What are OTT ads?Dana Bojcic
Are you down with OTT? You should be! Recent data shows more than half of all American adults are devouring over the top (OTT) content, and it is not a passing fad.
Ask friends for advice on a new show to watch or ask co-workers what movies they recently caught. You are not going to hear them talking about traditional TV, you are going to hear about an original series only found on Prime, or the latest Netflix movie. You might hear about a documentary or stand-up comedy show they are binging on through their Chromecast or Apple TV, and if you do hear about The Bachelorette or This is Us, they are likely watching it through their ABC or NBC app rather than through cable.
What does OTT even mean? It stands for Over The Top, initially named in reference to devices that bypass cable and instead go “over” a cable box to give the user access to streaming TV content. In OTT channels, content is delivered via an internet connection rather than through a traditional cable/broadcast provider.
People are cutting their cable cords and are watching what they want, when they want. Many don’t even have to cut the cord, they never had it, their official term is “cord-nevers”. In fact, it is estimated that 67 million Americans do not pay for a traditional TV service and 1.3 million Americans cancelled their pay-TV service in the 1st quarter of 2019.
Streaming options continue to rise and there are a lot of players in the game and from Apple TV+ to Disney + the options seem endless. With so many options to choose from, people are likely pondering just how many of these streaming options we need AND how many can be supported? A new survey of 2000 plus verified adult users of OTT services is attempting to answer some if these burning questions by digging a little deeper. The survey, conducted by the Harris Poll and AdTech platform Open X , has revealed many interesting facts:
- 52% of all US Adults over 18 use at least one OTT service
- The average OTT user streams more than 2 hours of content every day
- The average OTT user streams content across three devices and uses three different OTT services.
- Usage also varies by age with Millennials spending more time on their phones than they do sleeping and 1 in 3 OTT users stating that screen size has no impact on the type of content or how long they watch.
What does this all mean? That OTT is rapidly becoming the norm. People are not just testing the waters anymore, they have cannon-balled into it and are swimming freely.
The next question in my mind then is just how many streaming services does one really need? And, how many is too many for the market? How many monthly fees are we willing to pay when new streaming services are coming at us all fast and furiously? Survey says, “Up to $100 per month for about 15 channels/outlets.”
Are you overwhelmed? Most of us are. Managing our streaming subscriptions does not spark joy. We want it to be easy. Easy to choose, easy to manage and easy to navigate, however, there is no perfect way to cut the cord and no perfect magical combination of streaming that will give you everything you want.
Take sports for example. We have a Roku in our house, and I live with some massive soccer fans. In the last four weeks we have downloaded at least four different services in order to watch specific games that were not being broadcast on a service we already have. Keep in mind, in the last four weeks we have also decided to cancel two subscriptions. One as soon as the free trial was complete and the other as soon as the super special unicorn game we could only find on that app was over. We decided to keep one as it has a more massive variety and sports package and as for the fourth service, we are still in the trial period and we are still mulling over how necessary it is and if we want to keep it.
I would imagine a lot of households work this way. We are all constantly patching together different combinations of services to get just the right fit, yet like your favorite jeans, that perfect fit can be really hard to come by.
The average consumer subscribes to at least three services, and we will continue to see several more debuts in the next year or less. Now instead of just turning the TV on, we actually need to compile a strategy and game plan to watch TV.
What makes us decide which services to use? Content is huge. For us, it was about where can we watch this game and who has it? Often there is only one place to watch so the choice is simple. The survey agrees to a point and determined that while specialized content is a good way to attract new viewers, it is not enough the keep them long term.
As we are all working on patching together our own personal quilts of streaming, advertisers are busy keeping up with it all.
It is estimated that $76.1 billion was spent on advertising to television audiences in 2019, down from $79.3 billion in 2018. For 2020 it is predicted to rise 4% thanks to all the political ads we can expect in an election year.
What about Video ads and what do those budgets look like? According the IAB, marketers report we will see an increase for digital video budgets by 25%.
Some key areas are driving this spend increase:
Original Digital Video content— ODV now averages $9.3M (up 31% y/y); although advertisers consider ODV “essential”, the spend on this content type is still challenged by “quality of content”
• Advanced TV— Nearly 60% of advertisers report that they will increase their budgets for ATV this year, primarily because they find OTT to be beneficial in delivering tough to reach audiences
• Mobile and Desktop have reached parity in spending, with nearly two-thirds of the total digital video spend allocated evenly across the two devices
• Programmatic— Growth in digital video programmatic spending is expected to rise +4% year/year, now reaching 53% overall
With more video ads coming at them, how are OTT audiences responding to ads, especially when they are consuming content on their mobile devices? Going back to our Harris Poll and AdTech platform Open X
survey, 40 percent of all OTT users will pause a commercial on their phone, search for info on the product, and display intent to purchase. That is a HUGE opportunity for brands as OTT adverting could generate incredible results. The key is to determine the best approach, the creative needs to be strong and there must be a call to action.
Another challenge for advertisers is the diversity of the OTT universe. Not all providers allow advertising and not all in the same way. Some platforms are ad supported and others are not which makes it difficult to achieve a tactic that encompasses the whole scene.
The survey found:
• 72% of OTT users understand there is a trade off between watching free content and having advertisers use their data to serve ads, and most do not find ads bothersome if they are relevant
• 46% of OTT customers are willing to pay $10/month for a service with no ads
• 25% prefer a free service with ads
• 29% want a hybrid model with a few ads and a lower monthly cost
• Consumers are willing to pay up to $24/month for a premium package on a single service
These findings hint that OTT providers will most likely arrive at some kind of tiered pricing model with at least one of the tiers being ad supported to include the different customer segments.
As for ad targeting and personalization, there is immense potential to grow as we narrow in on the exact users. Lawrence suggests, “Advertisers will require a much richer inventory of creative to appeal to individual audiences and subsegments.” The concern here is the survey also found a approximately one third of consumers share passwords for OTT services. So he also cautions, “if the account holder is a 55 year-old married couple, but actual primary user is a 21 year-old college student, there might still be a disconnect.”
Although we don’t have all the answers yet, this new survey does help us to quantify some of the changes and gives us a bit of a baseline. I personally have lived through antenna only TV with no remote control, to FINALLY getting cable and the ever so important MTV in high school, to not being able to live without HBO, to all the on demand cartoons my boys watched to the now teens in my family downloading and deleting streaming services at a blinding speed. I’m not certain what exactly is next but I’m down with OTT and excited for the ride!