-->
Cast Your Vote in the Streaming Media Readers' Choice Awards. Voting Closes Oct 4!

The State of OTT Video Advertising

Article Featured Image

With first-party data, advertisers can see what content specific audiences are gravitating toward. This informs how they build strategic campaigns that are tailored to each advertiser's specific needs. Advertisers can bring their own CRM or shopper data and also use third-party datasets.

Marketers will ask themselves not just who they reached, but what the person did once they reached them. "Snyder's of Hanover found that Roku users who saw their ad spent five times more on their products than the average Kroger shopper, which led to a 250% return on advertising spend," says Natividad, noting, "That's an actual performance ad metric." 

Programmatic's New Identity

Programmatic has come into its own, moving from a remnant or remainder type of auction to a method now used to obtain top dollar on high-value spots. Programmatic is used with direct private deals to get the best market rates. "They're generating more revenue by allowing programmatic demand to compete with their direct sold demand," according to David Dworin, VP of advisory services at FreeWheel.

fuboTV has 2–3 minute partner avails that it sells advertising for across all of its channels in the same way a traditional MVPD does. It sells its inventory via programmatic direct. fuboTV works with the agencies and brands to set up private marketplaces and programmatic guarantees. "We're delivering based on contextual or demographic targeting," says Horo­witz. "We get requests to guarantee on Nielsen digital ratings, which we can do." She adds that the majority of the advertising fuboTV serves runs in 15-, 30- or 60-second commercials.

While fuboTV goes out to transact through third-party supply-side platforms (SSPs) and demand-side platforms (DSPs), Roku created its own DSP. OneView allows anyone to buy on Roku, for the right price. "This is our OTT-focused DSP," says Natividad. "It's a programmatic self-service platform that allows any marketer to serve [the Roku audience] while also accessing ad inventory on Tubi or Hulu, for example." 

Roku’s OneView demand-side platform allows anyone to buy ad space on Roku while also accessing ad inventory on services like Tubi and Hulu.

Newsy has always run programmatic ads. "I think that's been one of the reasons maybe that we didn't freak out this year with all of the attention that's been turned to streaming. For years, we have been heavily programmatic, and so for this year [2020], it wasn't necessarily about us discovering something new in our business, but really more about optimizing our business for … where we stand today," says Brown. 

Redefining the Landscape

While the digital-native companies in this article are doing very well, unifying digital and linear is the goal. "We're participating in the redefinition of what digital means," says Louis Gump, SVP and general manager at Cox Media. "We're finding that TV Everywhere as a digital product—basically linear TV or linear video on a device anywhere, anytime—is extremely popular among our advertising customers. It's a large portion of our digital business.

"Targeting is a huge part of what we're doing with our current business," Gump continues. "We have the ability to target in a number of ways that are not related to cookies, that are privacy-observant and privacy-compliant. For the majority of our business, the cookie restrictions really haven't affected us too much."

The new buzzword in the broadcast world is "addressability," or the ability to target viewers based on their location and other first-party data. While this has been around in digital for some time, this move should speed the merging of technology stacks. "Addressable inventory on broadcast and cable is something that we're seeing as a very opportunistic future," says Brown. "We're involved with Project OAR [Open Addressable Ready], which is a broadcast standard for ad replacement and addressability." OAR has members from NBCUniversal, Scripps, ViacomCBS, Disney, Discovery, AMC Networks, Warner­Media, Xandr, FreeWheel, and Hearst Television, along with Inscape, a division of Vizio, which is developing the technology.

Merging Digital and Broadcast 

In 2020, a number of companies realized that their CTV inventory and their linear inventory were growing, and so both have become addressable. "If you're an OTT program or TV publisher, you're probably running two systems," according to Allen. He says that because of addressability, these two systems really need to come together, as the goal is to unify a company's decisioning across all end points. "There's a whole lot of new consumption happening and new expectations among the advertisers in order to reach audiences," he opines, "and doing it manually or kind of in a semi-automated way is not going to scale." 

"We've done a couple of different engagements where we've worked with broadcasters on how to unify those systems," Dworin says. "I think they all have a long-term view that big components of them will start to get brought together, but today, large parts of it are still very separate."

Dworin notes that most of the broadcasters are looking for ways they can unify and simplify, while knowing they have to continue to maintain the legacy business. "It's not like you can just one day switch everything over," he says. "We're looking at ways that we can bring programmatic advertising into traditional television. More and more, we're going to see the digital tools seep into the traditional workflow and gradually get unification." He states that the first areas seeing this are CRM and billing. "Yield management and inventory optimization is a big area [where] people are bringing together tools to manage creative workflows," he says. "We just worked with someone to build a unified creative workflow that can get high-quality mezzanine files that deliver everywhere rather than having two separate creative workflows." 

The Future

"If the consumer trend hit the tipping point this year [2020], then we expect the advertising trends to follow. Streaming is the trend. We're witnessing this mass migration and we ultimately believe that all content will be streamed," says Natividad. 

There are a lot of people who agree with Natividad. We've absolutely reached a tipping point, and as the landscape changes, more streaming opens up more opportunities for ads to be served.

While advertising terminology may be confusing, and the experience may not live up to our expectations, it's still a fast-evolving ecosystem. Digital has so many moving parts, it's fairly remarkable the industry has already progressed this far. Digital may come up short compared to linear, but broadcast TV has been around for a very long time, and digital is running full steam to keep up. 

Previously, TV viewers had cable accounts, may have subscribed to larger tiers of content, and also watched advertisements. If you compare streaming to this, it still looks like a good deal for consumers, and each incremental fix on the ad tech side will just improve things. Ad-supported content will thrive if future consumer spending habits favor free viewing, which is looking to be the case. The $20 that consumers want to spend won't go far for paid services, so ad-supported viewing will have to pick up the slack. 

There is no shortage of work to be done, and while revenue numbers are still small, viewing is trending up, and so are ad sales. As my grandmother would say, "What's not to like about this?"

Streaming Covers
Free
for qualified subscribers
Subscribe Now Current Issue Past Issues
Related Articles

An Operator's Guide to the Future of IP Advertising

Operators need to achieve a balance between support for legacy advertising tech and embracing adaptive bitrate (ABR) over IP.

Linear Addressable Advertising Is Here Now: Are You Ready?

While business and technical challenges have blocked linear take-off, innovation has now removed the roadblocks. This is the perfect time for ad sales, ad operations, and engineers to deploy the right technologies to enable this revenue game-changer.

The State of OTT 2021

Taking stock of where OTT is at, with a look back at an unprecedented year and how it will impact the rest of 2021

Global Programmatic CTV Ad Spend Increases 2.2x

Report reveals 78% of U.S. households are now reachable via programmatic CTV advertising, but ad fraud rates remain high, at 24% in Q420

How to Improve OTT Ad Revenue

Verizon's Darren Lepke discusses traditional and emerging OTT ad operations strategies in this clip from Streaming Media West Connect.