CBS, NBCU, Scripps weigh in on changing dynamics with FAST platforms to improve fill rates

New York City - As consumer viewing habits shift, several owners of local TV stations have launched free ad-supported streaming (FAST) channels to reach eyeballs on more platforms. But while viewers are engaging with FAST, the advertising piece still leaves something to be desired. At NAB NY this week, broadcast executives cited changing relationship dynamics and the need for data sharing with the FAST platforms that distribute their channels, in an effort to improve lackluster fill rates.

It’s not something all FAST providers have always been keen to do, as some suggested platforms want to keep data for themselves, but in doing so hamper revenue-generating opportunities for both sides. But changes in the ecosystem, including a surge in supply, have seen dynamics between local FAST channel owners and platforms evolve more recently.

The topic was discussed at the NAB New York show this week during a panel about FAST revenue strategies for local TV. Leaders weighing in include representatives from E.W. Scripps, CBS, NBCUniversal and The Weather Company.

Broadcasters eye FAST

Before getting into improving monetization and fill rates on FAST, here’s a little background on the companies’ forays into FAST.

E.W. Scripps started launching CTV apps back in 2015 and Tom Sly, VP of Strategy at the broadcaster, noted that the company realized it couldn’t predict where audiences would necessarily be watching and consuming media. With so many platforms and options to choose from, the executive cited the need for ubiquity and to be wherever viewers could find the programming easily.  On its traditional broadcast stations, Scripps promotes CTV channels and runs crawls letting viewers know about streaming options.

“I can tell you, we have some peers still in the space that are afraid to promote CTV, and they’re afraid to talk about it because of retrans,” Sly said, referring to the lucrative revenue broadcasters generate from fees paid by traditional pay TV distributors for the right to retransmit local station feeds, fees which aren’t present in the streaming ecosystem. “But at the end of the day, we have to wake up and say the business and the audiences are transitioning, they’re changing, and we got to change with them, we got to move fast.”

CBS, meanwhile, has 23 FAST channels across news, local stations, sports and entertainment, of which 14 are local owned-and-operated CBS streams.  Sahand Sepehrnia, EVP of Digital Content Strategy and Business for CBS News, Stations, Sports and Entertainment, said “it is in aggregate, a pretty significant revenue source.”

Sepehrnia too acknowledged a need to get reach and scale, where CBS FAST channels are distributed across platforms.  But the monetization piece has been a bit challenged in the past year, he noted -  albeit for sports where the executive cited sell-through rates near 100% while acknowledging the news, stations and entertainment world is  “currently challenged.”

NBCUniversal, meanwhile, has launched several local FAST channels, including 11 English-language and four regional Spanish-language Telemundo FAST channels. It also has national and numerous entertainment FAST channels.

Per an April FAST report from Gavin Bridge at CRG Global, four years ago there were just three local news stations available on key FAST services. That has since jumped to 231 as of February 2024. And station owners aren’t just putting local news channels on FAST, but national news and entertainment ones as well such as NBC News Now or Scripps’ ION network.

Some of the FAST channel owners are part of companies that themselves offer FAST services – such as CBS-parent Paramount’s Pluto TV. Other broadcasters operate their own FAST services, such as Fox’s Tubi and Hearst’s Very Local. Major smart and connected TV players offer FAST services, such as The Roku Channel, Vizio’s WatchFree+, Samsung TV Plus, LG Channels, and Google TV’s Freeplay, as well as FASTs like Xumo Play, Plex and Local Now.

But again, when it comes to monetization, reach and ubiquitous distribution is part of the game, where content owners want to be available as widely as possible.

Data sharing key, but sometimes challenged 

When it comes to local advertisers, NBCU Local SVP of Business Development and Strategy Sonali Pathak noted that they know what they want, who their customers are, and have very specific geos where they want to reach them, down to the zip code level.

Through its Spot On product that launched during the pandemic, NBCU bundles premium FAST inventory with third-party publisher partners and other content, including on Peacock, with a solution that provides local advertisers targeted buying capabilities for CTV. And at the end, studies around brand lift and website lift, for example, to provide closed loop measurement.

“We’re able to really close a loop for local advertisers to show that we’re moving the needle,” Pathak said. “We’re getting people into their local store or…selling whatever product that they’ve got…because at the end of the day that’s what they care about.”

Being able to provide data to advertisers to show effectiveness of campaigns on FAST and streaming is key – particularly as brands increasingly seek performance-based outcomes.

The flow of data and information isn’t always necessarily easily offered up by platforms about performance of FAST channels and data on where ads run. Content owners view that and measurement data as critical to attract advertisers, increase and understand inventory fill rates and relay information back to advertisers about their success so that they keep coming back. And some indicated existing relationships between content owners and FAST platforms impact the ability to fully capture advertising and therefore monetize audiences to drive revenue.

Sly, speaking on the panel, said that in today’s world data is everything, both an asset and “almost a currency in many ways too” in the sense that it allows station owners to show the value of their audiences to the bidders or ad buyers on FAST and streaming.

In terms of data transparency, FAST distribution platforms tend to hold the control.

“It’s really critical that we have a relationship and we don’t always get that with the FAST services,” Sly commented.

But changes in the ecosystem are also seeing some platforms ease their grip on data sharing and inventory sales models.

FASTs unfilled ad time

Despite consumers engaging with FAST platforms, free streaming services still find themselves with unfilled ad time. That said, data from One Touch Intelligence shared with StreamTV Insider suggests fill rate trends, overall, are improving.

The firm audits all major FAST aggregators each month and the below chart is based on more than 3,200 hours of auditing per year.  Among a representative sample, in 2022 major FAST platforms in aggregate had 13.74% unfilled ad time, and roughly 50% paid fill rates.  By 2024 YTD those metrics improved to 6.82% and 64%, respectively. Promos’ share on FAST increased about four percentage points compared to 2023 to 28.6% year-to-date.

Fill rates on FAST One Touch Intelligence data 2024
Aggregate fill rates among major FAST platforms. (One Touch Intelligence )

“FAST channels continue to face advertising challenges when it comes to programmatic fill rates. But our audits have found that the amount of unfilled time has generally declined across providers as the ad tech improves and advertisers allocate more of their budgets to FAST,” Mike Grebb, SVP and lead analyst at One Touch, told StreamTV Insider.  “Interestingly, we’ve also seen the proportion of paid ads go up over time as the number of in-house promos have declined a bit from 2022 levels, another indication that demand from brands has been gradually increasing.”

Still, there’s work to be done on improving the monetization and related fill rates on FAST channels – part of which panelists indicated depends on platforms’ willingness to share data and evolve models.

Symbiotic relationship

Scripps’ Sly, on Wednesday, noted different relationships depending on platform.

Often, he said, FASTs will only send a check and nothing else. In other cases, the model is an inventory split where each side gets a portion of inventory to sell and respective revenue, but Sly noted that “if we don’t get that data passed…it can be difficult for us.”

Not all FASTs are selling inventory at levels satisfactory to content owners, where companies like Scripps want to be able to step in and have the chance to sell ad inventory that the platform itself isn’t filling. 

Amid this backdrop, he acknowledged Scripps built out graphs showing every partner, FAST channel and revenue per hour. It then presents this to partners (blanking out the other competing platforms) and says “basically, here’s where you are, and you suck…and surely we can do better” in terms of fill rates.

Scripps has been fortunate with this approach in work with a couple of the very largest FAST platforms, according Sly, which he said have been responsive to the broadcaster’s desire for data to help it sell more of the inventory, and bringing in its own sales teams when platforms fall short.

Scripps message to platform partners is essentially this: “If you can’t fill it, let us fill it, but you’ve got to pass data, and so we’re going to make money for all of us.”

“Your sales team is fine, but if they’re only filling 30% or whatever the number is, let’s make more money together,” Sly continued. “We’re bringing audience to you, and if you can’t monetize it, give us an opportunity.”

This approach has worked out pretty well, he noted, adding Scripps is expanding it across other platforms now and believes they’re starting to understand the channel owners also need that data.

“[FAST platforms] can’t have it to themselves, and this is so critical to the future of our industry,” he commented. That’s because data helps on the monetization front, and without monetizing audiences that have transitioned to FAST, broadcasters like Scripps aren’t going to be able to create and syndicate premium programming or help drive audiences to the FAST platforms themselves.

“This is a symbiotic relationship. We are a big part of what drive audience to their platforms and we have to work together,” Sly said.

Jump ball model?

The dynamics between content owners and FAST platforms have evolved over the past five years, according to Sepehrnia.

Early on, he noted, platforms needed content but have since gained scale along with a seemingly endless sea of available options  – somewhat lessening the leverage of the content owners.

For example, the Bridge-authored FAST report found that the number of channels available on at least one FAST service in the US ballooned from 669 in February of 2021 to 1,952 just three years later.

In the beginning “those rev shares and inventory shares really favored the content creators. Now the FAST platforms have reach,” he commented.  “So there’s that interesting dynamic in the negotiations of what that split should be, and it’s constantly moving.”

Another dynamic that’s changed is deal structures.

Initially most FAST deals were inventory shares, Sepehrnia said, - where the platform sells some inventory and the content owner sells some. But that shifted to platforms instead favoring revenue shares, where they sell all of the inventory.

However, that approach hasn’t always worked out.

In the last year “some of these platforms have been very challenged,” he said, reiterating Sly’s point of picking up the ad sales slack when platforms aren’t able to fill.

“You’re not selling, so let us backfill and let us sell,” Sepehrnia commented.

One factor panelists cited as causing the shift and platforms coming around to more data sharing and allowing content owners sell more of their own inventory is a surge of ad supply that flooded the market, such as Amazon’s ad-supported entry alongside other major players like Netflix, and more premium content, including sports, making its way to FAST.

Pathak noted NBCU is happy to do it, saying, “we sell our own inventory best, right?”

Still, backfill discussions can be challenging, some noted, in terms of some platforms willingness, or lack thereof, to give content owners the opportunity to try and fill unsold inventory.

But Scripps has done a few deals like this, according to Sly, who said they call it a “jump ball” – where basically whoever can sell the inventory does.

In this scenario, FAST platforms and content owners are equal bidders and whoever wins, wins, he said. Scripps has a financial agreement, be it a revenue share or flat CPM for whatever they win, that Scripps then pays back to the partner. “But we’re happy to do it either way,” he added.

And some are looking to creative ways to fill unsold ad time and improve monetization on FAST.

Weather instead of slate

The Weather Company is one that’s partnering to help fill unsold ad time on FASTs with more engaging and localized weather information.

On the panel, Justin Tuggle, Director of Sales and Strategic Solutions at The Weather Company described how publishers have reached out to company to use weather for backfill or unsold inventory, serving up personalized weather clips during an otherwise empty ad break – rather than running slate (aka a blank screen or ‘be right back’ message) or in-house promos.

Through automation, The Weather Company has a product that can create 15- or 30- second weather clip, personalized to a users’ location. It can add an advertiser logo on top and distribute automatically to digital platforms, tagged for FAST platforms and be ready to be inserted through dynamic ad insertion, according to Tuggle. The thinking is that this provides a better user experience than seeing a blank or ‘be right back’ screen.

It also creates the opportunity for sponsorship for that segment, Tuggle noted, adding that sponsorship CPMs are significantly higher than a programmatic CPM.

“So it’s increasing the amount of pressure on the inventory and giving sellers the tools to sell more types and pieces of content,” he said.

Sly believes this could be a great product, noting that Scripps has a stack of promos it runs but doesn’t see slate on its owned and filled inventory. Where it does see slate is on FAST channels.

“They’re not filling at 100% and therefore we see slate, which we know is a horrible user experience,” Sly commented.

A separate study from Comcast’s FreeWheel Viewer Experience Lab found slate was one of three ad break elements negatively impacting the viewing experience.

“We know the weather is valuable,” Sly said. The strategy exec viewed the ability to insert local weather and do a revenue share back as “a great idea to start monetizing something right now” instead of generating zero revenue from a blank screen.

CBS is already partnering with The Weather Company and Sepehrnia described a product called “Weather Where You Live.”

With that, during the first ad break, instead of seeing a commercial, CBS serves up local weather, which can also be sponsored. That can then be piggybacked with a 15-second commercial for a full 30-secod ad unit, Tuggle noted.

It’s an example of one way to start monetizing unsold ad inventory, bringing it back to the topic of FAST platforms allowing content owners to backfill unsold inventory.

"Here’s the simple math: anything is better than zero,” Sepehrnia said. 

Without naming names, he claimed there are two FAST platforms in particular “that are really struggling to sell” and don’t provide opportunities to backfill to everyone.

If FAST platforms don’t allow this and instead run slate or an empty screen, the CBS exec contends, it’s not only a terrible ad and user experience but also tells the audience the channel isn’t on anymore – potentially leading them to change the channel, further hampering monetization opportunities.

“So the ability to backfill is critical for everybody,” Sepehrnia said.