by Mike Shehan, Founder and CEO of SpotX
TV consumers are more spoiled for choice than ever before. Advancements in the way television is delivered to homes and across devices has created greater opportunity for audiences to find their favourite video content at a time and place that suits them, while still enjoying the inclusive, lean-back experience only the best shows and entertainment can offer.
As audiences move fluidly from the big screen to their tablet to their mobile phones in a bid to stay up to date with all of the premium content available, the development of data-driven TV has become paramount for advertisers and media owners to better understand changing consumer behaviour.
In the first study of its kind commissioned by SpotX and conducted by Kagan, a media research group within S&P Global Market Intelligence, ‘TV is Total Video: Predicting OTT and the Future of Video Advertising’ measured how changing patterns in the consumption of video have resulted in significant shifts in video advertising strategies.
Amongst the 41 US MVPDs (multichannel video service providers), pure-play OTT (over-the-top) providers, content owners, and advertisers interviewed, 80% of all respondents agreed that changing viewing habits had resulted in the requirement to deliver cross-platform audience reach, with 100% of advertisers saying that this was the biggest resulting strategy change for them.
Advertisers were also unanimous in their agreement that third-party data was a strong driver for the adoption of audience-based buying and selling of ads. Content owners were similarly united, with 94% saying that leveraging third-party data is the primary business driver for moving to this new buying model.
TV continues to thrive as an engaging and unique medium to reach consumers at scale, regardless of the screen the content is viewed on. Kagan estimated that total US digital video ad revenues hit $11.9 billion in 2017, up 18.8% from just over $10 billion in revenues in 2016. Total revenues could even rise to $17.1 billion by 2021, emphasising the importance of video advertising in the future.
OTT-delivered television allows advertisers to access more granular data at scale. The more data advertisers can access, the better they can target their ads to appropriate and more receptive audiences decreasing waste and improving messaging efficiency. In fact, more than half of respondents in the report said they expected to see an 11% – 20% increase in return on advertising spend by moving to audience-based buying.
The report, which was launched in February 2018, shows that advertisers are already showing a shift in their buying behaviour. Currently, only 11% of advertisers spend 21-40% of their advertising dollars on OTT platforms but within 2 years, this percentage is expected to grow to 67%.
“In OTT, we can now enable precise segmentation of viewing households, using highly granular audience attributes for targeted advertising on the best screen in the house to drive brand impact and results,” explained Ashwin Navin, co-founder and CEO of Samba TV, the world’s leading TV data and analytics company. “As the media industry moves more towards audience-based buying, OTT emerges as the most efficient way to reach desired audiences with attribution and optimal frequency.”
The report highlights the rapid growth of smartphones as a driver of changing consumer habits. Across all verticals, 76% of respondents said that more video streaming on mobile phones was the most important change in video viewing habits over the last year. Among advertisers, 89% said that this was the most important change, while 88% of pay TV providers, 75% of pure-play OTT providers, and 63% of media owners concurred.
This paradigm shift in how audiences, advertisers and media owners are interacting with TV does not come without challenges. Indeed, 88% of content pure-play OTT providers ranked implementation expertise as one of their primary challenges in the integration of data to their inventory while advertisers named data security and measurement as the primary challenges in adopting audience-based buying of ads.
As the ecosystem develops over the next two years, 78% of the whitepaper respondents will spend or generate greater than 20% of their revenue from OTT advertising, clearly illustrating the evolving total video strategies of advertisers and media owners. Data-driven advertising models are solving the cross-screen fragmentation challenges seen on both sides of the value exchange and are, in fact, increasing the return on advertising spend which brands continue to invest in.
Discover the TV Key Facts publication here.