We’ve now reached an inflection point with streaming TV advertising. While the shift toward cord-cutting and streaming was well underway, the surge in streaming audiences during the pandemic has forever changed TV viewing habits. And as streaming growth spiked, so did the proliferation of ad-supported OTT (over-the-top) services and platforms — bringing more media buying options and more complexity for marketers to navigate.
By every measure, streaming TV saw astronomical growth. Connected TV (CTV) and over-the-top (OTT) have become the fastest-growing advertising channels — and we’re now beginning to close the gap between viewership and advertising spend. CTV continues to outpace other formats, and shows no signs of slowing down, according to IAB’s Video Ad Spend 2020 and Outlook for 2021 report, which finds that nearly three-quarters (73%) of CTV buyers plan to shift budget from broadcast and cable to CTV in 2021; advertisers, on average, spent $20 million on CTV in 2020; and more than one-third (35%) of buyers expect to increase CTV video ad spending in 2021. Moreover, eMarketer projects that U.S. CTV upfront spending will double to $4.5 billion this year and $6 billion in 2022, with overall CTV ad spending hitting $13.4 billion this year and $21.4 billion by 2023.
Consumers have embraced ad-supported OTT and ad-based video-on-demand (AVOD) offerings in a major way. In fact, 76% of those who regularly stream video have watched ad-supported OTT, according to IAB. The major media owners are investing significantly in free ad-supported television (FAST) services, such as Tubi (Fox), Pluto TV (ViacomCBS) and Xumo (Comcast), and an ad-supported HBO Max just launched in June joining recent entrants, Peacock, Discovery Plus and Paramount Plus. As such, the U.S. is expected to triple AVOD revenues by 2025, reaching $24 billion, according to Digital TV Research.
As marketers attempt to make sense of the growing array of CTV and OTT advertising options available across many different streaming platforms, the priority should be on understanding the nuances of buying direct versus working with premium aggregators, the role of attribution and the differences in the valuation of impressions between OTT and linear TV. Amidst the increasing fragmentation, it’s important to consider the structural differences between sellers when it comes to inventory quality, targeting, frequency management and measurement approaches.
With that in mind, here are three prevailing buying myths surrounding CTV/OTT advertising and how marketers can navigate them for the post-pandemic era.
Myth 1: Buying directly from a publisher is efficient for local OTT
While there are perceived benefits of buying directly from a publisher, such as content control and delivery prioritization, a media buyer would need to work directly with many publishers to achieve the necessary scale to reach their desired audience. As such, a brand or agency ends up making disparate buys with many walled gardens. Beyond the issue of crossplatform frequency management and reach limitations beyond their subscribers, delivery pacing becomes a continuous challenge. Rebalancing underdelivered impressions between publishers is time consuming and often unachievable mid-flight with multimarket local campaigns.
A more effective approach is to work with a trusted aggregator that has curated many direct connections to premium and prioritized inventory to achieve the advantages of reach and scale. Agencies and marketers need to achieve audience scale for targeting, ensure proper frequency capping and consolidate reporting under one dashboard. More importantly, focusing on trusted providers with established premium content relationships ensures campaigns run in brand-safe and fraud-free environments.
Furthermore, as the OTT ecosystem becomes increasingly crowded, it’s important to vet providers thoroughly, as there are some aggregators that may claim to have premium content and prioritized reach. Instead, they may, in fact, be bidding on remnant inventory from open exchanges where there is little control over where ads may run — and thus presents greater brand safety and transparency risks.
Myth 2: Only performance marketers need attribution
While CTV and OTT have become proven customer acquisition and brand-building channels, there’s a misperception that only performance marketers need attribution. Beyond video completion rates as a key metric of success, the advent of closed-loop attribution capabilities allows advertisers to connect CTV and OTT viewership to direct business results. This could be as granular as running a quick-serve restaurant ad on CTV and then determining how many people visited the restaurant or website after viewing an ad, or an auto dealer matching the outcome of a campaign with verified car sales.
For advertisers solely focused on driving brand awareness, having outcome metrics such as website or in-store traffic can offer real-time feedback on creative responsiveness. Since a brand can run multiple pieces of ad creative in different markets, they can determine campaign creative effectiveness, as well as audience engagement, by geography. Marketers are now A-B testing approaches with audiences and creatives to reach maximum awareness.
Attribution insights can also be used to measure brand favorability and purchase intent. For instance, we conducted a brand lift study for a leading home furnishings retailer that measured the impact of our OTT campaign on consumers’ attitudes toward the brand. The study revealed that adults aged 25-54 reached by the campaign were three times more likely to be aware of the brand and almost half would consider purchasing furniture from the retailer after exposure to the campaign.
Myth 3: The shift to impressions-based buying puts local TV on par with OTT
While media buying is largely moving from linear gross rating points (GRPs) to impressions, measurement systems are still catching up to the emerging impression-based ecosystem. With the shift to impression-based buying in local TV, it’s important to understand how the valuation has changed. Today, not all impressions are created equal since inventory environments may differ. CTV and OTT offer higher value impressions as it’s not just about audience desirability but the value of audience engagement.
As such, marketers should consider the differences between OTT and linear TV in the specifications that go into the valuation of impressions. For instance, most co-viewing of CTV is not always calculated, ads are non-skippable in OTT, length of ad breaks are shorter in OTT and OTT measurement is based on ad server measurement of delivery and not probabilistic panels. Furthermore, OTT audiences are not passive channel surfers but are highly engaged viewers watching on-demand content. As advertisers increasingly combine OTT and local TV buys to extend their reach, the adoption of impression-based metrics will further accelerate the effective measurement and optimization for crossplatform campaigns.
As ad dollars follow the consumer, streaming TV is now entrenched as an essential marketing channel. With the continued proliferation of OTT services and platforms, and to overcome the prevailing buying myths, marketers should partner with trusted aggregators that deliver brand-safe premium content, local audience targeting at scale and outcomes-based measurement for long-term advertising success.
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Justin Gutschmidt is head of national sales for Premion, a connected TV/over-the-top advertising platform for regional and local advertisers owned by Tegna.