For this upfront season, over-the-top (OTT) advertising is at the top of the “transformation” agenda for the TV industry. In fact, Connected TV (CTV) and OTT advertising are expanding at the fastest rate of any major medium.
According to Magna’s latest forecast, it will reach $4 billion this year and $5 billion next year. Even with this rapid growth, OTT ad spending is still catching up with consumption — it’s just 3 percent of TV ad budgets.
To win over advertisers, we’re witnessing a battle brewing at the agency level — people are vying for marketers to shift budgets to CTV and OTT. Many traditional TV buyers have renamed themselves as “video investment” teams, and digital buyers are emphasizing their audience targeting, measurement and attribution prowess to stake the vast, growing CTV opportunities.
As the competition rages on between the media giants and distribution platforms to grow their direct-to-consumer streaming offerings, the OTT ecosystem is becoming more complex and fragmented. This makes the buying experience even more confusing for advertisers. Compounding the market confusion is the rise of new entrants that claim to do the same thing but are executing differently. Advertisers need a checklist to truly understand what they are getting.
Amid the disruption, here’s what marketers should be zeroing in on to overcome underlying challenges and bolster CTV’s position in building a scalable media plan:
1. New Innovations In OTT Addressability
The scale that is now emerging in CTV is enabling marketers to drive addressability — the ability to serve different ads to different people during the same programming — and to precisely target their audience across many interest categories. In evaluating the targeting capabilities of OTT providers, it’s important to ask where the data is coming from and assess the accuracy of the viewer profile.
There are new innovations that allow marketers to leverage machine learning technologies with decision-making capabilities to connect third-party data sets with CTV device graphs for precision targeting. For example, with a CTV device graph, a marketer will have a better match rate when they take quality third-party data and identify the households to reach those audiences.
2. Measuring The Impact Of Traditional TV And OTT
Traditional TV and OTT combined is proving to be a powerful 1-2 punch. Today, we’re able to enhance addressability with Automatic Content Recognition (ACR), a technology used to automatically detect and index content that is playing on television in real time. Data companies like Alphonso, a company we have partnered with, are collecting ACR data and leveraging artificial intelligence (AI) to generate granular information for closed-loop campaign attribution. This means that advertisers are able to measure how their ad campaigns connect to online and offline business results, such as website and in-store visits, as well as conversions.
Taking a data-driven and results-oriented approach to combining traditional TV and OTT campaigns can drive increased business outcomes for advertisers by extending both reach and engagement.
3. The CTV Co-Viewing Value
CTV impressions are sold on a one-to-one ratio (one impression for one viewer). But, according to the IAB, 93 percent of the time, there are multiple viewers in the room when viewers are watching content on CTV devices. So, if a given CTV campaign delivered 100,000 impressions, the likelihood is that it’s much higher when one considers the co-viewing value of multiple viewers watching the same screen. CTV co-viewing is an important buying consideration because the additional audience brings significant added value for advertisers.
4. Walled Garden Limitations
Scale is still a top concern for marketers that are looking to aggregate audience reach in their CTV media plan. When considering a single platform (walled garden), there’s a limitation in the ability to reach massive audiences beyond the platform’s own subscriber base.
Frequency is another issue: When a marketer places a buy with one platform, they are not able to see outside of those walls. And if they place buys with multiple providers that aren’t talking to each other, multiple ad spots will likely run with high frequency, which makes for a poor consumer ad experience.
When it comes to measurement, digital buyers are familiar with working across walled gardens and having to stitch disparate data together. The same issue translates to OTT measurement when dealing with walled gardens. In our fragmented OTT landscape, measurement providers are dealing with data from smart TVs, hardware, software, and providers like Nielsen and comScore, to name a few. As more dollars flow to OTT, standardization must be an instrumental part of the measurement equation to drive the industry forward.
5. Open Exchange Risks
Open exchange platforms present tremendous risks in dealing with unknown sources of content and with blind bidding, which comes with fraud and a lack of transparency. According to MadHive, 18 percent of OTT video ad requests are fraudulent based on its analysis of examining approximately 1 billion requests that flowed through its platform. Working with directly sourced inventory in premium content that runs on trusted network brands is the best safeguard to ensure brand safety.
The Future of Streaming TV Advertising
As OTT viewers have surpassed traditional TV viewers, OTT now offers the same big-screen experience in a premium, brand-safe environment at scale for advertisers. As savvy marketers rethink their approach to planning, buying and measuring advertising, the winners will be those that can aggregate video scale across many platforms to reach viewers anywhere they choose to consume content.
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