We are living in a golden age of innovation when it comes to video advertising. Traditional television advertising is being disrupted by OTT video advertising, which targets consumers on their televisions, computers, tablets, and smartphones. There is a lot of discussion about over-the-top (OTT) advertising and how it will affect the future. In this article, we’ll look at the seven most significant trends that are altering the future of video advertising.
Traditional means of marketing have been shown to be less successful than OTT video advertising. This is owing to its ability to engage customers in a non-intrusive manner. On-demand streaming services, for example, allow users to pick what they want to watch rather than being overwhelmed with ads they can’t ignore. While certain kinks need to be ironed out before OTT advertising can achieve its full potential, it’s already showing signs of promise and is fast becoming the new standard for video advertisements. Advertisers are taking advantage of this new trend as more people use streaming services to watch content.
Before we dive into the 7 trends shaping OTT advertising, first we must take a deeper look into what OTT advertising is.
What is OTT advertising?
OTT advertising is advertising that is displayed to viewers through video streaming services or devices for example Roku and FuboTV are two well-known streaming service providers.
Viewers may watch their favorite shows at any time of day or night since streaming companies are not bound by broadcast schedules or geographical constraints.
Because people consume content on a number of devices, OTT advertising must be designed to work on anything from a large-screen television to a laptop to a smartphone. One of the primary reasons marketers are driven to OTT advertising is that it allows them to reach a smaller but more targeted audience than traditional broadcast advertising.
The OTT industry is continuing to mature and its technologies are becoming more reliable and robust. As the industry continues to grow, more players will enter the space, and OTT providers will need to continue meeting the needs of changing consumer behaviors.
Below, we’ll review 7 trends shaping the OTT industry.
1. Greater Reach With Increased Subscriptions
Since the beginning of the Covid-19 pandemic, there has been a significant increase in the number of individuals streaming media from their homes. In 2021, streaming content will be consumed by more than 106 million homes in the United States, surpassing traditional linear television.
Revenue from the top ad-supported streaming services (Roku, Hulu, Peacock, Pluto TV, and Tubi) grew by 31% year over year to $849 million in the second quarter of 2020. Furthermore, YouTube saw a 90 percent rise in watching times in 2020, with content being viewed for more than 30 minutes on TV screens.
OTT services are increasing in popularity. Ad-free services like Disney Plus are handling growing demand for their services, with 103.6 million subscriptions reported in the second quarter of 2021. Disney Plus is expected to reach 294 million subscribers by 2025. Despite the fact that it is currently an ad-free OTT service, these figures can be used to forecast OTT’s continuing development into 2021 and beyond.
As the world advances online, OTT advertising is taking over the conventional TV experience. More companies are seeing the advantages of using this form of advertising to connect with their customers. Users are choosing these services because they want on-demand access to the programs they want to watch rather than viewing planned shows on linear television. Subscribers have additional options with OTT services. OTT advertisers are taking advantage of the increased user base to reach a wider more targeted audience with their advertising.
2. More Cost-Effective Than Linear TV Advertising
Advertising via traditional cable or satellite is more expensive than advertising on the internet. Because you’re not limited by predefined scheduling times or geographic locations with OTT advertising, less of your advertising money is wasted on irrelevant audiences, making OTT ads more cost-efficient and allowing you to spend your advertising dollars more wisely. TV publishers, such as CBS, are embracing OTT and developing their own streaming platform, such as CBS Interactive.
Traditional television advertising is time-consuming and labor-intensive for many companies. The majority of these decisions, such as when and where to broadcast an advertisement, can be made automatically using programmatic TV advertising which is embraced by OTT providers. To save both the publisher and advertiser time and money.
Smaller brands can benefit from OTT advertising as well since OTT platforms such as Hulu allow brands to acquire set impressions for a fixed fee using their self-serve bidding system. Self-serve platforms are making the OTT advertising industry more accessible to smaller companies by removing the manual work of handling smaller advertisers for publishers like Hula.
3. Targeting Relevant Audiences Becomes Easier
As OTT advertising becomes more popular, advertisers will be able to target their ads more precisely. The more time a subscriber spends with an OTT service, the more data they may collect about them. Audiences are created using demographics, location, device, interests, and behaviors. Advertisers can target specific audiences with OTT commercials, improving conversions and brand exposure compared to linear television, where generic ads are presented to a diverse audience.
4. OTT Dynamic Ad Options Increases Conversions
Advertisers continue to reap the benefits of customized ads, which help them boost conversion rates. Dynamic advertising is when the content of an advertisement changes depending on who is seeing it. When an ad is customized for a subscriber, they are more likely to respond. Once retargeting advertisements are set up when a subscriber engages with an ad and visits a brand’s website, they may be tracked and shown more relevant advertising on their smart TVs. Because the subscriber is targeted with the same material several times, brand awareness rises, which aids ad conversions.
5. Higher Engagement Rates With OTT
OTT advertising has better engagement rates than linear tv commercials since it’s well known that many linear tv ads aren’t even watched as people are too busy checking their phones or leaving the room to make a coffee or get something from another room while the ads are on. OTT commercials work because they are short and non-skippable, and most people who sit down to watch on-demand Hulu watch the short ad to get into the show they want to watch on their own time. Subscribers have come to learn that OTT advertisements are brief, and they know, unlike linear television, their show will be back on within seconds rather than minutes.
6. Subscription Fatigue Increasing Advertising Monetization
Subscription fatigue has been reported among users as a result of having too many alternatives across several OTT services to which they are subscribing. Maintaining subscriber interest in OTT platforms is essential for providers. OTT providers may utilize pay-per-view or advertising monetization as an alternative to subscription monetization.
Even as subscription fatigue sets in, OTT continues to gain ground on conventional television. Advertising monetization on OTT platforms is expected to increase as more businesses choose this sort of targeted advertising over traditional television advertising.
Brands such as Walmart, Coca-Cola, Ford, and Target recognize that advertising is shifting from linear television to OTT and are already discovering what works best in this channel.
7. User Experience (UX) Will Continue To Be Important
The success of OTT platforms has been due to their user-friendly interfaces. Subscribers want a diverse selection of shows and movies, but they also want an easy-to-use interface. Netflix provides a pleasant user experience and is visually appealing. Netflix is also very user-friendly across all devices. Hula’s user interface isn’t as user-friendly as Netflix’s, but you can guarantee that Hulu is working to improve their UX in order to compete with Netflix and other OTT platforms.
The OTT advertising market offers lots of opportunity for advertisers to get in front of their specific audiences at the right time, leading to increased conversions and revenue for these companies. OTT will continue to outperform linear television, with more established publishers, such as CBS, likely to enter the market with their own streaming platform, moving away from traditional television. The OTT market is a fast-growing and exciting industry to be involved in with providers constantly innovating to provide the best experience for subscribers and advertisers. It will be interesting to watch this market develop over the coming year.