This month, I attended the IAB Annual Leadership Meeting in Palm Springs, where industry leaders gathered to share perspectives on how brands can compete and thrive in the 21st Century. In particular, the OTT session generated lively discussions to a packed audience of ad agencies, brands and publishers on the implications for a cord-never world.
Here are 5 unequivocal takeaways from the OTT session:
1. Media buyers are prioritizing OTT/CTV in their media plans
The shift is underway with ad agency clients dictating that they want to move more spend from other media segments into OTT/CTVC. As cable subscriptions continue to decline and cord-cutters now making up as much as 58 million U.S. viewers, agencies and advertisers realize that viewers of OTT/CTV now make up a substantial portion of all TV viewing. As such, the smart strategy is to follow the eyeballs with their advertising investment.
2. OTT/CTV is fraud free
Fraud remains a top-of-mind industry issue and the consensus among the panelists and attendees is that OTT offers a definitive fraud free option: a better and safer choice than programmatic. Since OTT is in a subscription environment, where a walled garden environment exists between the viewer and the OTT video player, you have to be authenticated or recognized even on free ad-supported OTT services.
While I’ve attended the annual Consumer Electronics Show for decades, being a media executive attendee this year felt different as so many consumer electronics are increasingly dependent on content, video and associated advertising. This year, I had the opportunity to meet with C-Suite executives, advertisers, agencies and publishers, and the hot topics centered around monetization models for publishers and the future of targeting consumers with ads. Based on my discussions, here are three predictions to watch for 2018.
The dramatic shift in media viewing habits present real challenges for traditional local DMA media buyers. Media buyers and planners need to get acclimated on the OTT landscape to effectively reach the right audiences on these new distribution platforms.
Last month, I joined industry peers from Google, Nielsen, Comcast and MediaOcean in a lively panel talk on the future of television advertising at the Next TV Summit in New York. Our industry is transforming quickly and there’s one common theme that our panelists agreed on: television advertising is getting redefined every day.
Audience fragmentation is accelerating in our ‘place-shifting era,’ where people consume content anywhere, anytime and across multiple devices. In turn, advertisers are grappling with how best to reach and meet changing consumer expectations.
So how can advertisers reach their right audiences and create more effective campaigns in our fast-changing TV landscape?
This month, I participated in panel discussions at CableFax’s TV Innovation Summit and the Next TV Summit. At both events, industry leaders convened to share perspectives on our fast-evolving TV landscape. The common discussion theme at both events is that linear TV is still a huge business but the pace of OTT is growing much faster than many anticipated.
In fact, OTT now leads the way in terms of online ad view share, according to a new report from FreeWheel. The report cites that advertising view composition and growth on OTT devices surged 45% year-on-year and it notes that OTT has ballooned from 2% to 32% in a four-year period with heavier investment by publishers and programmers.
Amid the excitement for our transforming TV industry, there is still more education and investment needed to build out advanced capabilities for OTT to truly scale.
Let’s start with how we define OTT. Our industry uses various terms to describe the targeting of a video advertisement to someone watching TV over the Internet. Is it OTT, cord-cutters or Connected TV? While all three terms are correct and used interchangeably, they have subtle differences.
OTT or Over-the-Top is an FCC term that refers to how consumers receive their primary video signal meaning that it’s ‘over the top of the cable/MVPD plant.’
Cord-cutters is an industry term used to describe consumers who once were cable subscriber and now have decided to get their primary video signal(s) via the Internet, so they have ‘cut the cable cord.’ And according to Moffett Nathanson analyst Craig Moffett, cord cutters spoke loudly in the first quarter cutting 762,000 cable subscriptions.
Connected TV is more of technical term used by advertisers, content owners and video ad serving companies to define ads that run on smart TVs or Internet-enabled devices that deliver TV programming and advertising.
So while there’s no right definition, there is a right path forward for driving growth in OTT. Here’s what to watch for in the advancement of OTT advertising.
IP delivery of advertising offers greater opportunities for targeting – IP delivery of content is increasing exponentially, which means that the ability to have digital-like targeting via IP delivered ads is going to increase. Both Nielsen and comScore are actively working on their measurements in this new world. Unlike digital advertising, the key difference is that Connected TVs do not have cookies. This means that the targeting must be done via tags to IP addresses.
Solving the complexity for advertisers to reach cord-cutters in local DMAs – The increasing fragmentation of media and our OTT networks makes it hard for advertisers to reach the right local audiences. There needs to be a simpler way for aggregating disparate OTT inventory in local DMAs. We are helping to address this issue at Premion with our demand-side OTT ad platform. We’ve aggregated OTT ad inventory from leading OTT providers and top content owners and we’re offering this in local DMAs to advertisers.
Ad supported OTT services are growing and thriving – The future of television will be over the Internet and it will be ad-supported. With more premium video content being made widely available across platforms, more ads are being served through Connected TV apps and OTT devices. Just look at the growth of Sony’s Crackle or TubiTV, which recently touted that its audience grew by a 9x growth rate in monthly active users in 2016.
OTT is clearly solidifying its position with advertisers in their media plans. We are excited to be collaborating with our partners to lead the industry forward. We’re investing in new capabilities to improve standardization and deliver advanced targeting and engagement for our advertisers.