In our recent research survey, TV is Total Video: Predicting OTT and the Future of Video Advertising, more than half of respondents said they expect to see an increase in return on ad spend (ROAS) or yield by moving to audience-based buying or selling of ads.
Respondents are for the most part in agreement regarding the benefits, but there are still a number of challenges standing in the way of full adoption of audience-based buying and selling of over-the top (OTT) video ads. Today, we sat down with Randy Cooke, VP of enterprise solutions at SpotX, for insight into the top-identified challenges.
Data security was ranked as a top concern across all types of respondents. What have you heard in-market on this topic and what measures can be taken to alleviate this concern?
Rightfully so — audience is really the intersection of content and data. Data and the insights they yield are, materially speaking, intellectual property worthy of protection.
As a buyer looking to activate CRM data or proprietary research to help decide which ad opportunities meet a specific performance metric, you don’t necessarily want your media vendors to know why you’re selecting specific ad opportunities over others. Conversely, if you’re a vMVPD or a programmer with a direct-to-consumer app, you probably know a lot about your subscribers: Household composition, income, or how and when subscribers interact with your content. You don’t want buyers to have unmetered access to that information, as it could affect your ability to set and manage rates for your inventory.
Solutions like SpotX’s Audience Lock can connect what buyers and sellers respectively understand about their mutual consumer segments, creating audience marketplaces without the risk of data leakage. With data becoming every bit as valuable as content within an audience-based marketplace, being able to facilitate a transaction that functions on data makes security a priority.
Implementation expertise is another top-identified challenge. Interestingly, it is ranked as the top challenge for pure-play OTT providers in particular. Why might this be the case and what suggestions do you have?
The simplest answer is that audience is everywhere, and regardless of the reach you offer as a media owner, there is vastly more audience available across TV and OTT than any one brand can engage. Pure-play OTT providers—as opposed to traditional media companies that also distribute content through OTT channels—are leaning into a total video marketplace that is already oversupplied, particularly in linear environments.
You can’t look at OTT in a vacuum. While it may be unique in capability, it is still very much part of the TV ecosystem sharing the same living room big screen as over-the-air broadcast.
There’s an enormous opportunity for SpotX to be sort of a guide for buyers and sellers as the value centers of TV transition from being based on 30-second ad units to individual impressions.
These are two different business models, and the key to monetizing OTT audiences lies in the ability to connect their two value structures—spots and impressions. This is where implementation expertise comes into play, and it starts with understanding the relative value of an audience target across channels.
Pricing was the third challenge cited by our respondents. What strategies do you recommend to frame this in terms that buyers and sellers unaccustomed to the OTT space can understand?
From an advertiser’s perspective, the value of traditional linear TV has always been based on content. No matter what demographic is in play or how much data a buyer employs to determine the effective value of an advanced audience target, a $5,000 spot in a show is still worth $5,000. CPM, given any variable target audience, is a second-order effect.
In OTT, however, CPM is the primary order of value. And its efficiency is directly comparable to that second-order effect from the linear environment. A media owner earning $200 effective CPMs for auto intenders in traditional linear should use that data to inform rates among OTT audiences, particularly in live linear streaming. If an advertiser realizes they can target auto intenders at a $100 CPM price point in OTT, it won’t make sense to use traditional linear to engage those consumers.
To learn more about the future of cross-screen video, download the report.