I saw this article last month by Korena Keys around the evolution of TV viewing habits and why she believes the shift from linear TV to an on-demand model is positive for advertisers. Ultimately, Keys’ take on OTT as an advertising channel in 2020 is intuitive and one I would like to dissect further.
Advanced Targeting Capabilities:
- The most obvious value ad for TV viewing habits shifting to an on-demand model is advertisers’ ability to target their audience more granularly (demo, interest, behavioral, pod selection, the list goes on). With the on-demand model, we can layer data segments and programmatically serve TV advertisements through an impression model. This is a massive swing in the pugilism for TV buying where traditionally, national buyers would buy TV spots based on guaranteed GRPs and the cable/broadcast companies would serve the advert to everyone who tuned in… if the show didn’t produce the guaranteed GRPs for their demo, the advertiser would get free advertisements into the next show until the GRPs were fulfilled by the publisher.
- While Keys doesn’t directly mention anything about publishers, the on-demand model also favors TV publishers (in the long term) as they can optimize their inventory and allow advertisers to activate on audiences with little wasted viewing consumption. The live TV model led itself to a lot of GRPs that weren’t monetized as they couldn’t predict who would tune in, but with the on-demand model, publishers can put all of their inventory into the auction and allow advertisers to bid programmatically as soon as the audience tunes in.
- A point Key’s brought up that I hadn’t previously thought about is the reduction in fraudulent impressions by leveraging OTT in the current system. The value ad, here, is in comparison to the current landscape of programmatic display and video where advertisers currently spend billions of dollars/year on fraudulent impressions (projected to surpass $50B in fraud ad spend by 2024). With the current landscape of OTT, most networks have to directly connect to publishers’ private marketplace to gain access to OTT inventory (at least high-quality inventory). This encourages the networks to vet the inventory source as inventory is usually constrained making the audiences more expensive. Keys’ is essentially making the argument that because inventory is only available in closed networks it increases the price and maintains the integrity of the audience available through programmatic channels. I would also argue the reductions in fraud could also be correlated to the fact that a lot of the on-demand TV viewing sources require some sort of membership to view their content (TV subscriptions, paid subscriptions, or account registration wall), ultimately reducing bot consumption/impressions.
- The last point Keys makes is on how on-demand will bridge the gap between the historical segregation of TV buying and digital buying. They used to be completely different channels that required completely different tactics with little to no overlap in measurements. With OTT inventory available on the programmatic exchanges, it allows advertisers to, as Keys’ puts it, ‘ [to] better understand how audiences are interacting and responding to [they’re] commercial content…[they] know what percentage of their ad is actually being viewed by their target audience.’ It ultimately gives advertisers valuable information to make sweeping optimizations in real-time to improve the efficiency of their ad spend, across ALL marketing channels.
- OTT and the on-demand viewing model will prove extremely valuable for advertisers, publishers, and the audience alike. However, even with all the technological advances that make OTT so appealing in 2020, mostly around attribution/conversion reporting, I implore you to remember why advertising on TV content is and has been so appealing to advertisers for the past century – Branding. I fear that as the lines blur between video channels (i.e. in-banner video vs an engaging 30-sec tv spot), the industry will un-intentionally degrade the value of OTT and TV advertising through thoughtless ad buying and creatives that don’t resonate well with that channel. Before you add OTT to your advertiser’s media mix, ask yourself:
- Creative: does their creative work in a TV viewing setting? Sound on? 30-60seconds? High quality? Showcase their brand proposition?
- Their current Mix: Does OTT make sense with their current goal? If they are very budget sensitive, OTT might not make sense and we can be creative in leveraging other targeted branding tactics that are less expensive (OTT will most likely see prices spike in 2020).
- Holistically, I am excited to watch this channel continue to evolve and seeing the value (and audience access) it can bring to the local market.
Thanks for reading.
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