Why OTT Is A Rich Opportunity For Advertisers

While traditional TV has long been the gold standard for advertising, audiences continue to flow toward streaming services.

Why OTT Is A Rich Opportunity For Advertisers

by CMO.com Team

Posted on 07-17-2019

While traditional TV has long been the gold standard for advertising, audiences continue to flow toward streaming services: By 2022, eMarketer projects the number of cord-cutters to reach 55.1 million, up from an estimated 39.1 million this year. During the same period, OTT adoption is expected to leap from 170.1 million to 197.7 million. In the past year alone, a flurry of major industry players have announced dramatic mergers, acquisitions, product launches, and big plans, all in response to the inexorable rise of streaming services, smart TVs and other OTT devices.

The move to OTT will be a boon to advertisers in the form of addressable TV advertising, which allows for real-time targeting of custom, complex audiences and for much finer-grained measurement and performance tracking compared to traditional index-based TV buying.

For all the promise of OTT, however, the industry landscape is still taking shape, and navigating this new environment will surely present a learning curve. To reap the benefits of this emerging opportunity, marketers must start familiarizing themselves with OTT advertising’s unique contours and capabilities. The current state of flux inspires lingering skepticism, but the potential upsides far outweigh any risks or uncertainty.

Underscoring this point is a 2019 study from the Video Advertising Bureau, which projects that ad spend on addressable TV will hit $3.3 billion by 2020, a 343% spike since 2016. Even still, the report found, only 15% of advertisers regularly include addressable TV in their ad buys to date.

That’s despite mounting evidence that investments in OTT pack a strong ROI punch. Premium video ads on OTT achieved a 98% completion rate, according to a FreeWheel report, outperforming tablets, smartphones, and desktop. OTT ads also provided a greater boost to brand awareness and favorability than ads on desktop and mobile.

Not only does OTT offer a highly engaged audience, but it also provides an effective medium to drive performance. Mobile measurement platforms (MMPs) and OTT providers have begun to offer tools that allow OTT app marketers to attribute app installs, registrations, and session data to OTT ads. Moreover, the availability of clickable display ad formats on platforms such as Roku and Amazon Fire TV offers a direct-response mechanism that yields lower acquisition costs than traditional video ads.

While OTT is ripe with opportunities, it also poses a clear set of challenges. Prominent among them is scale, which can be particularly difficult to achieve when implementing addressable advertising campaigns. Measurement, meanwhile, is the holy grail of OTT, and it’s far from the easiest nut to crack. Traditional TV has the Nielsen system, but there’s no single, all-encompassing tracking system for OTT. Although OTT offers the potential for more granular attribution, measurement offerings are still fragmented and inconsistent among OTT platforms, MMPs, publishers, and various third parties.

But as more viewers cut their cords and opt for OTT viewing, the incentive to overcome these challenges will only intensify. In the meantime, advertisers seeking to navigate the new waters of OTT and maximize ROI stand to benefit from building relationships with programmatic partners that can match key audiences with advertisers’ content.

As more players enter the OTT space in the near-to-medium term, those that make the investment now will be positioning themselves for greater impact and success. TV’s gates have finally opened, and while this will inevitably lead to a more crowded marketplace, those that get the formula right–and commit to OTT before it’s part of every marketing department’s budget–have a unique opportunity to stand out in this brave new world.

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