TV Advertising Makes a Resurgence Through OTT

As our beloved TV programming returns this fall, all across America people will gather to take in their long-awaited show or root on their favorite team. This was true five years ago, 10 years ago and 20 years ago — but something is very different. Cord-cutting is going mainstream, with more and more consumers opting for internet-delivered TV through connected (CTVs) and smart TVs — both presenting new, exciting opportunities for brands.

It has not yet hit the tipping point, but make no mistake, it soon will. When it does, many valuable eyeballs will be focused on over-the-top (OTT) advertising content, and brand marketers must begin anticipating how they will utilize the technology now, if they aren’t utilizing OTT already. Like mobile video before it, OTT is exploding with premium content and is becoming more and more attractive to marketers who want to find their audience.

Pre-roll OTT video — mostly repurposed traditional TV spots — is currently the most common content on CTVs. But OTT technology puts a sharper arrow in the marketer’s quiver in the ability to speak directly to consumers with personalized and interactive video content that includes features like overlays, branded microsites, additional videos, image galleries and more. Consumers know very well how to use their remote. Why shouldn’t they be able to use it to engage with premium content delivered by an advertiser?

With an ample supply of data on consumer viewing habits flowing from CTV platforms, marketers can design creative campaigns around individual preferences and have a one-on-one conversation with potential customers.

But does personalization drive purchase? Research suggests that it does. According to Innovid’s 2017 Global Video Benchmark Report, interactive video significantly outperforms pre-roll video across all KPIs, including completion rate, time earned and user activity.

Advertising Isn’t Dead — But Guesswork Is
Before the era of Big Data, marketing research came in the form of focus groups, Nielsen ratings, and randomized surveys. While these methods were considered statistically sound (to a degree), they left much on the table in terms of personalization. The goal with traditional TV advertising was to identify a particular demographic, then create content that would ostensibly engage a large portion of that demographic. It was, in essence, hopeful guesswork. And while it was the most efficient approach for many years, much of the content missed its intended target.

With OTT, marketers can target individuals directly, and serve up content that is fully informed by a treasure trove of data that goes far behind viewing habits and basic demographics. Marketers who are deploying custom interactive ads — which engage the viewer within the ad itself and encourage click-through to a website or additional ad — are driving more value and yielding higher benchmarks across the board over standard pre-roll video ads, earning a 561% lift in total user activity over standard pre-roll campaigns.

Creative informed by data represents an incredible opportunity for marketers as OTT continues to grow. With traditional TV advertising, performance was a difficult metric to nail down. Does spending millions on a 30-second spot during the Super Bowl bring return on investment? We know that it provides visibility, but it can be tougher to attribute an uptick in sales directly to a single TV spot. With OTT advertising, marketers can measure performance in real time and adjust content and tactics as necessary.

The Cord Cutters Are Comin
Cable-based television remains strong, but the tide is turning towards OTT. 56 percent of U.S. households are now “connected” with CTV and smart TVs. The majority of new televisions sold include internet-connected features, which is helping to pave the way for a massive shift to OTT. The early adopters of cord-cutting are those under 30 years old, and represent a growing portion of the most important demographic to advertisers — the vaunted 18-54 range. Cord-cutting is growing steadily, and looks to continue to grow for the foreseeable future.

Cord-cutting has not yet reached the tipping point, not because customers are unwilling to adapt new technology, but because content providers and distributers have yet to solve the revenue model. The early entrants into OTT — Netflix, Hulu and Amazon Prime TV — led the first wave of cord-cutters by offering massive amounts of content for a low price (around $10 per month). Other a la carte services, including premiums like HBO and Showtime — have popped up in their wake, offering genre-specific content for a nominal fee. Live TV, including sports, and the cable bundle model of content delivery has impeded a full move to OTT.

The consumer expectation (a la carte programming at a lower total cost) and the current model (bundled content that includes unwanted channels at a higher cost) remain at odds. But change is coming. Three of the four major sports leagues already offer OTT broadcast packages (NBA, NHL, MLB) and the NFL — who has already experimented with OTT broadcasts on Yahoo and Twitter platforms — will surely revisit its approach at the expiration of its deal with DirecTV.

While content providers have not yet zeroed in on a model that works for everyone, the move towards OTT television is inevitable. This is good news for marketers. OTT advertising opens up a whole new world in which marketers are armed with information and delivery channels they could only dream of 20 years ago. Oft scrutinized marketing budgets will be able to prove ROI. Advanced creative options will allow for big new ideas. And most importantly, marketers will be able to expand engagement time with consumers, and move them through the funnel from the comfort of their own home.

Beth-Ann Eason is president of video marketing platform Innovid.