2017 saw tremendous consumer growth in streaming TV services and 2018 is set to be even bigger. This year, eMarketer estimates that 181.5 million U.S. consumers will use connected TVs at least once every month — equating to more than 55% of the U.S. population. By 2021, that number will expand to 194.4 million, which is almost 58% of the population.
Let’s begin with a basic definition of OTT video (over-the-top): OTT video is video transmitted via the internet and bypasses traditional cable/linear distribution. While it can either be ad-supported or subscription-based, at Premion, we consider true OTT to be long-form and live streaming premium content such as network programming, TV shows and movies.
The pace of digital disruption that is transforming the TV industry is accelerating: the growth in IP-delivered TV content is reshaping distribution models, consumer viewing habits, and advertising. Every major TV operator has launched or is in the midst of launching and scaling up their direct-to-consumer streaming offerings.
Consumers now have more choice than ever — from DirectTV Now, FuboTV (a Premion partner), Sling TV (a Premion partner), PlayStation Vue and YouTube TV, to name just a few. Philo is another recent entrant that offers 30-plus entertainment channels. Disney has plans to launch two streaming services and may develop even more following its 21st Century Fox deal.
With many media and content companies jumping on the streaming TV bandwagon, the marketplace is becoming increasingly fragmented, and it’s creating even more competition for high-quality content to keep viewers hooked: Already there are over 200 OTT services in the U.S. market, according to Parks Associates.
What can we expect in 2018 with the rise in streaming services and OTT advertising growth? Here are three developments to watch:
Growth In OTT Advertising
Savvy advertisers are following the exponential OTT audience growth and our industry has made significant strides in the past year with OTT targeting, personalization, measurement, and engagement. Today, OTT delivers the best of TV with the capability to precisely target viewers down to the ZIP code level, and use factors like demographics, lifestyle and interests.
More advanced analytics tools are enabling advertisers to target the right audience, buy the highest quality inventory, and measure OTT campaign results more effectively. While not all OTT impressions are created equal, marketers and agencies are becoming better educated, understanding the nuances and differences in value between buying directly sourced, premium OTT inventory and buying from an exchange at a lower CPM and having to sacrifice transparency, quality, and brand safety.
Richer Targeting And New Innovations In Data Management Platforms (DMPs)
Our industry is investing in new capabilities for targeting users through a device ID that allows advertisers to leverage their first-party data or a data management platform (DMP) to reach its identified audiences. Unlike digital advertising, the key difference is that Connected TVs do not have cookies.
This means that OTT targeting must be done via tags to IP addresses. IP delivery of content is accelerating which in turn creates greater opportunities for targeting with IP-delivered advertising that have digital qualities. Watch for connected TV providers to use DMPs to create tags that can track ad impressions down to the individual level and know exactly where their impressions landed, in what content, at what time and at what IP address.
Improving The OTT Consumer Experience
Consumers are spending more time binge-watching on streaming services. They also expect greater personalization and to engage in fewer, but more relevant ads. However, it’s still common for a viewer on an ad-supported OTT app to be served the same ad multiple times in the same pod or in the same viewing session, resulting in a poor consumer experience.
As such, frequency capping across networks — the ability to restrict the number of times a viewer is shown a particular ad — is a problem that needs solving in 2018. It’s one of the biggest gripes for streaming audiences today and fixing this is an imperative for our industry to improve the OTT consumer experience.
Today, frequency capping is an inventory issue as multiple providers are offering the same inventory; even though ad inventory could be capped on one platform, it’s hard to decipher if the same advertising is frequency capped on another platform. One of the ways to solve for this is with an open DMP which is what MadHive, a company we’ve been working with, is doing. MadHive tracks and solves this with the use of device ID tags and their meta-data DMP. Furthermore, it can provide the ability to fix frequency capping at the device level with publishers. FreeWheel offers another solution, using its ad server to help publishers manage their ad pods and prevent the same ad from playing back to back.
While the speed of disruption, the emergence of new technologies and media consolidation will likely bring greater unpredictability to 2018, one trend that’s certain is that TV is moving faster to the internet. This year, we look forward to greater collaboration among our industry to invest in richer data and measurement capabilities and new technologies to enhance the consumer experience and improve standardization to drive greater progress in OTT advertising.
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