By Kerry Tracy
OTT keeps growing – in scale, efficiency and ad revenue. In 2018, there were over 200 million OTT viewers in the US. That’s about the same number of households that pay for cable. And OTT ad revenue in the US is projected to be $40B (according to TDG Research), which is almost half of the total projected TV ad revenue of $85B.
OTT has kept true to its promises of incorporating broader and deeper data sources to allow marketers to better target their audiences compared to traditional, or linear, TV. With traditional TV, media planners use content and channel categories (think News, Sports, etc.) to target audiences and rely on ratings to estimate the total audience reached. OTT allows media strategists to layer deeper demographic, psychographic, and purchase preference segments to narrow ads to the specific audiences at the household and viewer level. Creative agencies will need to develop more video ads with differing messages to “personalize” the video ad experience. The single :30 TV spot will expand into multiple spots at varying lengths and executions for various audiences and across multiple devices.
As more viewers “cut” the cable cord, expect OTT to absorb viewership and ad revenue from the traditional TV model. OTT is still not without its limitations. It is still fragmented across a number of competing players and scaling from local/regional campaigns to national ones is difficult. Measurement across all devices (particularly smart TVs) is still a challenge. But as OTT adoption grows and new entrants (like Facebook and Google) capture share, precision advertising for better and more personalized video experience will continue to improve.
Kerry is the CEO of Working Media Group.
Working Media Group is a media planning and buying agency using data, insights, and analysis to deliver transformative media solutions to partner creative agencies and their clients.