In the world of advertising, change is a constant theme. In the over-the-top (OTT) industry, this has especially been true over the last few years and continues to be a space of rapid evolution.
As an industry, programmatic would not be where it is today without one main factor — viewership. The sheer number of people and time spent watching OTT content has driven the industry forward to invest in technology that benefits both advertisers and media owners.
Over the last few years OTT has achieved scale, established important standards and information exchange protocols, made strides related to targeting and measurement, and continues to innovate to more seamlessly transact and adhere to strict user privacy laws like GDPR.
From a pure scale standpoint, OTT has hit its stride
Viewership, along with the growth of the ad-supported model, has driven an important piece of the puzzle for buyers with regards to OTT — scale.
Streaming TV and long-form video has become a mainstream behavior in the U.S., driven by market factors and consumer interests, including:
- Connected device penetration: According to comScore, 79 percent of U.S. homes with Wi-Fi own at least one connected TV device (e.g., smart TVs, streaming boxes/sticks, gaming consoles, DVR/set-top boxes, and internet blu-ray players).
- Cord-cutting: Thirty-four percent of OTT audiences are “cordless” and no longer subscribe, or have never subscribed, and now can not be reached via traditional pay TV.
- Affordable options: Streaming services such as Netflix, FuboTV, Sling TV, and others can be purchased for $6-45 per month — a fraction of the cost of pay TV.
- Unique content: Many services offer unique and interesting content that people want to watch and fear missing out on.
These factors amounted to a forecasted 40 percent increase in OTT ad spend year-over-year in 2018 — a projected $2 billion, according to MAGNA.
In addition to the above, the standardization of device identifiers and information exchange protocols have also served to unlock the OTT advertising opportunity.
Standards established by governing bodies and industry partners have removed barriers to spend
In the early years of OTT, fragmentation across the numerous devices, operating systems, and streaming applications made it difficult to efficiently transact in a programmatic marketplace. This ultimately hurt scale for media owners and buyers alike due to the one-off nature and special setups it took to execute.
Learn more: 2019 Video Advertising Trends
Fortunately, due to the following established standards by governing bodies — such as the IAB and MRC — as well as strides made by industry players, OTT is more easily transacted today.
- In April of 2018 the IAB released a technical framework for Identifier for Advertisers, including limit ad tracking, on OTT platforms with best practices for delivering targeted ads to ensure the ecosystem is moving in the same direction.
- In June of 2018, the MRC released updated Video Ad Measurement Guidelines which included OTT. These new video requirements more fully addressed specific issues that relate to Server Side Ad Insertion (SSAI) or server-to-server measurement. Clarification was provided pertaining to general reporting of OTT including counting impressions, Invalid Traffic and Filtration, continuous play, latency, and video duration disclosures.
- In November of 2018, the IAB released apps-ads.txt, which authorizes sellers of app inventory, including connected TV. Earlier in the same year ads.txt was released to validate ownership of desktop and mobile inventory. Both specifications work to eliminate resellers of inventory and provide greater transparency in the video and OTT space.
- Additionally, Ad-ID has become the de facto standard, with support from across the media ecosystem, to register advertising assets in order to ensure greater transparency of the ad ecosystem, and more granular audience measurement across platforms.
- Bundle ID, a platform-specific OTT application identifier originally used by mobile publishers, has taken hold in the OTT space and is now the norm. The concept of a validated store ID, like an app bundle or app store ID, has not existed on all OTT platforms. As CTV devices standardize their app integration processes the buying processes will become more uniform.
- SpotX has worked with DeviceAtlas to refine documentation around passing of User Agents (UA) to help developers ensure that the UA value from their app is descriptive, a problem we identified in the space and proactively worked to resolve.
These standardizations have achieved operational efficiencies and given advertisers more confidence in their OTT investments.
An increase in targeting options made possible by data enablement
The scope of targeting options continues to increase and evolve as new capabilities emerge to target users based on first- and third-party data.
While age, gender, and location continue to be a mainstay for targeting on the big screen, audience-based campaigns are a strategy advertisers are employing to reach target audiences.
Data management platforms (DMPs) have become the norm for big brands to enable data, sync audiences, and make better decisions based on user behavioral- and interest-level data.
At SpotX, we partner with DMPs — Lotame, Salesforce DMP (formerly Krux), Oracle Data Cloud (formerly BlueKai), Adobe, Neustar, Tru Optik, and LiveRamp — to empower publishers, media owners, and broadcasters to enable audience data for targeting purposes.
Measurement of OTT has improved greatly due to innovation
Originally hindered by the fact that connected devices are not VPAID-enabled and are cookieless environments, the industry had to adjust to solve for nuances that are different from desktop or mobile.
Measurement companies, such as DoubleVerify, MOAT, Integral Ad Science, Nielsen and comScore, have made strides to validate OTT impressions and performance, which has served to legitimize the medium.
Additionally, to assist TV buyers with measuring TV and OTT apples-to-apples, some measurement companies now provide reach, frequency, and GRP measurement for OTT on the campaign level.
As measurement has evolved, advertisers are increasingly looking to their DMP and measurement partners to provide attribution insights to measure return on ad spend (ROAS).
New technologies and innovations are imminent
True to form in the advertising space, there is no shortage of products being developed to further refine the advertising opportunity for OTT.
In 2019, we expect further adoption of data security products like SpotX Audience Lock, which protects media owner data and adheres to strict user privacy laws such as GDPR.
Additionally, prepare to see more innovations pop up around competitive separation, ad pod management, better ad frequency controls, and the further convergence of OTT and TV inventory into a singular system.
We have come a long way in a few short years as an industry in managing and monetizing connected TV opportunities, and the industry will undoubtedly continue to experience change happen at a rapid pace.
Click here to learn more about the top OTT evolution trends to watch in 2019.
This article was written by Lynn Koves, specialist of Advanced Solutions Group at SpotX.