Editor’s Note: This article originally appeared on BroadcastingCable.com.
2019 is shaping up to be a monumental year for ad-supported streaming over-the-top (OTT) services with Viacom’s acquisition of Pluto TV, Amazon’s IMDb Freedive and NBCUniversal entering the fray. Pure-play OTT networks, such as MLB.TV, Xumo and Tubi TV, are already gaining significant traction with attracting growing audiences in the booming ad-supported OTT market. This beckons the question: how much of the streaming TV future will be ad-supported versus subscription-based?
The expansion in ad-supported streaming services comes amid concerns of subscription fatigue among consumers. In fact, research from Magid indicates that U.S. subscription streaming growth is slowing.
In contrast, consumers that watch ad-supported streaming services are largely incremental to those that watch linear TV, they represent a high-value audience, and they are highly receptive to ads, according to an IAB study. With rising subscription costs and the fact that there’s a limit to how many streaming services consumers are willing to pay for, it’s inevitable that the ad-supported model will prevail.
For advertisers, ad-supported Connected TV (CTV) offers a highly valuable proposition: a brand-safe and fraud-free environment to reach desired audiences across a broad or niche demo range. As such, brands and agencies are moving bigger budgets to this medium. A SteelHouse Survey finds that 78% of marketers plan to buy ad inventory on streaming TV within the next 12 months.
Here are key developments to watch with the growing opportunities in ad-supported streaming:
Convergence of Linear and Connected TV
Since CTV delivers the same highly engaged, lean-back and big screen experience as linear TV, savvy marketers are combining ad-supported CTV with linear TV in their media buys. In fact, a VAB report highlights that viewing an ad on both linear TV and OTT platforms resulted in a two-fold increase in brand favorability and validate that combining linear TV and ad-supported OTT inventory can deliver even stronger campaign results and increased business outcomes for marketers by extending both reach and engagement. This converged CTV and linear media strategy will accelerate as many TV advertisers now consider connected TV as a way to add incremental reach to their linear TV buy.
Furthermore, the proliferation of video experiences across different platforms and devices is triggering broadcasters to review and consider new business models for monetizing their inventory. With broadcasters embracing OTT, we can expect bigger investments in live streaming services, particularly in the world of sports and local news.
With the heightened focus on consumer privacy in the current GDPR era, advertisers come to expect greater transparency across the advertising supply chain. Given the increasing sophistication of brand safety, ad fraud and viewability issues, marketers are moving from the use of third-party data in favor of first-and-second party partnerships.
Trust and transparency are now considered a competitive advantage. Brands and marketers demand accountability in their partnerships and verifiable transparency has become table stakes for doing business. Companies must be held accountable and choosing ethical, trustworthy people aligned with your core values is mission-critical when considering any business relationship.
When it comes to CTV advertising, given the increasing fragmentation and wide disparity in capabilities among advertising providers and video content, it’s imperative that marketers thoroughly vet their partners to ensure that they are buying the highest quality premium video inventory. Defining and setting clear metrics from the onset and having transparent and detailed reporting on campaign results is key for a successful partnership.
Furthermore, the advancement in blockchain and cryptography technologies offers opportunities to bring independently verifiable transparency to the media supply chain, which in turn drives greater trust, as advertisers can be assured that they are getting what they pay for. The AdLedger Consortium is paving the way in driving and implementing global standards to build greater advertising transparency in this area.
Enhanced advertising experience
Finding the right balance of content and ads is vital to improving the viewer experience. As such, we’ll see greater experimentation in testing a variety of ad loads within different content types, screens and audiences, as well as shorter ad formats to address lower attention spans of some viewers on streaming platforms.
The future of CTV advertising offers the opportunity to redesign the experience by leveraging richer data and user-centric ad experiences to incorporate interactivity and e-commerce capabilities within video content. The use of dynamic ad insertions in CTV offers a more personalized advertising experience as a viewer is only served current and relevant ads at their time of viewing. These are just some of the innovations that will make advertising models catch up to the user experience.
As we move quickly towards a fully addressable, ad-supported OTT future with new innovations and as marketers become more sophisticated buyers, the need for trusted partners who are committed to brand safety and provable transparency is critical to our industry’s success.
I’m averaging 5 to 10 phone calls a day with people calling for more information about our school. They say they were searching online and saw our ads — our internet marketing is working very well.
TEGNA has made our business an actual brand, not just a startup. It’s driven people to see we’re a real company with quality products.