Dushyant Kohli, Head of Growth, NexGtv

The lines between traditional television programming and digital video content are blurring with each passing day. OTT video has fundamentally altered the viewing habits of individuals and empowered them to choose what they want to watch. The one-dimensional and inflexible experience of television is being replaced by more dynamic and interactive channels offering video-on-demand and catch-up TV content. In addition to all of this, OTT continues to siphon off a major chunk of the advertising monies from traditional television networks, which are now realizing that shrugging off the competition from digital video platforms was not such a good idea after all. As a result, TV ad buying is in the midst of an evolution, shifting gradually from a one-for-all to a one-on-one approach, with maximum emphasis on capitalizing on the consumers’ cross-device viewing habits.

The Dawn of Digital Advertising

Globally, many OTT services are based on an advertising model, which contributes to more than 80 percent of the revenues generated by the sector. Advertising spends from OTT content are expected to rise from USD10 billion in 2015 to USD40 billion by 2020. Industry experts also believe that this rise in advertising spend on OTT platforms will create a bigger dent in revenues for television networks, as marketers increasingly seek to explore digital avenues to acquire customers – specifically, the millennials – and deliver their brand message across multiple devices.

Digital advertising allows marketers to obtain useful, data-driven insights on consumer behavior and take advantage of latest trends to design targeted campaigns and enhance engagement programs. Compare this to ad buying for linear programming on traditional television networks, which is a much more complex process, involving too many steps like selecting spots, estimating prices and viewership, preparing a plan with the segments, and demographics you want to target, etc. Then comes measuring the reach, fixing campaign schedules, and creating post-campaign strategies and managing payments. With digital advertising, however, the process is far less cumbersome, and the opportunity for advertisers is huge. Although most ads on OTT video platforms are simply the same whether aired on national television spots or between linear TV programming, marketers are experimenting with shorter interactive advertisements or dynamic ad insertions, which allows ads to be changed over show breaks for each individual consumer – something they could not do with programmatic ad buying on linear TV channels.

Adapting to the OTT Phenomenon

There is no doubt that each day a large number of television viewers are migrating to digital video streaming platforms, a trend that is being intensified with the rise of Internet-enabled devices like smart TVs. With devices like Google Chromecast and Amazon Fire TV simplifying access to OTT content even further, marketers and brand managers need to take cognizance of some of these trends to help them crack the digital video advertising code. If they look close enough, the real opportunity lies in targeting these audiences who are shifting from linear TV to OTT platforms, and exploring the possibility of displaying targeted real-time advertisements to consumers. It is not too complex either since the technology enabling real-time decision-making already exists. With software to measure cross-device viewership, advertisers can translate successful mobile and online video campaigns into effective OTT-centric ads. In addition, the same metrics which are used to measure performance on digital/mobile can be used to measure OTT performance as well, while leveraging the consumer data and insights gained from the OTT content platforms. Another area of opportunity for advertisers is the personalization and hyper-targeting of ads for OTT viewers. By micro-segmenting consumers, individual viewers can be targeted based on their psychographic assessment, behavior on social networks, and spending patterns. In fact, many ad-driven OTT platforms are already testing dynamic ad insertion for popular content on OTT platforms.

The biggest takeaway for advertisers here is that they need to better understand their core audiences on digital channels and gather relevant data on them. Since viewers on the OTT ecosystem are likely to be even more fragmented, knowledge on consumers and demographic segments will go a long way in targeting customers who will actually buy what they are selling. Since no definitive advertising model for OTT video exists yet, marketers can improvise and adopt new ad models from other digital segments.