Connected TV can help media ride the advertising wave of the future

By Shelley Seale

INMA

Austin, Texas, USA

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Over the past few years, streaming services have exploded and TV viewing habits have continued to change. Ramandeep Ahuja, CTO and co-founder of ZypMedia, summed it up like this: “In the world of TV advertising, 2019 will be remembered as the tipping point between linear broadcast and OTT streaming for TV viewing.”

The analog-to-digital shift has never been more evident than in a chart of data from Borrell. In a Webinar for INMA members on Wednesday, Dan Rensel, director of sales enablement and talent development at Advance Local, presented Borrell’s ad spend predictions for 2021, versus 2020, saying it is data news media publishers can’t ignore.

Dan Rensel of Advance Local shared key insights on OTT and CTV during a Webinar for INMA members.
Dan Rensel of Advance Local shared key insights on OTT and CTV during a Webinar for INMA members.

“We’re looking at a very similar shift of the dollars that are being forecast to shift away from broadcast TV, and the dollars that are forecast to show up to streaming and OTT,” Rensel said.

Connected TV and OTT are platforms broadcasters are either jumping into or figuring out how to jump into, he added.

What is OTT and CTV?

Before diving into the details of this shift and what it means for news publishers, Rensel clarified what the various jargon means.

  • CTV: Connected television.
  • OTT: Over-the-top, meaning serving ads over the top of traditional broadcast.
  • FEP: Full episode player.
  • TVE: Television everywhere.
This hierarchy chart shows the relationships between TV, video, OTT, and CTV.
This hierarchy chart shows the relationships between TV, video, OTT, and CTV.

In essence, OTT is a streaming media service delivered directly to viewers via the Internet, bypassing cable, broadcast TV, and satellite TV platforms. These services, such as Netflix, cut out those traditional providers because viewers don’t need to subscribe to a cable or satellite company to watch the OTT content — including ads.

CTV is any type of television that can be used to stream the OTT video over the Internet. This includes smart TVs, devices such as Roku and Apple TV, and gaming consoles such as Xbox or Nintendo Switch.

“We’ve all experienced it at some time or another,” Rensel said, adding that OTT ads are more likely to be seen on free streaming content.

A user is watching the OTT content, and it breaks to present one or more targeted video ads. These are usually non-skippable, after which the original content resumes: “When we are talking about viewability, it doesn’t get much better than that,” he said.

So how do customers buy those OTT ads, and how much do they cost? That depends on who they want to reach, Rensel said.

“The more targeting we do, the more it’s going to usually cost.” The targets can include geographical location, audience demographics, behaviour, device, etc.

The CPM cost of OTT advertising increases with the amount of targeting an advertiser does.
The CPM cost of OTT advertising increases with the amount of targeting an advertiser does.

“One of the big benefits of OTT is the ability to reach these audiences but with such amazing targeting,” Rensel said. “The more layers you add, the more they cost. Just because we can target in all of these ways, doesn’t mean we should.”

Making the audience too targeted with too many segmentations can make the viewer pool for the ad too small and hard to reach. As a result, advertisers can see ranges in CPM from low to incredibly high.

Benefits and best practices

Rensel outlined some of the benefits of OTT advertising.

  • Brand safety. With ads delivered during live TV or on-demand, viewers are reached across top-tier networks and popular content.
  • 100% viewability. All ads run full-screen so 100% of pixels are in view, eliminating below-the-fold ads of other media vehicles.
  • Near perfect ad completion. Viewers are watching the ads through until the end, with an average completion rate of 98%.

Likewise, there are several key benefits of CTV advertising.

  • Audience reach. Advertisers can reach TV viewers that they can’t reach without traditional TV commercials.
  • Superior targeting capabilities. Advertisers can be sure their marketing dollars are going towards their most valuable and targeted viewers.
  • Measurable results. Programmatic platform allows for measurement of the CTV campaigns with both digital and traditional metrics, including video completion rates.

There are also some best practices that advertisers should keep in mind when using OTT ads:

  • Make sure the video can be formatted for multiple devices. When OTT ads are inserted into video segments, they can appear across different device types. Don’t assume ads will fit on a large-screen TV. Identify sizing best practices so the value proposition and call to action are immediately apparent on all screen types.
  • Keep it 30 seconds or less for non-skippable ads. While advertisers may want their ad to evoke the high quality of a premium television channel placement, they should not fall into the trap of making it as long. OTT viewers have different expectations. Keep it short and to the point, 15 to 30 seconds.
  • Leverage dynamic creative to deliver relevant, personalised experiences. The look, sound, and feel of the video should reflect that of where the audience is. This can include day of week, time of day, geo-location, weather, and behaviour signals. All of these can be combined to inform the creative of your OTT content.

How is it changing the industry?

“It’s probably not a surprise here, the spike we’re seeing in consumption,” Rensel said.

This consumption saw exceptional growth starting in early March 2020, with a plateau afterwards.

Though this coincides with the start of the COVID-19 pandemic, Rensel said it’s important to remember that the growth of OTT was already there, with strong numbers in the months leading up to that.

OTT consumption saw exceptional growth in March 2020, then hit a plateau.
OTT consumption saw exceptional growth in March 2020, then hit a plateau.

That post-peak plateau has not gone down, either.

“We’re not losing users who tried it for a bit and went back to another source.”

OTT consumption via desktop and mobile has grown from 43 billion to just over 64 billion total visits, and online categories have pivoted. The most popular categories now are those such as education, entertainment, family, financial services, games, health, retail, social media, and news information.

Traditional digital devices (phone, desktop, and tablet) are still the most prevalent, but CTV devices (streaming box/stick, smart TV, gaming console) are growing in reach. The important thing to look at here is that while traditional devices still have the larger share of usage, that usage has remained stagnant over the past few years, while the use of CTV devices has grown each year.

“They are not the most used devices yet, but it’s really something to keep an eye on,” Rensel said.

Among connected devices, smart TVs and streaming boxes/sticks are seeing the highest data usage.

Streaming sticks and boxes have the highest usage of any CTV devices.
Streaming sticks and boxes have the highest usage of any CTV devices.

“Every category there is still seeing growth, but those smart TVs and the streaming boxes/sticks are really dominating the usage of home Wi-Fi.”

Rensel emphasised that OTT/CTV is something that has already become mainstream. Almost 70 million homes in the United States use OTT, and there is a 68% reach amongst homes with Wi-Fi. The average home views 102 hours of OTT content across an average month.

“If OTT is not on your radar, it absolutely has to be,” Rensel said.

However, the cord has not been completely severed yet. The majority of households using CTV still have a traditional cable or satellite TV subscription (58%). Additionally, 21% of households are cord cutters, meaning they’ve gotten rid of cable or satellite TV within the last five years. Another 21% are “cord nevers” — they have not had any cable or satellite TV subscriptions in the last five years. Both of those categories continue to grow.

“So what does that mean for local media?” Rensel asked the INMA audience. “Luckily, it means something really good. Local media’s first-party data is still the number-one thing that will make these ads successful. That data is imperative to do the type of specific targeting that we tout OTT can do.

“So it’s not bad news, it’s just that we have to adapt to where people are consuming their content. And we have to use the information that we already have through our first-party data to create our story about why we are the right solution for this type of advertising.”

Dan Rensel shared some key takeaways for OTT and CTV with INMA members.
Dan Rensel shared some key takeaways for OTT and CTV with INMA members.

He stressed this shift is not something that’s about to happen — it’s already happening, and COVID-19 simply pushed it into overdrive.

“There’s a lot of potential in OTT, we just have to know what the story is and make sure that we craft ours, using our data as to why we can do this in a way that will be successful with our advertisers,” Rensel concluded.

Banner image courtesy of StockSnap from Pixabay.

About Shelley Seale

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