Q4 2019 OTT Insights: The Rise of the Local OTT Advertiser

Karen Sowa
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By Karen Sowa
February 03, 2020
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Local advertisers are increasingly using OTT advertising to get in front of U.S. viewers. The OTT viewership pool continues to get bigger every quarter, and as the provider of the leading digital advertising platform built for local, we saw firsthand how local advertisers took advantage of the opportunity by running OTT advertising campaigns at increasing rates in Q4 2019.

eMarketer predicted that 205.9 million people in the U.S., 62% of the total U.S. population, used OTT video services in 2019, up 2.7% from 2018. We know this percentage is reaching total saturation of the available total adult viewing population and is even higher when only adults aged 18 and over are considered.

The amount of OTT impressions delivered on ZypMedia’s platform increased by 23% when compared to the previous quarter, and 100% when compared to the same time period in 2018, suggesting that local advertisers are rapidly increasing their confidence and demand for supplementing digital and traditional strategies with OTT advertising.

2019 Q4 OTT Report Impressions

How are local advertisers approaching this evolving OTT opportunity? We took a look at the OTT campaigns our clients ran in Q4 2019 to continue our understanding of which industries are adopting OTT the most, why and how local advertisers continue to invest, and where viewers are seeing the delivered ads. Keep reading to find out what we discovered.

Local advertiser categories continue to match industry spending trends.

eMarketer reports that the retail and automotive industries spent the most on digital advertising in the U.S. in 2019. We’re seeing these industry adoption trends trickle down at the local level.

In Q4 2019, we saw ‘Automotive’ campaigns contribute the largest investments in OTT advertising across the entire U.S., followed closely by retail-focused categories ‘Health & Fitness’ and ‘Home & Garden.’

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Local advertisers are often focused on driving people to visit brick-and-mortar businesses. The top five categories that spent the most with ZypMedia in Q4 2019 follow this model. Automotive advertisers want to drive visitors to their car lots, home and garden advertisers want foot traffic in their retail locations, and health and fitness advertisers want to boost memberships at their facilities—and they are all using OTT advertising to get in front of viewers who have a high potential to convert. OTT advertising gives local businesses a medium that allows them to create brand awareness to targeted audiences at the local level.

The OTT space is definitely maturing, but compared to established ad types like traditional TV, display, or pre-roll video, it still is relatively new and exploratory. It makes sense that the top spenders in digital advertising are more bullish at investing heavily in the latest digital opportunities like OTT. Their successes are inspiring confidence in other categories to continue to experiment and invest more in OTT, leading to the 100% year-over-year (YoY) growth in overall delivered OTT impressions on ZypMedia’s platform.

More than just an experiment: Why do local advertisers keep investing more in OTT advertising?

Results that matter

An advertiser’s essential goals are to get in front of and motivate potential buyers. Not only are viewers watching OTT content, but the nature of the OTT content viewing experience also has viewers watching advertisements in their entirety as well.

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The average video completion rate (VCR) for OTT ads delivered by ZypMedia remained consistently higher than the 95% industry average reported by Extreme Reach at over 97% in Q4 2019, up slightly from 96% in Q4 2018.

Similar to traditional television, this type of lean-back watching environment coupled with long-format content motivates viewers to watch the entire ad. As viewers increasingly migrate their viewing habits towards digital television, OTT only becomes a bigger opportunity to reach the people who matter to local advertisers.

OTT advertising provides the flexibility local advertisers need.

We tend to see advertisers with brick-and-mortar locations run shorter campaigns intended to bring people in the door on an impulse-based call to action, while advertisers that cater to industries with a longer decision-making process, like banking, finance, and government issues, run longer awareness and influence-based campaigns.

Local advertisers often find value in running multiple shorter campaigns to rotate campaign creatives and messaging.

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The most popular OTT campaign duration in Q4 2019 was six days long (12% of campaigns), compared to seven days in Q4 2018 (8% of campaigns).

Where are local advertiser’s campaigns connecting with viewers?

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OTT ads run through ZypMedia’s platform are all delivered on some kind of connected TV system, likely through a streaming box or stick. This popularity may be due to the lack of built-in internet access capabilities in the average viewer’s television sets and a higher familiarity with the user interface of these more established systems.

Unsurprisingly, the top devices OTT ads were delivered on were all streaming devices.

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The majority of OTT ads in Q4 2019 were delivered on a Roku device, but Roku’s share of ad delivery decreased 10% YoY when compared to the same period in 2018. The same OTT devices remain popular a year later, but viewers are seeing ads on a greater variety of devices as more options for consumers become available on the market.

As OTT services continue to expand and improve, we know viewers will continue to spend more time watching OTT content in connected TV environments.

In addition to the viewer migration opportunity, as the digital advertising industry continues to evolve targeting and measurement capabilities, local advertisers will finally have the information they need to understand the impact of each campaign and make the most of tight budgets.

It’s clear that OTT is more than just a viewing fad. Local advertisers are gaining confidence in it as a medium that can drive major awareness to their brand and business while also maximizing budgets by engaging the right people in a location that can convert.

While 2019 was the year of the cord-cutter, momentum in the industry, advancements in backend technology, and the ever-increasing confidence of advertisers are set to make 2020 the year OTT advertising breaks records.

Subscribe to our newsletter now to follow along as we continue to monitor and report on the impact OTT advertising has on the local market.

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Karen Sowa

Karen is a marketer with over a decade of success in solving business challenges with digital companies. She is currently the Sr. Director of Marketing at ZypMedia and can likely be found drinking an iced latte behind a laptop somewhere in the San Francisco Bay Area.
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