The over-the-top (OTT) landscape continues to evolve as the industry innovates and consumer behavior shifts to adopt the increasing number of streaming options.
At the end of 2018, we made several digital video advertising predictions for the year ahead. We are barely halfway through 2019, and we’ve already seen digital advertising making a huge impact on the industry. Keep reading to revisit these predictions, along with current updates to see if they came true and what their key takeaways are. This list is a go-to resource of data points and insights you can use in daily conversations or in sales decks.
As you set your goals for the second half of 2019, consider these developing trends to build a rock-solid advertising strategy for your ad campaigns.
Trend Prediction #1: U.S. digital ad spending will surpass traditional in 2019.
Digital video viewing accounts for the biggest share of daily media time spent; digital video viewing time is increasing year-over-year.
- Latest data: According to eMarketer’s February 2019 report, the total digital ad spending in the U.S. will grow 19% to $129.34 billion this year — 54.2% of the estimated total U.S. ad spending.
- Where those dollars are coming from: Budgets are shifting from traditional ad spending. Spending share on non-digital advertising is down this year from 51.4% to 45.8%.
- Why you should care: The data makes it clear that advertisers are favoring newer digital video viewing formats like OTT to stay in front of consumers’ evolving viewing habits. Spending on OTT platforms like PlutoTV and Roku are boosting digital video ad spending this year. In 2018, nearly 60% of marketers’ digital advertising budgets were allocated to digital video. Currently, 71% of internet users use an OTT service. Advertisers can’t ignore the steady shift of consumer attention to digital platforms and are increasingly turning to digital to hit their reach and ad revenues goals.
Trend Prediction #2: The number of U.S. connected TV (CTV) and OTT video users is growing at a faster-than-expected rate.
Highly addressable products like OTT are leading the pack.
- Latest data: OTT subscription revenue rose 37% in 2018 to $16.3 billion and is on pace to grow another 35% to $22 billion in 2019, according to The Convergence Research Group's annual The Battle for the American Couch Potato report. Cord-cutting started to rise in 2010, and by the end of 2019, its research predicts that 34% of households won’t have a traditional TV subscription.
- Why the shift: Many new ad-supported streaming services like PlutoTV, Sony Crackle, STIRR, and more offer free subscriptions to users. At the same time other programmers -- like Disney and WarnerMedia -- are coming up with their own DTC streaming services. There are new relationships being built by bigger industry players with new OTT services like Viacom, which has purchased Pluto TV, leading to more users trusting new platforms and cutting the cord to access free content online.
- Why you should care: These statistics, combined with the upsurge of streaming services and the launch of new platforms from media houses, clearly suggests that OTT is here to stay. Streaming platforms with an AVOD revenue model are attracting large user bases. Combine this with shifting viewer habits and advertisers now have a smoother and smarter way to cater to their target audience with a big earning opportunity.
Trend Prediction #3: CTV devices will be the leading method of digital video viewing, especially for long-form content.
Reach continues to grow within the OTT/CTV universe, driven by the adoption of smart TVs and streaming devices.
At ZypMedia, we’ve seen a dramatic year-over-year increase of advertisers incorporating CTV into their advertising campaigns. The share of CTV ad impressions we served compared to video ads on other devices increased by 20% between Q1’18 and Q2’19, taking over desktop impressions.
- Latest data: Viewers overwhelmingly prefer watching digital video on a CTV device over other digital devices, a preference that is increasing in popularity over time, according to a study by Comcast ad-tech unit FreeWheel. The company noted that 42% of the ads it served in Q4’18 were for CTV, more than double the share of any other platform, and at 45% year-over-year growth, making it the fastest-growing category.
- Why the shift: Viewers favor these CTV devices because they directly connect to OTT services that aggregate their favorite content in a single location, providing a one-stop shop for premium video. OTT holds advantages for advertisers because the large CTV screen is often in the living room, leading to higher engagement and the potential for co-viewing. The Video Completion Rate (VCR) on OTT devices typically averages 95% or higher.
- Why you should care: Diversifying your media strategy by adding OTT advertising will help you stay ahead of your advertising game and extend television campaign reach beyond cable subscribers. Advertising on OTT devices is similar to advertising on TV, but it is delivered through internet-connected streaming devices on OTT platforms instead of through traditional broadcast connections. The impressions are delivered in a TV-like environment but offer a higher engagement rate spurred from digital capabilities like targeting beyond basic demographic categories.
As video storytelling evolves alongside viewer consumption habits and technology, successful TV revenue models in 2019 are leveraging the combined powers of linear and OTT and providing advertisers with relevant metrics to measure impact.
For advertisers and marketers looking to access cutting-edge marketing technology, ZypMedia promises the full package. We help media companies, advertisers, marketers, and media companies plan and execute their digital advertising campaigns.
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