We’ve reached a tipping point with the rise in cord-cutting and growing demand for premium video content. We’re approaching full-market scale in the U.S., with nearly 200 million OTT viewers in 2018, which equates to roughly the same number of households that subscribe to OTT services as they do pay TV.
Clearly, 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.
But the increasingly fragmented viewership and time-shifted audiences bring greater challenges for advertisers to reach the right viewers. Marketers need to be armed with richer data to gain a better understanding of the OTT marketplace for media planning. As such, our industry needs to move quickly to solve addressability in OTT.
Let’s begin with how we define addressability in OTT. It’s the ability to serve different ads to different audience segments watching the same programming. For marketers, this is the holy grail of being able to deliver the right ad to the right person, no matter what content is being viewed at the household (a one-to-one approach). This leads to greater relevancy for consumers and increases efficiency and ROI of a media buy, thereby eliminating waste.
Measurement, scale and disruptive challenges
So, what are the obstacles? There’s still a lack of measurement and benchmarks across all the content programmers and platforms. While advancements in measurement are emerging, no measurement provider exists that measures every OTT platform. Nielsen Digital Ad Ratings are accredited for desktop and mobile, but there is no standardization for connected or smart TVs, which are the most valuable spaces. comScore has rolled out its OTT intelligence product, but this is mostly focused on the major OTT content providers like Amazon, Hulu, Netflix and YouTube and does not include all programmers.
While OTT advertising is gaining traction, achieving scale remains a concern: It’s a challenge for agencies and brands to have representative and scalable media plans when applying granular addressable targets, especially at the local and regional level.
Another concern is the rising threat of the technology giants—Facebook, Google and Amazon—as they hone in on building their video business and further disrupt traditional media broadcasters and true OTT content channels.
Data: The next frontier in the OTT evolution
Achieving OTT addressability requires having true precision targeting at the household level and then down to the viewer level. This is done by collecting viewer data and analysis of viewer data into audience segments, such as auto intenders or travel enthusiasts. Those segments are then applied to advertiser campaigns. With the use of real-time dynamic ad insertion and ad decisioning, the ad is then delivered to the person depending on the audience group that they fall into.
This is true audience planning rather than TV genre audience planning. By leveraging datasets to triangulate the viewer, similar to the digital world, advertisers are able to identify audience segments to deliver tailored campaigns.
Addressability in OTT is complementary to linear TV buys. For brands that have traditional TV strategy, this extends the reach and gives precision. For example, in the TV world, if a brand is looking to reach men who are auto intenders, age 25 to 54, they would apply contextual relevancy targeting focused on content such as sports channels and live action programming.
With true OTT addressability, targeting is not based on content, but by audience—it’s based on data collection and matching third-party data and delivering richer, more precise targeting by audience (a combination of content, audience and zip code). This allows for more sophisticated targeting by taking the IP address and matching it with other data preferences.
Furthermore, the data collected in this approach is not reliant on people filling out their information accurately and then attaching possible interests, which is what Facebook, Google and others do by creating lookalike models from attributes and interests. Audience segmentation in OTT is truly deterministic and addressable down to an individual level. Data can be collected on the true viewership level and matched back down to the individual person within a household through new technology.
Today, we’re able to solve the industry-wide challenges of scale and addressability in OTT advertising with technology that can bridge the gap between OTT data collection and audience segmentation. But there’s still more work to be done for our industry to work together to deliver cross-media audience planning and analytics, proper OTT attribution and to be able to execute at scale. By leveraging true OTT audience insights, we can help agencies and advertisers deliver more precise, richer targeting that will drive greater personalization and deliver more relevant ads to consumers.
