In early April, the SendtoNews team attended the annual NAB Show in Las Vegas — one of the largest broadcast media conferences in the world. Every year, media professionals from all over the world gather to discuss the latest video trends.
The topic on everyone’s mind this year? Over-the-top (OTT) media.
While OTT is currently exploding in popularity, it actually provides an immense opportunity for digital publishers looking to increase video advertising revenue.
What is OTT?
“Over-the-top” is a term used to describe video content streamed directly to viewers over the Internet without the need for a traditional cable or satellite TV subscription. More than 75% of OTT streaming time comes from the four most popular services: Netflix, Amazon, Hulu, and YouTube.
While OTT is great for cord-cutting audiences, it does have some drawbacks for advertisers. The good news for publishers? Those same drawbacks can be used to position your video advertising offering alongside OTT.
Why is OTT popular?
One of the reasons OTT is so popular is that it provides an easy transition to digital video for advertisers. The content and experience are similar to live TV, so agencies find clients are more open to shifting their budgets to OTT and taking a risk on a new channel.
OTT also reaches a rapidly growing audience: Nearly three-quarters of Americans use OTT to watch videos at least once per month, and the number of cord-cutters continues to climb.
However, despite the fact OTT accounts for 29% of TV viewing, it only makes up 3% of TV ad budgets. Why the big discrepancy? A large percentage of the OTT market is ad-free, and the remaining ad-supported OTT options have limited ad breaks compared to that of live TV. OTT options have nine minutes of ads per hour of programming compared to 16 minutes of ads per hour for live TV.
While advertisers might be keen to get on OTT, there simply isn’t enough inventory to effectively deliver a large-scale campaign. For publishers, this provides an excellent opportunity to work with sellers to provide a complementary offering that OTT cannot realise on its own. But scale isn’t the only way digital publishers can capitalise on advertisers’ growing appetite for OTT.
Selling the second prime time
Advertisers have long been interested in advertising during live TV’s prime time — the hours before and after the average white-collar work day. The audience at this time of day is much more affluent, which means content providers can charge a premium for advertising. However, even between live TV and OTT, there is only so much inventory available during prime time. More recently, advertisers have been looking for ways to connect with their target demographics throughout the day when live TV and OTT can’t reach them.
Media buyers who have traditionally purchased TV advertising attribute a negative connotation with daytime audiences. Many have a misconception that reaching a video-consuming audience during the day is the equivalent to reaching daytime TV audiences, which historically skew older with lower disposable incomes.
While few people watch Netflix at the office, many do catch up on the latest news by reading articles on their favourite digital news properties. By incorporating video content in articles and on section fronts, newspaper publishers can reach the prime time audience at a time when they can’t be reached by OTT or live TV, something industry experts have aptly titled the “second prime time.”
When we graph total views by hour for OTT, live TV, and SendtoNews (STN), you can see that when OTT and live TV viewership drops off, SendtoNews’ viewership surges. This peak in daytime video views is being driven by sports fans at the office reading articles about last night’s big game on one of our publishing partners’ Web sites. Contextually relevant videos within the articles provide a natural way for publishers to engage their readers and capture an enticing audience for video advertisers.
The second prime time offers a unique way for digital publishers to create valuable video advertising opportunities and generate a completely new revenue stream. Many advertisers are shifting to a holistic cross-channel marketing approach where they want to tell a story through a series of advertisements. By combining OTT, live TV, and video ads on digital properties, advertisers can reach the right audience multiple times throughout the day, further amplifying their message.
But there is another way publishers’ offerings can complement OTT.
Follow the data
With the rise of OTT also came connected TVs and hardware designed exclusively for streaming content. While this technology makes OTT more convenient for the end user, it often limits the amount of related data that advertisers rely on for effective targeting.
Frost Prioleau, CEO at Simpli.fi, explains it best in an interview with AdExchanger: “For starters, people rarely browse the Web, research products, or conduct searches via their connected TVs. Because of this, the data that is readily available to target ads on desktop and mobile devices is not as accessible for targeting ads on CTV and OTT devices.”
Data can help advertisers better identify their customers, and you can charge a premium for it. Platforms that monetise videos on behalf of publishers can also provide more in-depth data. Industry leading tools such as Comscore and Resonate, which we use, are able to provide granular insights to advertisers on exactly who is watching their ad in a way that OTT can’t provide.
Advertisers want to know what their audiences are researching online, what their preferences are, and how they can target them directly. Short-form digital video provides this opportunity because it’s able to leverage a user’s online behaviour combined with the video they are consuming while OTT simply offers the latter.
While the buzz of OTT has many advertisers excited about the possibilities, there will always be a need for measurable brand-safe video advertising options. Digital publishers have the perfect combination of audience and data. By understanding the OTT market, you can better position your offering to achieve higher CPMs and more ad revenue.