Media

The reason why sports streams have advertising gaps, explained

It’s complicated.
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Francis Scialabba

6 min read

Picture this: You’re sitting down to watch the Lakers take on the Hornets. You turn on your TV and head to the NBA League Pass app. You settle in for the tip-off. You crack open a brewski (or a non-alcoholic spritz). A commercial comes on.

And then, for a few seconds, there’s…nothing. You may see a static message from the streaming service telling you there is a commercial break occurring, or maybe there’s simply a blank screen. But in an industry ruled by ad inventory, it seems unthinkable that there’s just nothing.

So why isn’t all the ad space filled? Turns out, it’s complicated—and it can come down to how ads are bought and sold, and how streaming has made that process even more intricate.

A regular occurrence

First things first: If you are a fan of any kind of sport, and you’ve streamed a game, you’re probably familiar with this phenomenon.

“Everybody that watches premium sports on streaming has experienced that,” said Dave Morgan, the CEO of TV-buying platform Simulmedia.

The exact reason as to why a viewer might see a static message, sometimes referred to as a “slate,” depends on a few factors. To understand the cause, you must first understand which service is streaming the event, who has the rights to stream, and through which connected device a viewer is watching—all factors that affect how ads are sold.

Let’s break it down. In the case of NBA League Pass, there are two main ways ads are sold during games, depending on how you’ve signed up to watch, explained Seth Ladetsky, the SVP of client partnerships and head of digital revenue strategy at Turner Sports; Turner Broadcasting operates NBA League Pass through a partnership with the NBA.

The ads in the linear version of NBA League Pass—that is, the version you would get if you were to pay for it through your cable package—are sold by the network, which typically sells national ad inventory, and cable operators like Xfinity, which typically sell local ad inventory.

Ads running on NBA League Pass’s direct-to-consumer option, offered as a standalone product and an add-on for viewers paying through a cable package, are sold differently. Ladetsky and his team at Turner are in control of selling ads and setting rates, not local cable operators.

On other streaming services, watching games OTT sometimes means watching a simulcast of what is being broadcast on linear TV. In that case, local cable operator rules and operations usually do apply. (There are exceptions here, too, including the fact that some ads aren’t cleared for digital use and must be replaced in streams.)

Too many cooks

The growth of connected-TV platforms and devices adds an extra complicating factor to the already labyrinthian world of sports broadcast and streaming rights.

Platforms like Roku or Amazon Fire TV can get their own cut of ad inventory, selling it and managing it themselves. That means there can be quite a few players involved in selling ads during a single stream. If you, for instance, switch on your Roku to simulcast a local baseball game on Hulu, that means the network, the local cable operator, Hulu, and Roku may all be involved.

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To prevent these various parties from stepping on one another’s toes, there are rules that govern how all of those ads can be sold, for how much they can be sold, and to whom they can be sold.

In broad strokes, negotiations may go something like this: “I’ll let you have a certain number of ads you can fill,” Morgan said that a network might tell a distributor. “But you have to actually exceed the CPMs that I’m already getting.”

And that means that sometimes, an ad spot just isn’t sold. Simple enough—but isn’t that leaving money on the table?

Actually, that choice is designed to keep rates high overall. “TV operates on a scarcity model, and it says it’s better, in many [cases], to leave a spot blank…than to sell it at half-rate,” Morgan said. “It’s a very different mindset than the people that grew up on real-time bidding, auction-based banner ads.”

Technically speaking

An empty ad slot, then, can present an opportunity for a network to show off something else. Sometimes, and especially on old-fashioned linear TV, that’s a house ad—either a promotion for an upcoming game or a more generic message from a broadcaster, explained Ladetsky.

House ads from the networks or from a sports league itself are becoming more common to help fill the gaps in digital streams. If there is a slate that appears for 30 seconds or longer, it’s a missed opportunity—probably some sort of error, Ladetsky said.

More often, though, the appearance of a slate is because the length of an ad is unusual. That can make slotting in a house ad more difficult, even if all of the ad inventory in the game is sold.

“Instead of running an odd-sized commercial, like a 15 or a 20, you put up a slate for a few seconds,” Ladetsky said.

No will, no way

On traditional TV, decades of experience means there are lots of systems in place to fire up a five-second house ad or other promotional message to help fill the gaps during oddly-timed ad breaks. That’s just not the case on digital yet, Ladetsky said.

That’s not because it’s not technically possible. Ladetsky said that streamers would need to erect systems that would be able to immediately fire up a house promo after the ad server communicates that nothing is about to play—something that, while complex, is “very solvable.” But since an ad wouldn’t play in the space, “there’s no real revenue opportunity,” he said.

There is, however, a will to improve the user experience. “If someone’s stuck there for two minutes [with a slate], it’s not a good experience,” Morgan explained.

To keep the user experience high, and to keep TV rates competitive, don’t expect to see a programmatically placed ad to fill those five-second pauses; Morgan said no one’s likely to “put 10 digital intermediaries…in the middle” to solve the issue.

In the meantime, enjoy those little after-the-break messages. Eventually, Ladetsky promised, they will become a relic of the past.

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