We all can remember a time when our families sat down to sing the “Dallas” theme song or watch pretend politicians debate during an episode of “The West Wing.” Whether you enjoyed the daily news cycle or reserved your ritual for Thursday night’s “Must-See TV,” it was a predictable occurrence – like an unwritten rule of the house.
Fast-forward to today, and TV time is a much different scene. The whole family might be sitting in the same room, but you could all be watching your own content. Imagine the kids watching YouTube on a tablet, the parents streaming the news on their laptops and a family-friendly sitcom playing on a connected TV.
In fact, many households are completely “cutting the cord” with traditional television providers, In 2018, eMarketer predicted that the number of adults to cancel traditional TV services would climb by 32.8% to 33 million.
They say these numbers are fueled by the success of original content that flows from streaming platforms, like Netflix and Hulu. As long as these platforms keep offering premium programming without the hassle of installation or feisty customer service agents, family TV time will continue to be a fragmented picture.
The question is: What do these new family viewing habits mean for advertising today?
Advertising Today via OTT/Connected TV
Television advertising used to be as straight as an arrow. Programmers had time to sell during breaks in their broadcast, and advertisers were willing to buy those spots. It was a seemingly easy sell, because brands were guaranteed to reach a massive audience in a matter of seconds. Then came a wave of new digital technologies, like the connected TV.
As you know, a connected TV is simply a television that’s connected to the internet. However, most people use their connected TV to access over-the-top (OTT) content, or videos served beyond the closed network of a cable provider. When you think of OTT content, think of Netflix, Hulu, Amazon Video and the like.
The evolution of OTT advertising
While these streaming services are practically household names now, advertisers were initially hesitant to invest their dollars in OTT content providers. Frankly, there were issues with these streaming platforms that made it difficult – if not, impossible – to engage in programmatic media buying.
A 2017 eMarketer article spoke to the fact that there are just too many different platforms. With OTT advertising, you have to cater to the Apple TV owner, someone with a Roku and another person streaming content on their PlayStation. On top of that, you have to navigate the smart TV system, which itself includes various manufacturers. This clutter of hardware created a real technical challenge for ad buyers and sellers, alike.
While the number of streaming services hasn’t changed in the last few years, the advanced TV industry has since made big strides in OTT advertising. In April 2018, the Interactive Advertising Bureau (IAB) developed Guidelines for Identifier for Advertising (IFA) on OTT Platforms. The IAB says these “technical guidelines provide instructions on best practices for delivering targeted ads, as well as controlling ad frequency and rotation across a wide variety of disparate smart TVs, connected devices, and other OTT systems.”
Later in 2018, the Media Rating Council (MRC) addressed concerns with OTT advertising impressions when they released an updated version of the IAB Digital Video Ad Impression Measurement Guidelines. This helped resolve issues surrounding measurement latency, OTT-specific inactivity rules, and invalid traffic considerations. The MRC’s Executive Director and CEO said in the announcement, “the new guidance on OTT platform measurement will better enable us to validate and accredit quality measurement in that rapidly emerging space.”
Because of these instructional guidelines and best practices, OTT advertising saw a seismic growth in 2018. In MAGNA’s fall 2018 forecast, they predicted OTT ad spend would reach just over $2 billion by the end of the year – a 40% increase, year-over-year. Finally, marketers could take advantage of all that OTT advertising has to offer.
The benefits of OTT advertising
Despite the technical hiccups in the beginning, OTT advertising provides valuable benefits to brands, including:
Precise targeting – In a 2018 eMarketer survey, 58% of 171 U.S. agencies and marketers said precise targeting was the leading benefit of OTT/connected TV advertising. They can achieve precise targeting a couple of different ways, one of which is by device. After all, a Roku customer is not identical to an Apple TV user.
Secondly, OTT advertising offers Dynamic Ad Insertion (DAI). DAI technology enables advertisers to easily change out their ad creative in live, linear and video on demand content. This means you can target individual consumers with messaging that’s relevant to them.
Detailed measurement – Roku has been leading the charge in measurement capabilities. They were the first platform to integrate Nielsen Digital Ad Ratings. But in October 2018, they announced a more significant change: their Measurement Partner Program. The program includes 11 data-rich partners that offer information on audience demographics, brand awareness, store visits, website visits, and sales increases. With a broader set of metrics, brands can better quantify the return on their OTT advertising efforts.
Ongoing optimization – Strategic digital marketers will continuously analyze and optimize OTT ads. They look at video completion rates, compare ad performance across multiple devices and carefully study consumer engagement. OTT advertising allows for this type of deep dive into consumer behavior, so you can identify the most effective ad creative and messaging.
Enhanced engagement – Even back in 2017, MarTechSeries says streaming TV viewers finished 98% of all video ads, giving OTT advertising the best engagement rate among desktop, mobile, and tablets. This is likely due to the fact that connected TV and OTT fire ads less frequently than broadcast television and, usually, only deliver one ad at a time. It’s easier to recall a brand when it’s not sandwiched between five-minutes’ worth of mixed commercials.
Sometimes, Broadcast Advertising Still Makes Sense
We admit no one likes long commercial breaks. But that doesn’t mean broadcast television has become obsolete. While MAGNA reported high growth for OTT ad spend, they also noted that “ad spend remains small compared to the entire TV advertising market.” When you look at the $63-billion market, $2 billion in OTT advertising seems like just a sliver of the pie. MAGNA suggests this is because “brands don’t want to sacrifice traditional TV success metrics like reach, scale and cost.” Indeed, broadcast advertising still makes sense. Take the Super Bowl, for example. The 2019 game may have been the lowest audience in more than a decade, but it still had a whopping 98.2 million viewers. The sheer volume cannot be matched by connected TV.
And when it comes to cost, connected TV loses there, too. Digiday reports that the available connected TV inventory is “significantly more expensive than digital video and on par with linear TV.” In some cases, connected TV ad spend even runs higher than traditional TV costs. Connected TV, however, will have lower minimums, making it a more accessible vehicle for smaller businesses.
At the end of the day, it pays to play in both traditional TV and OTT advertising. The Video Advertising Bureau issued a report that says OTT advertising is most effective in combination with traditional linear TV. They supported their argument with studies that found viewing an ad on linear TV and OTT devices leads to a twofold increase in brand favorability.
Navigating the New Normal
Not only are households, themselves, fragmented in terms of how they experience content, but how each family member consumes content is just as scattered. In other words, Mom may start watching the “Today Show” via live broadcast at home. Then, on her commute to work, she switches to her Apple TV app and streams the rest on her phone. During her lunch break, she visits NBC.com to catch one of the segments she missed or search for a recipe Al Roker made on the show that day.
This melting pot of platforms is why it’s so important for marketers to make the right connections when and where people are most receptive to your message. At Bullseye Strategy, we see the big picture. We know that you cannot put all your advertising eggs in one basket. Instead, you have to have a comprehensive, multi-channel strategy that reaches each individual on their own terms.
That’s why our approach to digital marketing has always been (and always will be!) data-driven. With the right information and the right partnerships, we can go wherever the customer goes. Or, in the case of advertising today, wherever the latest technology takes the customer.
Want to learn more about how television advertising fits into your brand’s digital marketing plan. Give us a call today to get started!
