Q1 2020 State of Local OTT Advertising Report

ZypMedia
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By ZypMedia
May 05, 2020
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Local Advertisers Increase Use of OTT Advertising in Q1 2020

As the nation continued to increase their streaming video consumption on connected TVs in the beginning of 2020, local businesses also increased their spend on advertising and presence on this exciting medium. Earlier this year we published our 2019 report that showed a 127% year over year growth in advertising spend, and the following data shows continued momentum in Q1 of this year as the nation deals with the impact of COVID-19 in all aspects of business and personal life.


2020 Kicks Off with 83% Year over Year Q1 Growth

ZypMedia analyzed data from Q1 of this year to distill the latest trends in over-the-top (OTT) advertising among local businesses. Findings for this quarter show total OTT ad spend went up by 83% (compared to Q1 2019), showing continued strong growth in what is traditionally the weakest quarter in advertising. In direct correlation, the number of campaigns also increased by 81% as businesses continue to leverage OTT as a means to reach customers in their local markets. 

Additionally, more local businesses ‘got into the game’, as the number of advertisers increased by 29% in Q1. Video Completion Rate (VCR) remained consistently high in Q1 at an industry leading 98%, while CPMs remained unchanged.

 

The Shelter in Place and Economic Uncertainty Impact  

With most people staying home in the last month of the quarter and streaming as a result of COVID-19 restrictions, the industry saw tremendous spikes in streaming viewership with Nielsen noting an 85% year over year increase in minutes streamed on TV. We documented several other ad-supported viewing statistics in a recent blog post.

As much of the advertising industry has noted that while viewership is way up, advertising is seeing a pull back in budgets as brands work to find the right message for these trying times as well as understanding expected ROI as consumer spending is both decreasing and uncertain. We saw very slight single-digit percentage drops in spend, campaigns, and number of advertisers week over week through the course of March but not significant enough to impact the overall growth for the quarter.

The Impact of 2020 Includes Political Advances

We also examined the total ad spend by category in Q1, which is impacted by the fact that 2020 is an election year. The top three local advertising categories remain mostly the same year over year and each quarter for that matter. Automotive advertisers continue to be the biggest spenders each quarter.

With the next presidential election getting closer, ‘Law, Government, and Politics’ made the list of top advertisers, replacing ‘Food and Drink’, which made the list in 2019. With the general election still on the horizon we expect this category to really pick up in Q2 and Q3.

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Look at Regions and Devices

When we dive into the numbers by region we see the percentage of total by region staying in the same rank order year over year, but interestingly high percentage increases seen in the West especially where the spend jumped over 115% well above the overall increase of 83% for the entire country.

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Q1 2020 saw smart TV’s share of impressions and consequent spend increase by over 50% year over year, which was 2x the increase we saw for either streaming devices or game consoles. Finally, we saw Samsung jump ahead of LG smart TVs with almost 7% share that still is far behind Roku devices that saw 43%. Consumers continue to embrace and extend the smart TV as a standalone streaming platform to complement the existing installed based of Roku and other streaming devices. It should be noted that these device share numbers are based on available ad impressions that is a function of consumer ad-supported viewing preferences, not device targeting.

In 2020 Nothing Is Certain

Q1 continued to show very strong performance for local advertisers, proving that OTT continues to complement the traditional broadcast, direct mail, and OOH local mediums as a new way to reach consumers. 

As the year progresses and the country continues to adapt, it is no surprise that COVID-19 will tell a different story in Q2, as many local businesses are being impacted by the “shelter in place” restrictions that each state is using to urge people to be safe and stay home. However, as we flatten the curve and society slowly starts returning to normal the economy will improve, we expect to see continued growth in OTT in the latter half of the year. In the wake of COVID-19, we believe the country and advertising industry will recover and continue to find innovative news ways to connect and get compelling brand stories told.

 

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ZypMedia

ZypMedia is the programmatic advanced TV platform for local media companies connecting advertisers with their local audiences across all screens.
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