According to a report published by eMarketer, investments in CTV grew by 40.6% in 2020 and will continue to accelerate in 2021 as spending reaches USD 13.41 billion. Advertising streaming in the US is also predicted to almost double in 2024 with a spending of 24.76 billion. MordorIntelligence also reported that the over-the-top (OTT) market valued at USD 101.42 billion in 2020, is expected to reach USD 223.07 billion by 2026; recording a compound annual growth rate of 13.87%.
Photo Credit: www.eMarketer.com
Within the US itself, 64 million homes have adopted OTT services, garnering an average home viewing duration to 86 hours of OTT content per month. This clearly marks that the era of cable television and TV commercials is on a decline. Streaming media is what the viewers want. It is the new way of watching TV and video content.
The overall convenience and reach of OTT advertising as compared to traditional TV ads is just hard to beat, and let’s not forget the on-demand contents with more exciting and dynamic contents. The constant developments of these technologies are accelerating their exponential growth.
What is OTT Advertising?
OTT is a common term used for gadgets and services that are used to stream videos, ads and other digital content to the television (or computer, smartphones, and tablets/ipads). These devices are known as OTT devices and are the medium through which the streaming process happens. These include:
- Game consoles
- Smart TV
- HDMI sticks (like Amazon Fire TV Stick. Roku, Chromecase)
- Streaming Boxes (like Apple TV, Amazon Fire TV, Samsung Allshare Cast)
- Internet-enabled Smart Blue-ray, etc.
With reports that predict the ad spend to increase multiple times in the next 10 years, advertisers are looking forward to getting good returns in the times to come. And it is through these OTT devices and OTT steaming contents that advertisers are betting on.
What is Connected TV (CTV) Advertising?
Connected TV or CTV in short, refers to televisions which are connected to the Internet either by wired ethernet cable or wirelessly. The two terms (OTT vs. CTV) often appear together like batman and robin as both are intricately linked to each other.
OTT works through all sorts of devices and one of the primary means is via a TV. These days, TV comes ready with the capability to connect to the Internet thereby becoming OTT-ready intrinsically with what is known as smart TVs. In this article, we shall continue to refer to OTT since OTT is more encompassing.
Let us take a quick look at the factors that make OTT a success.
As per recent speculation by eMarketer, the OTT monthly users by the year 2022 is predicted to reach 197.7 million.
The figures in 2018 stand at 170.1 million. The growth is hence predicted to be over 27 million users in 4 years!
Targeting is a big strength of OTT advertising. As opposed to traditional TV advertising, investors can now show their products in targeted geographic areas or to a targeted audience.
Being able to reach a focused group of audience saves resources and increases efficiency.
3. Data analysis
Analytic strength is important to understand how your advertisements are performing. Almost all OTT platforms give data analysis services for their products. Information on types of data, impressions, and their analysis helps in the right targeting of the advertisements.
4. Cost efficiency
Since OTT advertisements are highly efficient in tracking the number of views, there is always flexibility in budgeting. You can not focus on bringing a fixed number of impressions to a select group of audience and at a given budget.
OTT platforms are all about high-quality videos. Most businesses leverage the fact by creating message-based videos and targeting them to a select group of audience.
The cable TV audience is typically classified as:
- Cord Shavers: A group that pays for their Television subscriptions but cut down some of their TV channels and decide to check streaming videos
- Cord Cutters: A group that is totally cut off from TV subscriptions and is totally on streaming services.
- Nevers: A group that hasn’t checked out streaming services or never paid for premium channels.
OTT advertising gives the possibility of reaching out to each of these groups. OTT is hence the only alternative at present for traditional TV advertisements.
OTT Ad Delivery and Insertion
To give you some context, the following sequence of events is usually followed for the purpose of OTT ad delivery:
#1 Create a target audience
To start with, subscription data of users along with other relevant information (like shows watched, preferred categories) is collected and analyzed. This forms the basis of selecting a target audience.
#2 Ads sent to OTT platforms
Once the audience is selected and matched to TV subscriber lists on various OTT platforms, the ads are forwarded and downloaded by OTT agencies.
#3 Display the ads
OTT gadgets are now linked with VAST or VPAID tags.
The results of ad viewing are then produced in reports and analyzed for the advertiser to go through. The data analysis forms the basis of improvement for the campaigns.
OTT delivery is largely dependent on the communication of the platform with the OTT device.
Following are the key techniques used for the insertion of OTT advertisements:
1. CSAI (Client-side ad insertion)
This method involves direct loading of the ads on the OTT box and then displaying them to the audience. While this technique has been used traditionally, there are clearly certain loopholes. Hacking issues are very common when using CSAI ad insertion techniques.
2. SSAI (Smooth Stream ad insertion)
This process involves mixing the ads and the core content which is then streamed to the audience’s gadget in a smooth stream, frame by frame. The technique is fairly effective when dealing with ad-blocking software since the blockers can not distinguish the frames as ads.
SSAI technique stitches the advertisements with the content which makes it free from the gaps that traditional CSAI ads had. There are hence no pauses between advertisements and videos.
Additional features like clickable ads can later be added on the client’s end using certain advanced developments.
Tags Used for Communicating With OTT Devices
OTT advertising makes use of tags to create communication channels with OTT devices like Smart TC, Game consoles, HDMI Sticks, Streaming boxes, etc.
Following are some common tags used:
VAST (Video Ad Serving Template) Tags
VAST is a specification that is developed by IAB for streaming video advertisements.
These are third-party ad tags that are generated by the server for video advertisements. The tags allow video players to connect with ad servers. This allows the advertisers to serve ads into various ad inventories in the vide ad players.
VPAID (Video Player Ad Interface Definition) Tags
These were developed by IAB for the purpose of interaction between ad units and video players. The purpose here is to enable rich interactive in-stream ad experience. VPAID is an upgrade from VAST.
VPAID tags enhance interactions and enable measurements of performance in terms of engaging the audience. Companies these days are preferring VPAID over VAST tagging techniques.
Key Challenges with OTT Advertising
While OTT is the preferred advertising technology in modern times and has multiple advantages over traditional methods, it is not without its challenges. OTT advertising faces the problem of a fragmented industry with a lack of operational standards and guidelines. There are at present more than 200 providers and more platforms are scheduled to be released! With such a large pool of providers with no standardization, it deters smooth implementation. Below are some challenges that arise from this:
- Lack of standardized identifiers OTT faces the challenge of an absence of standardized identifiers which can consistently advertise relevant advertisements to a specific viewer. Without a universal standard for device identification, targeting and frequency management tools that rely on persistent identifiers, such as frequency capping, become ineffective in delivering relevant advertisements. The lack of features like flash and cookie support limits targeting and attributing conversations. Marketers cannot be sure if the ad is viewed by the right user they intend to target. Identifying audiences across devices and platform is a huge difficulty in this space. Furthermore, the behaviour of multi-tasking between devices, makes the situation more complicated when users respond to a OTT Ad by searching with another device.
- Lack of TransparencyWith the absence of a universal identifier, both the platform and device will provide different IDs. This way, marketers are aware of the service they are buying from but will not know the audience they reached and how often they are reaching them.
- Campaign Measurement Metrics While OTT measurements have improved in the last year, there’s more that needs to be done. Most OTT platforms still fail to report the channel that an ad ran on. Moreover, as aforementioned, the obscurity of targetting and attribution make OTT’s campaign metrics superficial. This drawback is one of the main reasons for key agencies to choose direct advertising over a programmatic approach.
- Tags incompatibility Not all tags on all platforms find compatibility with OTT which creates discrepancies.
- Vulnerability to fraudulent behaviour There is also a serious lack of trust and confidence in the OTT advertising. The demand for OTT inventory is increasing exponentially, and for this reason, the industry has also attracted fraudsters to exploit loopholes and vulnerabilities in this space. In OTT/CTV, server-side ad insertions (SSAI) is the dominant way to deliver ads. However, it is hard to detect the authenticity of traffic as fraudsters have used SSAI servers to generate fake traffic and impressions. A report states that over 20% of the OTT inventory has frauds. With more and more OTT services entering the market, tracking the frauds is a big challenge.Hence, it is critical to find a reliable advertising partner that seeks to eradicate fraudulent activities and support brand safety. Leading organizations like Knorex in collaboration with Pixalate have come up with “fraud protection techniques that are dedicated to helping clients confidently capitalize on the OTT/CTV opportunity.”
That said, there’s still growing hope in the advertising world for OTT advertising. Advertisers understand the potential and the money that it is bringing. While the technology needs a good number of upgrades, the outlook is very positive. More so with the adoption of IAB standards and frameworks!
Marketing Strategies for OTT/CTV
Go Omni-Channel and Retarget your Audience
Through 2019 to 2021, we saw a surge in time-spent on digital devices due to the pandemic. OTT may have spiked during this time, but other devices have risen in tandem with it. Mobile phone usage escalated and other channels like podcasts have also gained traction. Furthermore, OTT content can be used across multi-devices such as mobile, TV, tablets, desktops and laptops.
Image Credit: www.InsiderIntelligence.com
In spite of its benefits, CTV/OTT advertisements have no clickable CTA. Hence the adoption of an omnichannel approach would help you increase retention rates, improve retargeting and engagement rates. Seeing brands across multiple mediums make them more memorable. Therefore to maximize your CTV/OTT campaign, advertise across channels.
With this strategy, it is important to identify the touchpoints that your audiences are active on and retarget them across various channels like Search, Social Media and audio with relevant ads that include a call-to-action. This would deliver a seamless experience to users and boost actionability and conversion.
Targeting strategies are refined with personalization. Enrich your messages by personalizing them to the nuance of every audience segmentation to keep them engaged and drive conversions. Personalization allows you to match your creatives to where your customers are on the funnel. Retarget your customers with personalized messages can help you eloquently walk these quality leads through the funnel.
Have a robust Dataset
OTT ad personalization runs on first-party data to reach consumers on these devices. Using OTT’s first-party data alongside your audience data and third-party data, you may effectively segment and accurately target your audience more efficiently. Such information provides you with insights that support your decision making and which channel to adopt. Monitor your data and with these results, optimize your measurement strategy and allocate your creatives accordingly.
Programmatic refers to automated buying and selling of advertising inventory through machine learning algorithms. XPO is our cross-channel marketing automation platform powered to unify access across leading marketing channels. Its automated processes allow users to utilize a data-driven approach for audience targetting instead of the traditional spray-and-pray approach used in traditional media. Furthermore, XPO creates a brand-safe environment for your advertisements and actively guards against ad fraud.
The Future of OTT Advertising
Our source of TV entertainment today has evolved with the developments of CTV and OTT. These innovations are fast replacing traditional cable TV. As consumers’ TV and movie viewership increasingly migrate to such these digital platforms, there is a window of opportunity in this area for marketers to develop an effective marketing strategy.
With an elevated time spent and adoption of these developments – especially during the Covid-19 pandemic, marketers today are leveraging the rising demand of CTV/OTT by channelling their digital advertisements there in order to reach a wider audience demographic with targeting capabilities. InsiderIntelligence, a market research company, found that CTV, including OTT devices, saw a spike of 33.8% increase in 2020. Subscriptions to OTT services similarly grew. A study reported that 60% of US marketers are shifting their media budgets into CTV/OTT platforms. Furthermore, advertisements on these platforms would cost much less than traditional TV advertising.
OTT advertising provides huge opportunities and potential despite its current challenges. According to IAB, two iterations of OTT are envisioned.
- The first one allows brands to purchase directly from OTT content providers. They will hence execute the campaign programmatically.
- The second iteration brings forth ad targeting based on viewing information from OTT providers and matching the OTT devices with other devices in the house.
The idea is to optimize a brand’s ad campaign efficiency. Additionally, this will promote the intent-based targeting of ads though privacy regulations may now make it much more challenging.
One thing is for sure, OTT’s share in the advertising market is increasing and is bound to grow more in the years to come. It is still a long way from showing its full potential for the advertisers.
The advertising world is undergoing a major change. With advantages like powerful analytics, strong targeting, flexible budgeting, high-quality creatives, OTT is definitely the next big thing!