The first half of 2018 saw the rapid growth of over-the-top (OTT) global video ad spending, a trend that shows no sign of slowing. As we move into the latter half of 2018, we’re going to continue to see OTT explode in the market with new features, technologies, and opportunities. According to a recent estimate by eMarketer, there will be more than 200 million OTT users in the U.S. by 2019. With that growth in the OTT audience, there has also been a corresponding growth in innovation in OTT advertising.
There’s strong appetite for OTT advertising as advertisers know that they must follow their audiences. According to TDG Research, ad spend in OTT is projected to hit $40 billion by 2020, which is nearly half of the $85 billion in forecasted total TV ad revenue.
Here are four signs that show how OTT advertising is growing up as the format goes mainstream.
#1 - Shifting Consumer Behavior
Changing consumer habits is playing an essential role in the growth of ad spend on OTT. With the increasing adoption of streaming TV, cord cutting is a major trend that encompasses many viewers who are both young and affluent — a combination that has great appeal to advertisers.
Advertising through OTT grants access to the living room, where families spend time together. Moreover, unlike on the browser screen, OTT video ads tend to be displayed full-screen without the controls to either minimize or skip them. OTT devices aggregate viewers’ favorite content in a single location, providing a one-stop shop for premium video. Thus, OTT holds advantages for advertisers — the large screen is intrinsically viewable and the living room environment leads to higher engagement.
A new study by Raymond James, a financial services firm, reveals how popular streaming TV has become. While cable is still the primary way U.S. internet users consume video, it doesn’t lead by much. Time Warner, Comcast, and others were cited a 35% share of viewers while streaming services like Hulu and Netflix were not far behind at 31% — a whopping 29% jump year over year.
Consumers have reached a new stage in connected entertainment where OTT is a standard source of video and viewers are more willing to experiment with multiple OTT services.
#2 - Rise in Viewership and Devices
The Interactive Advertising Bureau (IAB) defines OTT devices as those that “can connect to a TV (or functionality within the TV itself) to facilitate the delivery of internet-based video content (i.e., streaming boxes, media streaming devices, smart TVs, and gaming consoles).”
All OTT device types are growing in volume year over year. The growth of the newer OTT devices is a sign that there will be greater opportunities in this space to come for both publishers and advertisers.
Publishers are also investing more in growing their OTT presence and expanding their content libraries to capitalize on the increased consumer viewership and create additional inventory.
#3 - More Targeted and Data-Driven
Technology and measurement companies are developing advanced capabilities to ensure that OTT capabilities keep pace with the rest of the digital market.
OTT ad spending is on the rise because of its ability to target audiences. OTT ads can be purchased to match the demographic or lifestyle traits of consumers. Data can be collected about which video content viewers watch, when they watch it, and the amount of time spent viewing the content.
While additional targeting features are still a work in progress, there are signs that the digital industry is beginning to find better targeting solutions by using data. ComScore, for example, now offers an OTT intelligence product that helps advertisers track viewer behavior across Amazon, Hulu, YouTube, and Netflix.
#4 - Adoption by Large Media Companies
Today small-and medium-sized businesses can advertise in places where the local broadcasters offer not only traditional mediums of reaching an audience, such as newspaper, radio, TV, direct mail, and out-of-home, but also complementary digital products.
Large media companies in the advertising industry are starting to publicize the desire for data-driven TV advertising progressively. They are seeing the value OTT brings to today’s media mix and are beginning to offer OTT-specific advertising solutions. For example, Sinclair Broadcasting Group recently launched a new OTT platform for serving addressable ads.
At ZypMedia, we anticipate that distributing local or regional channels via OTT is going to be a significant trend in 2019.
Digital products like OTT help reach the right target audience with a more personalized message down at the local level. The close touch provided via local digital ads is a substantial opportunity for advertisers and media companies to use local targeting to increase awareness and interaction between the community and their businesses.
For local advertisers looking to access cutting-edge marketing technology, ZypMedia promises the full package. We help large media companies with local outlets, like television and radio stations, plan and execute massive advertising campaigns.
It’s clear as we speed through the last quarter of 2018 and beyond, exciting things are happening in the OTT space. Stay tuned — it’s only getting better from here!
Media companies have to be open to dynamic collaborations and partnerships. As video storytelling evolves alongside viewer consumption habits and technology, successful TV revenue models will be those that leverage the combined powers of linear and OTT and provide advertisers with relevant metrics to measure impact.
When you're ready to grow your OTT sales, we're here to help you accelerate your success!
SpotX has ranked ZypMedia as one of the top 5 DSPs to help it reach 18x year-over-year growth in advertiser dollars spent on OTT in 2017. We help professionals like you sell more over-the-top advertising every day.
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