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FreeWheel Report Calls OTT Better Form of TV Advertising

Moving to increasingly digital delivery systems could be good for television advertising, according to a new report on over-the-top viewing.

Ad-tech company FreeWheel, owned by Comcast, finds that people who watch TV on over-the-top platforms are engaged with the programming and with the advertising that runs there. Rather than zipping and zapping, OTT viewers complete 98% of the video ads they’re served.

Those viewers are also younger than viewers on traditional broadcast and cable platforms, which means OTT helps advertisers reach the coveted millennial viewers that are eluding them as linear ratings erode.

“The rise of video consumption in the living room through OTT devices provides great opportunities for advertisers—new sources of premium inventory coupled with the ability to align delivery with changing consumption habits allows us to better connect with the consumer and ultimately drive more brand value for our clients," said Jon Anselmo, chief digital officer and president at Omnicom Media Group, who is quoted in the report. “A focus on this area now ensures our clients are ready for a future that one could argue is already here.”

OTT delivers audiences that many advertisers would pay a premium to reach, the report said. According to an analysis of Nielsen data, the median age of OTT viewers is 31, compared to a median age of 54 for traditional TV. Median household income for OTT is $61,200 while traditional TV households have income of $51,500.

FreeWheel says that OTT has just topped desktops as the most popular delivery system for digital video, with 56% of the people in the U.S. using an OTT devices at least once a month.

At a time when advertisers are concerned about fraud, viewability and unsuitable content, audiences for OTT video are mostly authenticated by pay-TV operators, ensuring they are living, breathing consumers. The report says that 69% of OTT ad views are on authenticated platforms.

“Many agencies often require the same standards for OTT as for desktop, even though the user experience is inherently different and existing measurement do not scale across these newer services,” the report added. “Videos on OTT devices take up the full screen as they do for linear TV, and devices don’t allow multi-tasking, making it all but impossible for an ad to not be fully viewable.”

According to the report, advertisers are also concerned that when they advertise on OTT, they will get the same viewers they get on traditional TV. But the report found OTT viewing tends to peak at the same times as traditional viewing.

This suggests that viewers are going to replace standard TV viewing and can’t be reached through linear buys alone, the report said. As traditional ratings have dropped, OTT viewing has picked up some of the slack.

“The desirable audiences, engaged viewers, and marketing effectiveness that OTT brings to the table make it an increasingly essential channel for marketers. While barriers remain to opening the floodgates of advertising investment, each member of the premium video ecosystem—buyers, publishers, distributors, tech providers—must do their part to develop and align on standards for transacting OTT,” the report said.

Here are FreeWheel’s suggestions about what programmers can do to increase adoption of OTT advertising:

  • Arm sales teams with knowledge and tools: As the guardians and evangelists of OTT inventory, publishers’ sales teams play a huge role in educating buyers and stimulating demand. But to do that properly, they must have sufficient knowledge about the platform’s benefits and limitations, anticipate an agency’s concerns, and be able to offer creative solutions to address them. Having the right training and understanding of industry best practices in this area will be critical to success.
  • Ensure system integrations are optimized and aligned: Delivering a quality OTT viewing experiencing involves integrating multiple device endpoints with unique specifications and ensuring that a variety of delivery systems effectively communicate with each other. While it’s tempting to integrate with every new Smart TV, sometimes it’s better to focus on optimizing the experience on larger established platforms instead of investing in the marginal incremental reach of newer device models. Additionally, it’s important that publishers make sure all of their systems are configured to get most out of their OTT inventory, including ensuring that key pieces of information are being passed between systems—including the device ID and IP address—to enable richer targeting.
  • Leverage data to maximize inventory value: There’s vast opportunity in selling beyond traditional age & gender on OTT. The ability for advertisers to bring in their target audience lists and find them on these devices puts an immense premium on OTT inventory. Publishers should experiment with new ways of packaging and pricing OTT as well as open it up to safe automated channels where it’s easier for advertisers to incorporate their own data. Additionally, publishers should work with DMPs to define standard audience segments (e.g. based on age, income, location) that they can sell against.
Jon Lafayette
Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.