2019 Trends: Ad Supported OTT

Posted on December 11, 2018
By Matt Kaplan, Content StrategistContent Strategist

Is 2019 the year that ad supported OTT video viewers reach a critical mass, or will the number of people who watched ad supported OTT remain low? Will the amount of ad supported OTT video be scant in the new year, or will the number of people watching ad supported streaming video content rise to unforeseen heights?

We are confident that content on streaming services will become bigger than ever before in 2019, and that the dominance of traditional television on the largest screen in the house is declining.

Note: This is the second in our series on top trends for 2019. Our first post was on transparency. Stay tuned for upcoming blog posts all about what leading figures in the mobile advertising and marketing space think will become pervasive in the new year.

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What is OTT Exactly?

The Interactive Advertising Bureau (IAB) defines over-the-top (OTT) video as “video content transported from a video provider to a connected device over the Internet outside the closed networks of telecom and cable providers.” Roku boxes, Chromecast sticks, Hulu and Netflix are popular, common examples of OTT video.

Who watches OTT video content? OTT viewers are cord cutters or cord shavers. While OTT video viewers don’t outnumber TV only viewers just yet, they may very well be the largest audience segment between the two in short order.

Advertising’s Role in the OTT Ecosystem

Among advertisers, OTT viewers are a tempting audience since traditional audience segmentation strategies don’t reach them. Plus, they tend to have a higher income than their peers.

But is there an audience for ad-supported video (ASV) streaming content? ASV OTT viewers may be the minority - streaming video on demand (SVOD) viewers are more popular now, thanks to services like Netflix. But, it’s possible this audience has a higher ad receptiveness than is widely believed. OTT viewers likely don’t mind TV ads if that means not paying for three or more streaming services while still getting a positive viewing experience.

OTT video streaming services also offer a few other key potential benefits for advertisers and their partners:

  • Ability to reach a large and diverse audience across ages and geographies.
  • Ability to reach people that can’t be reached via traditional routes like radio or broadcast television advertising.
  • Ability to precisely target TV-like ads without needing to spend a large TV media budget, and to have more knowledge on who is watching the ad and what they care about.
  • Ability to capture someone’s attention for a longer amount of time than is possible on computers or mobile devices.

Still, all is not rosy on the OTT video advertising front. Because there has yet to be a critical mass of brands flocking to advertise in this space, it’s largely a new frontier at the moment. Standards and processes will need to be hammered out and finalized in 2019 (and beyond) before it becomes a de rigeur practice among savvy marketers.

However, since OTT is largely an app-dominated space, likely what works well now in mobile app environments will probably translate onto these larger screens. Time will tell if that indeed ends up happening in 2019 or not though.

What Will The 2019 OTT Video Landscape Look Like?

Right now, OTT viewership is still a small fraction of the overall video and television arena. But, that will likely all change in 2019.

“Once upon a time, software was eating the world. Now, it’s video’s turn,” says Abhay Singhal, Co-Founder and President of Advertising Cloud at InMobi.

The mystery in the new year is not whether OTT will reach a critical mass, but rather what shape it will take. Thus far, ad-free premium subscription services like Netflix and HBO Now have proven to be the dominant model. Nevertheless, ad-supported options may prove to be more lasting in 2019 and beyond as there is a large segment of viewers who still are willing to receive ads if that means they can get their content for free and not pay for yet another video streaming solution.

“Ad-supported OTT will prove to be a strong contender for television advertising dollars as more and more viewers shift away from traditional television,” says Kedar Gavane, VP of India, Australia and New Zealand for ComScore. “I believe that OTT will be take a lion’s share of the advertising pie” in 2019.

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