March 3, 2014
In case there was any doubt that TV advertising is going through its biggest evolution since the ascent of the 30-second ad in the 1960s, Comcast's acquisition of video ad platform FreeWheel should lay those doubts to rest.
While this $320 million acquisition of a behind-the-scenes ad tech company seemingly pales next to Comcast's splashy $45 billion bid for Time-Warner, it is a more important transaction for the evolution of television advertising. FreeWheel provides essential functionality for the networks to maximize revenue as their advertising inventory splinters across computer, tablet, and smartphone devices as well as cable, Internet, and mobile delivery systems.
To date, the TV ad industry has fought the tide of viewers fragmenting across linear, VOD, online streaming, and TV-anywhere options by trying to stuff all these audiences back into a bundle labeled "cross-platform" and "C3" (i.e., all views of a show within three days of its linear air date). But soon, advertisers will realize that this merely dilutes the audience they really want to reach, and they'll embrace fragmentation and addressable capabilities to deliver their messages to a more relevant audience (for more on how this future will unfold, read my recent report How Software Is Eating Video Ads and, Soon, TV).
Juggling ad inventory split across multiple devices and delivery systems is exponentially harder for content owners' chief revenue officers than having a finite number of ad spots, i.e., 17 minutes of commercial time per hour. FreeWheel has quietly established itself as the go-to provider to help manage this complexity.
Like AOL's $400 million acquisition of Adap.TV last fall, this is further confirmation that the future of online advertising is video. But AOL is an online media company following the money as online video fetches the kind of revenue that banners could never command. Now we have a premier TV company making a big bet on a future where TV advertising is addressable and multiplatform.
Comcast has put its chips on a winner.