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 — and 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 that 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?
The transformation of TV is happening faster than many anticipated. OTT (over-the-top) viewing is growing exponentially. It’s now the dominant platform for premium video viewing. While advertisers know they must be there, many are still asking: Is it a broadcast or a digital buy?
It’s time we look at OTT advertising differently.
In this golden age of TV, where consumers have more quality content options than ever, they’re embracing the speed at which TV is moving to the Internet, especially if it’s ad-funded and free.
eMarketer estimates there are 193.3 million OTT users in 2017, with 168.1 million U.S. connected TV users. The rise of OTT comes at a time when cable is seeing continuing declines as another million consumers cut the TV cord last quarter, per a DSL Report.
Audience fragmentation across devices and screens is accelerating; according to comScore, the average household has 10 connected devices, and that figure rises to 19 devices among households with at least four people. Every major TV player is adjusting to this phenomenon by moving quickly to launch or announce plans for standalone Internet TV services.
How should marketers navigate the rapidly evolving and fragmented OTT space and reap its full potential?
By any measure, media transparency remains the hot-button issue for advertisers today. Beyond voicing their concerns, we’ve seen two of the world’s largest advertisers pull back their digital ad spending. Both P&G and Unilever are putting their money where their mouths are, with P&G cutting spending by 41% year over year and Unilever doing the same by a whopping 59%.
At this year’s Cannes Lions, media industry leaders convened to address the ways they are working to improve transparency, and we saw Ebiquity launch its Media Transparency Score at the event in the hopes of becoming one of the standard benchmarks for the industry.
At this year’s NAB, I hosted a panel session with fellow panelists Raoul Marinescu, Head of Sales at Pluto TV; Adam Helfgott, CEO of MadHive; Giancarlo Maniaci, CEO at ColorTV and David Haynie, CEO at CitySpark. Stacy Huggins, CMO of MadHive moderated the panel.
The session explored the future of over-the-top (OTT) advertising and what it takes to shift more ad dollars to OTT, how to monetize content, how to meet customer expectations and the importance of data in AdvancedTV experiences.
Here are the five key takeaways from our thought-provoking discussion:
Education is the biggest barrier right now for OTT
Some refer to OTT as only video that is delivered by a streaming device through a television rather than content that is streamed through a tablet or a smartphone. Some agencies refer to OTT video as AdvancedTV, whether it’s short form or long form. Some even lump OTT into Cable VOD, which are clearly two different offerings targeting different audiences. Although OTT viewership is growing rapidly, there are differences of opinion about it. At Premion, we define it as premium, long-form episodic streaming video outside of a cable subscription. We also access our inventory through direct partnerships while others source from exchanges.
Furthermore, a number of agencies are still grappling to figure out where OTT lives within their own internal structures. In some instances, we see the buying coming out of TV while others treat it as digital. With greater education and investment in OTT digital capabilities, we hope to see it own its own place inside of agencies.
Improve content discovery and curate local experiences for consumers
The good news for consumers is that with streaming OTT apps, you can pretty much watch whatever content you want, whenever you want. The bad news is the experience in trying to find it. We are seeing the rollout of enhanced content discovery features such as voice-activated search that’s helping to improve the consumer experience.
Giancarlo Maniaci at ColorTV pointed out that aside from making sure that you are driving traffic to content properties, customer retention is key and it requires constantly curating content to deliver a more personalized experience for the consumer.
For CitySpark, David Haynie highlighted the opportunities to curate highly relevant, local experiences for OTT audiences. CitySpark can match up content based on what users are watching. For example, if someone is watching a rock-climbing show, they can be served up hyper-local rock-climbing events in the area.
Frequency capping is the industry’s dirty little secret
Our panelists agree that cross-network frequency capping is an important issue that needs fixing, as it remains one of the biggest annoyances for OTT viewers today.
MadHive’s Adam Helfgott says that, “frequency capping is an inventory problem as the same inventory is being made available across multiple providers. While it may be frequency capped on one platform, it’s difficult to know if the same ad is capped on a second platform.” MadHive is working on a meta-data open data management platform to better track and solve this issue.
Need to standardize OTT media buying
To shift more ad dollars and to simplify the OTT media-buying experience requires our industry to come up with and agree on new standards. Raoul Marinescu shared that for Pluto TV, standardization is a top-of-mind issue and right now transactions could be device specific or on Pluto TV’s platform.
To address this issue, we need to build standard audience segments that are portable across the ‘walled gardens’ of OTT providers, but this is a huge undertaking and it will take the cooperation of many to solve this.
Data is the lifeblood for OTT’s future
For OTT advertising to scale, we need to invest more in data, advanced targeting and measurement solutions.
Our panelists shared excitement for the future of OTT, in which there would be a centralized way to target and marry data sources together to have proper attribution back to each data source. Programmatic, data-driven IP-delivered advertising is another way to achieve the long-tail scale needed.
At Premion, targeting is the lifeblood of our business. We deal with local and regional advertisers and they depend on having quality data so they can spend their ad dollars wisely. And they need lots of inventory to scale a campaign that moves the needle.
While it’s still early days for OTT advertising, we are collaborating with our partners to find new ways to address frequency capping across networks, improve standardization and deliver enhanced targeting and engagement vehicles.
By leveraging what we’ve learned from our past and collective experiences, we are helping the industry make sense of it all and drive OTT forward.
To drive the growth engine in today’s fast-changing world, CMOs must keep pace of the rapidly evolving channels and technologies to engage audiences that are multiplying at a lightning pace across platforms and devices. Forward-looking CMOs are paying greater attention to the rise of over-the-top (OTT) audiences, which has emerged as the fastest-growing segment of video advertising views.
TV viewing has entered its sixth evolution with OTT
In our ‘place-shifting’ era, consumers pick a device, connect to the Internet and consume OTT content anywhere and at anytime they choose. According to The Diffusion Group (TDG), 78 percent of households have OTT subscriptions and they’re spending more time watching OTT than ever before.
NBC’s latest announcement to expand OTT with local affiliates further validates the ‘mainstreaming’ of OTT. Another study by Level 3 suggests that within the next five years, viewership hours of live-linear streaming OTT video could surpass those of traditional broadcast TV.
According to Nielsen, more than 60 percent of OTT viewers prefer to watch long-form and live-streaming content on a big screen. And it’s not just millennials. More than 60 percent of OTT viewers are age 25 to 54 years old – that’s more than 90 million viewers (source: eMarketer).
While consumers are clearly spending more time watching OTT, advertising on OTT is still a new, emerging frontier. So how can marketers keep up and make sense of it all?
OTT offers untapped potential but it’s highly fragmented
OTT blends the attribution of TV advertising with digital media’s precision, but it’s still the Wild West. OTT advertising is highly fragmented; some OTT ad inventory is sold as part of big upfront TV packages alongside traditional cable and broadcast ad time. Some inventory is sold by OTT service providers and platforms like Sling or Roku. And in some cases, these ads are purchased through ad tech middlemen, or programmatically.
So what does it take to shift more ad dollars to OTT advertising? It begins with helping advertisers and marketers navigate the highly fragmented space through a simplified buying process for OTT.
Our roadmap for effective, simplified OTT media buying
Don’t limit your reach – To effectively reach the rapidly growing local and regional audiences that are no longer viewing traditional linear TV requires working with many OTT providers. You can get rid of the fragmentation headache by picking a partner that will streamline your media buy across multiple OTT providers and platforms in one seamless transaction.
Reach premium audiences at scale – Reaching premium audiences is the best approach for brand safety and we should make it easy for advertisers to buy premium media at scale. Buying ad inventory on premium content on OTT platforms such as Premion addresses brand safety, viewability and fraud. You want to ensure that your ads run on trusted networks with authenticated viewers.
Expect transparency – Take control of your brand and work with partners who can provide you with the confidence to know exactly where your ads will appear. While some providers tout low CPMs, they are adding a significant amount of short-form advertising products into the mix, including user-generated content, to keep costs down. If you want brand-safe long-form premium content, be wary and ask questions.
These are exciting times for OTT — both for consumers and marketers. Consumers have much more TV viewing choice and control. And marketers that leverage smart OTT buying strategies in their media plans will reach more engaged and relevant audiences.