT // Programmatic Video & TV Ad Summit, the “duopoly” of Google and Facebook came up repeatedly on stage, mainly in the context of how they’re pursuing TV ad dollars and what the TV industry is doing to defend itself. In fact, the whole concept of “programmatic TV” - TV networks data-enabling and automating /streamlining the ad transaction process - pretty much captures what the industry is doing to become more competitive. 

But as I listened to and participated in the SHIFT sessions, one consideration kept coming back to me as possibly being the biggest single influence over how TV advertising evolves in the coming years: the idea that Google and Facebook are single entities, while the TV industry is fragmented with many different powerful players, each with their own agendas, capabilities and resources.

It isn’t news that Google and Facebook are in hot pursuit of TV ad dollars. For Google, this has been happening for years, highlighted by its splashy annual YouTube Brandcast NewFront presentation that features TV stars and agency/advertiser executives extolling the virtues of working with YouTube. And of course its “Google Preferred” program has sought to create a tier of inventory akin to TV, that is premium and brand safe.

Conversely, Facebook is much newer to the video business, is still experimenting with its content strategy and hasn’t yet fully baked its video ad model. But Facebook’s CEO Mark Zuckerberg has publicly said many times the company is pivoting to be “video first” and, it’s hard to imagine how Facebook will continue to grow its top-line revenue at a prodigious 50% annual rate without tapping into TV’s $75 billion spending.

With Google and Facebook looking to encroach on its traditional turf, the TV industry faces two well-funded companies with strong technology and deep benches of talent. But more important it seems is that each is a single entity and therefore controls from end to end what it offers to ad buyers, including campaign planning, audience targeting, optimization and reporting. In theory, if Google and Facebook listen closely to ad buyers’ needs, they’re in a position to quickly respond and innovate. That’s not to say these systems are perfect, with Facebook’s self-reporting challenges and YouTube’s ongoing brand safety snafus being relevant illustrations.

Conversely, the TV industry is comprised of many networks and owners. While each can invest individually to enhance the audience targeting capabilities and streamline transactions, it’s only though industry-wide collaborations that dramatically increase scale and standardize measurement/reporting that the industry as a whole can be more competitive.

Initiatives like OpenAP are pivotal in helping advance this agenda. An industry-wide executive meeting convened by NBCUniversal last week is yet another positive sign that the industry recognizes the urgent challenges. However, it’s been 9 months since OpenAP was announced and beyond Fox, Turner and Viacom, its founding network owners, no other networks have fully signed on. And while it is positive for the industry to meet, it is the specific actions that result from such meetings (and their timing/implementation) that matter most.

The single entity vs. fragmented industry battle that’s unfolding reminds me a lot of what’s unfolded over the last several years with SVOD vs. TV Everywhere. The former, with single entities like Netflix, Amazon and Hulu, has raced to integrate with multiple devices, launched high-profile nationwide (and global in some cases) marketing campaigns highlighting marquee content and released a plethora of valuable features to viewers. Meanwhile, TV Everywhere, a loose pay-TV industry initiative to extend viewing capabilities beyond the set-top box, has lumbered along with widely disparate commitments from both operators and networks. While Netflix is a household name with 50 million U.S. subscribers alone, TV Everywhere and its capabilities are still unknown to many pay-TV households.

Admittedly, the analogy isn’t perfect but I do believe it provides a frame of reference for how battles between well-funded single entity vs. fragmented industry play out. The single entities move fast and can respond to market needs. The fragmented industries have to coordinate among many parties and often can only move at the pace of the laggards. As the single entity gains momentum it can invest even more, in turn opening a bigger advantage vs. the fragmented industry.

As a number of SHIFT speakers noted, the TV industry is facing an existential threat from Google/Facebook, plus shifting viewer preferences and the rise of ad-free SVOD. Working as a fragmented industry isn’t easy, but there must be a full court press to bring the industry’s entire scale, targeting and reporting potential up to speed to compete effectively. Even then long-term success isn’t guaranteed. But anything less than a 110% industry commitment to advancing programmatic TV will almost surely mean TV ad dollars will flow more strongly to the duopoly in the future.