The shift of TV audiences to streaming or over-the-top (OTT) video platforms like Netflix and Hulu has, in combination with viewers embracing a variety of screens, fueled the rise of many new video viewing options and the demand for targeted ad space on these services.
But despite this clear trend, buying in OTT environments is still relatively nascent. Early adopters may be graduating from their experimental phase of OTT, with many looking for better ways to track performance and optimize their campaigns. However, brands are turning for guidance to their media agencies—a group that largely hasn’t adopted OTT as a core competency or established dedicated teams for leading it.
Currently, streaming video ad buying is generally handled by one of two teams: television departments that specialize in advanced TV or digital departments that focus on mobile and web-based executions.
Digital teams are comfortable with programmatic and think in terms of clickability, viewability and interactivity, and their buys reflect that. Television teams, on the other hand, evaluate their buys in terms of gross rating points (GRPs) and are more accustomed to using traditional insertion orders than programmatic tools. What we’re seeing is that OTT, which requires a blend of these two distinct skill sets, is falling victim to the language barrier that exists between the two.
To agencies today, developing an internal arm to handle over-the-top executions may feel like overkill. Regardless, the move to incorporate dedicated OTT skill sets into the modern agency is no less necessary than the creation of the first television departments within agencies in the 1960s. That’s a bold statement, to be sure, but let’s dig into why it’s true.
Traditional television is still going strong, with global revenues forecast to reach a peak of more than $200 billion this year. However, the same evidence also suggests that revenues will stall at that high point.
OTT usage is on the rise. Media research group Kagan forecasts that shipments of OTT streaming devices will increase by more than 10 percent over the next year, rising by 28 percent between now and 2021.
For advertisers, connected TVs and other OTT devices present an opportunity to reach audiences that are shifting away from traditional channels. In addition, the data available in digital creates enhanced targeting capabilities, allowing advertisers greater insight into their audiences and reducing the risk of buying out-of-target impressions.
From the publisher perspective, this heightened level of insight translates to more valuable inventory as advertisers are willing to pay more for a more targeted impression, which in turn creates a more relevant ad experience for viewers.
In the changing world of media consumption, agencies need to be able to connect the dots here, enabling OTT executions that live up to their potential by attributing the data that’s available through traditional and digital channels respectively to the connected environment.
Some innovative players are already working to solve this challenge for advertisers. For instance, Samba TV allows advertisers to map digital subscriber data to traditional household data, enabling one-to-one audience attribution in cross-screen campaigns.
In a world prepared to capitalize on the vast opportunity of OTT, media agencies would be equipped with the skills to effectively use data. This is not to say that over-the-top delivery should be expected to replace television, but as nontraditional channels gain popularity, the way forward is a holistic, cross-screen strategy that allows advertisers to reach consumers wherever they choose to watch.
With the industry moving in this direction, agencies who proactively develop in-house OTT departments will have an advantage over those who continue doing business as usual.