March 2017 An eBook from the editors of OTT’s Advertising Problem
2 Introduction
OTT Advertising Prepares for a 3 New Chapter
How OTT Providers Are 9 Targeting, Tracking and Timing Ads
Sponsored Content 12 The Move to Server Side Ad Insertion
OTT Ad Delivery Case Study: 13 Hyundai’s ‘Skip’ Ad
What Advertisers Are Saying 15 About OTT
Programmatic, Social, VR and 18 the Future of OTT Advertising
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Introduction
It’s no secret that the OTT video market is exploding. advertisers alike. Further, newer technologies ranging 2 Introduction With relatively new, heavyweight entrants like DirecTV from programmatic advertising to virtual reality promise Now and HBO Now, alongside increasingly powerful to create further complexity. 3 OTT Advertising players like YouTube and Amazon, the space appears Prepares for a New positioned to gain significant traction in the years ahead. With the industry now hunting for results in the form Chapter of dollar signs, is time running out to fix advertising’s But the market for advertising in the OTT space is still OTT problems? 9 How OTT Providers Are Targeting, Tracking And very much in a state of flux. Ad blocking, fraud and Timing Ads measurement metrics are ongoing issues for providers This Fierce eBook will break into the OTT advertising of ad-supported online video content and brand market in five parts. Read on. 12 Sponsored Content The Move to Server Side Ad Insertion
13 OTT Ad Delivery Case Study: Hyundai’s ‘Skip’ Ad
15 What Advertisers Are Saying About OTT
18 Programmatic, Social, VR and the Future of OTT Advertising
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OTT Advertising Prepares for a New Chapter By Tara Seals
2 Introduction Compared with the paid, subscription video-on- demand (SVOD) services that dominate the over-the- 3 OTT Advertising top (OTT) market today (Netflix, Amazon Prime, Prepares for a New HBO Now and so on), ad-supported video-on- Chapter demand (AVOD) and live services have floundered, mainly because they tend to lack compelling, premium 9 How OTT Providers Are Targeting, Tracking And content that justify viable ad rates. However, market Timing Ads shifts indicate that 2017 could be a bellwether year for advertising’s role in the OTT video ecosystem. 12 Sponsored Content The Move to Server Side The first generation of ad-supported services has Ad Insertion suffered because of two main issues: The sheer cost of content acquisition and a lack of standardization for “Online video advertising as a pure-play strategy is 13 OTT Ad Delivery Case ratings and measurement for digital content. broken because the CPMs are so low,” explained Dan Study: Hyundai’s ‘Skip’ Rayburn, principle analyst at consulting firm Frost Ad The acquisition issue is perhaps the biggest obstacle, & Sullivan. “For the premium content services, the and it can be encapsulated in a sentence: Netflix spent content acquisition costs are so high that you can’t 15 What Advertisers Are Saying About OTT $6 billion on content in 2016—a chunk of investment pay for it based on a CPM model alone. Consider that advertising alone could never recoup. that Microsoft shelved plans to do a live service to the 18 Programmatic, Social, Xbox, because it realized it couldn’t make its content VR and the Future of The issue is circular: Without the right, differentiating investment back—even though it’s the No. 1 non-pay- OTT Advertising content, consumers won’t watch, and without eyeballs, TV device connected to the TV in American homes.” providers can’t charge viable ad rates. And without a working monetization model, it’s impossible to invest YouTube is the one looming exception in the ad- in differentiating content in the first place. Many of supported market to date—and it gets by based on its the most successful OTT services have opted out sprawling volume. of that chicken-and-egg treadmill entirely and are subscription-only. “YouTube, of course, has a massive ad-supported online video business that has been growing
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healthfully according to our calculations,” said One example of a troubled player on this front is Forrester Research analyst Brandon Verblow. Verizon Communications’ mobile-first Go90 service, “However, even YouTube falls short of Netflix in according to Rayburn. “They have a huge number terms of downstream bandwidth consumption, and of people working on Go90 and it’s free—but no 2 Introduction its estimated ad revenue is only a small fraction of one watches it,” he said. “The fact is, everyone is traditional TV ad revenue.” competing for OTT ad dollars and eyeballs, and some 3 OTT Advertising of these services just won’t make it because they don’t Prepares for a New In fact, “about 75% of YouTube content can’t be have the content.” Chapter monetized—it’s user-generated, gets no traffic or is of bad quality, so no one will advertise,” Rayburn said. New Models in the Works 9 How OTT Providers Are Targeting, Tracking And “Its sheer scale is what it relies on.” This first generation of ad-supported OTT Timing Ads approaches is poised for change, because that middle Joel Espelien, senior research analyst at The Diffusion no-man’s land is being filled out with services that are 12 Sponsored Content Group, noted that YouTube is a “different animal experimenting with hybrid models. Hulu for instance The Move to Server Side because it really has relatively no content costs. last year axed its ad-only tier in favor of a low-cost, Ad Insertion We’re talking about things like Minecraft videos that subscription-based, ad-limited tier. someone uploads.” (Of course, it’s worth noting that 13 OTT Ad Delivery Case YouTube recently launched its own streaming live TV “This provides some stable level of income via Study: Hyundai’s ‘Skip’ service for under $40 per month.) subscriptions, as long as they keep consistent market Ad share, and then the advertising allows a bit of padding The end result is that the OTT advertising market is to generate incremental income,” explained Glenn 15 What Advertisers Are Saying About OTT like a barbell—weighted on both ends, with nothing in Hower, senior analyst at Parks Research. “We’re seeing the middle. fewer and fewer solely ad-supported services.” 18 Programmatic, Social, VR and the Future of “It’s a good time to be HBO and Netflix, and short- Forrester’s Verblow said that growth in OTT OTT Advertising tail content is doing okay,” explained Espelien. “And advertising will require the migration of traditional TV meanwhile YouTube is fine. But the guys in the middle, content to digital platforms—something that hasn’t who want to make a service and or create their own been available in large amounts in any kind of ad- video channel and brand and then try to sell ads supported OTT. There are, however, indications that around it—that’s a tough row to hoe. Those people are that this is about to change. struggling to eke out an existence and many of them will not, because there’s not a bonanza of money. But really “Traditional TV providers control much of this high-end content—or a crazy big platform—that works.” content, and they’ve been cautious about making
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their programming available outside the lucrative TV these services can, in theory, command viable ad rates. bundle,” explained Verblow. “Even if many viewers Indeed, an object lesson could come from the TV want to cut the cord, they may not follow through as Everywhere world, where content providers offer those they realize they cannot get all the content they want.” with pay-TV subscriptions the ability to watch content 2 Introduction online. Things are changing though. Dish Network’s Sling TV 3 OTT Advertising has been offering streaming TV for more than a year, “Professional production-value premium content does Prepares for a New and AT&T recently joined the fray with its launch of attract higher CPMs than a Minecraft video,” Espelien Chapter its DirecTV Now OTT service, and there are several said. “If you look at NBC’s TV Everywhere app, it’s other noteworthy services along these lines. now running ad blocks that are similar to what you get 9 How OTT Providers Are Targeting, Tracking And on regular TV—there are 120-second breaks several Timing Ads Most recently, Google’s YouTube launched its own times during the show, and there’s no ad-skipping. live TV service with dozens of channels, as well as the They also generally have a pretty good idea of who’s 12 Sponsored Content Big Four networks, for under $40 per month. Hulu watching. They’re not yet doing eyeball scans, but The Move to Server Side is expected to launch a similar offering. Also helping they can resolve where I am down to my zip code, so Ad Insertion matters is the fact that CBS content—one of the last they can be a little targeted. That’s new—last summer Big Four TV network holdouts on live-streaming— during the Olympics all you got was generic national 13 OTT Ad Delivery Case is now slated to appear on the upcoming Hulu live ads for McDonalds, etc. Recently I’ve noticed that Study: Hyundai’s ‘Skip’ local ads have started to appear, indicating that they Ad can generate enough revenue off that online view to “Professional production- treat it like traditional advertising.” 15 What Advertisers Are Saying About OTT value premium content does attract higher CPMs than a As for pure-play AVOD services from smaller players, 18 Programmatic, Social, Minecraft video.” the path is less clear. Hower said that one of the VR and the Future of —JOEL ESPELIEN, SENIOR RESEARCH models being tested is custom content packages. OTT Advertising ANALYST, THE DIFFUSION GROUP “In the short-form space, there’s a move towards sponsorship and branded models, which has a few streaming service and could also start appearing on implications,” said Hower. “This allows creators and other OTT services. CBS content is already on the advertisers to have a mutual level of control over how Sony PlayStation Vue service. the brand is presented and how the messaging comes across. It also allows advertisers to build one-on-one Armed with a stable of professional, premium video, relationships with creators and influencers—giving
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them a hands-on relationship with how their message churn rates are high—so providers have to move is delivered and who it’s coming from. This approach beyond generating market share so they are looking is a lot more resource-intensive, but there’s anecdotal at retention and building value. And from that evidence that it’s creating better engagement.” standpoint, we’ll start seeing OTT 2.0—how do we 2 Introduction sustain our businesses now? Advertising will be a key In contrast, in a typical insertion model, brands buy discussion point.” 3 OTT Advertising 15 or 30 seconds of media time, and the platform, Prepares for a New whether it’s YouTube, Hulu, DirecTV Now or The Need for Better Measurement Chapter something else, places the ad depending on its own In theory, OTT services are counting unique parameters. viewers, measuring time spent watching and tracking 9 How OTT Providers Are Targeting, Tracking And demographic info on age and location. But none of Timing Ads “I think going forward, we’ll see a lot more them are doing it the same way. experimentation in the OTT space,” Hower said. 12 Sponsored Content “It’s full of so many different services now and the “A full 10 out of 10 advertisers are using Nielsen The Move to Server Side Ad Insertion
13 OTT Ad Delivery Case Study: Hyundai’s ‘Skip’ Ad
15 What Advertisers Are Saying About OTT
18 Programmatic, Social, VR and the Future of OTT Advertising
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ratings to evaluate the value of content on linear TV,” buying, whether ads are targeted to specific users or Hower said. “But in the digital space, where you have whether ads are interactive,” Verblow said. “These metrics like unique viewers and time spent viewing, are the factors that have the potential to generate each evaluation technique has its own little quirks.” incremental value and the ones that should really 2 Introduction matter to advertisers and content providers.” For instance, YouTube’s standard for counting a 3 OTT Advertising unique view is that a viewer watches a video for 30 An example of this is the fact that content providers Prepares for a New seconds. In contrast, Facebook uses a three-second and advertisers are looking to incorporate social data Chapter standard, according to Hower. Also, it’s worth noting into their measurement approaches. that Facebook recently admitted that it miscalculated 9 How OTT Providers Are Targeting, Tracking And the level of video viewership on the social network, “Snapchat has an analytics API, Facebook has an Timing Ads inadvertently inflating the platform’s average viewing API—so there’s more granular data available out time. These incidents don’t exactly instill confidence there,” Hower said. “But none of this talks to each 12 Sponsored Content in advertisers. other. Advertisers are trying to get to that point where The Move to Server Side they know what viewers are not only watching, but Ad Insertion “Everyone does measurement differently, and no one also commenting on, what ancillary content they’re wants to work together,” Rayburn said. “Sony, Twitter, visiting on YouTube and so on. The Holy Grail is 13 OTT Ad Delivery Case Google and Facebook are not going to get together to incorporating social, video chat, TV, digital video into Study: Hyundai’s ‘Skip’ share engagement numbers in a standardized way.” a full profile of what an individual viewer is watching, Ad and how. It’s a jigsaw puzzle with a billion pieces, and This lack of standardization also extends to knowing we’re not there yet.” l 15 What Advertisers Are Saying About OTT how to track viewership across linear TV and digital viewing. “The idea with some of this, like the NFL’s 18 Programmatic, Social, deal to show Thursday night games on Twitter, is to VR and the Future of reach a younger audience that may not be watching it OTT Advertising on TV,” said Rayburn. “But how do you know they’re not watching on TV?”
To really make a go of OTT advertising, marketers will need to develop screen-agnostic planning and execution to reassemble the audiences that fragment across these screens. “Going forward, it will be important to track innovations such as audience-based
OTT’s Advertising Problem // March 2017 // Perfecting the Media Experience
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How OTT Providers Are Targeting, Tracking And Timing Ads By Rob Pegoraro
The OTT video market continues to undergo “The information you have about them (the 2 Introduction dramatic changes, but according to three top customers) is pretty bulletproof because they’re giving executives in the space, the advertising opportunity you money,” said Peter Naylor, senior vice president of 3 OTT Advertising remains strong. That’s because targeting technologies ad sales for Hulu. Prepares for a New are relatively robust, customers generally watch ads, Chapter and experiments are relatively simple to conduct. Hulu also asks viewers what kinds of shows they want to watch. And since it’s an on-demand service, it can 9 How OTT Providers Are Targeting, Tracking And Indeed, identifying viewers to match them with ads is assume more viewer interest in whatever’s playing than Timing Ads easy at Hulu for one simple reason: Since the service any linear service could. requires paying subscriptions, it literally knows where 12 Sponsored Content its audience lives. Naylor added that about 80% of Hulu ads are targeted The Move to Server Side Ad Insertion
13 OTT Ad Delivery Case Study: Hyundai’s ‘Skip’ Ad
15 What Advertisers Are Saying About OTT
18 Programmatic, Social, VR and the Future of OTT Advertising
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on traditional criteria—“demo, geo, gender, genre”— Not The Same Old TV Ads with 20% booked using programmatic targeting that The results of this data-driven market can sometimes calculates a spot’s real-time value and matches a buyer. look much like the commercials that populate “It’s a material part of the business, and it’s growing,” traditional linear TV. 2 Introduction he said. “The majority of the ads you see on our network 3 OTT Advertising It’s not perfect: Hulu viewers have complained on also run on linear TV,” said René Santaella, senior Prepares for a New Twitter about seeing Spanish-language ads. “It could vice president of global ad strategy and operations at Chapter potentially be a multicultural marketer,” Naylor said Crackle, Sony’s ad-supported streaming service, in of those gripes, adding that viewers may have had responses forwarded by a publicist. Hulu’s Naylor said 9 How OTT Providers Are Targeting, Tracking And somebody on their account watch a Spanish-language as much: “The majority of our ads are things you can Timing Ads show. see on broadcast and cable.”
12 Sponsored Content He added that although Hulu can target ads down to The Move to Server Side “It’s a material part of the Zip codes, many advertisers don’t bother. “A lot of Ad Insertion business, and it’s growing,” our geo-targeting is multi-state,” he said, noting that – PETER NAYLOR, SENIOR VICE Hulu’s biggest category of advertising is automotive. 13 OTT Ad Delivery Case PRESIDENT OF AD SALES, HULU Study: Hyundai’s ‘Skip’ Hulu touts a reduced ad load in its flagship Ad subscription product, and Sony’s Crackle is also OTT services without a database of paying experimenting with fewer but more valuable ads. 15 What Advertisers Are Saying About OTT subscribers must rely more on external data sources such as Google’s ad-targeting services. Said Crackle’s Santaella: “You don’t want to hit the 18 Programmatic, Social, same viewer over and over due to over-targeting.” VR and the Future of “We’re able to lean into a lot of the work they’ve done OTT Advertising around geographic targeting, demographic targeting,” Last year, that ad-subsidized site rolled out a reduced- said Jamie Wilkinson, general manager at VHX, which advertising product, Break Free, that pares the ad load provides a white-label OTT platform to third parties. down to just five per episode during its original series. The idea is binge-watching-friendly ads: Each of that Wilkinson added that VHX, which he co-founded small group of advertisers can continue telling its story before Vimeo’s purchase of the firm last spring, can over succeeding episodes. also combine viewership data from across its partner networks for a better understanding of viewers. Hulu has been conducting its own experiments to
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see what formats resonate better with viewers. “We’re that aim to displace traditional cable and satellite totally open to accepting 5, 7, 37, 83 [seconds],” subscriptions opens other possibilities. Naylor said of the ad lengths Hulu can support. “Bank of America gave us a sequential ad; you’d see three ads Hulu, for instance, is readying a live TV service for 2 Introduction from Bank of America, but it was a story.” launch this spring and now has a VR app. 3 OTT Advertising Viewing Platforms And Effectiveness VHC’s Wilkinson expects more live-streaming across Prepares for a New “The vast majority of our audience viewing occurs on the company’s partner networks, which will in turn Chapter closed platforms on gaming consoles, streaming boxes call for different ad formats. “I would expect a different and mobile apps,” said Crackle’s Santaella. kind of user behavior around live streams versus on- 9 How OTT Providers Are Targeting, Tracking And demand,” he said, suggesting that those viewers would Timing Ads Hulu enlisted Kantar Millward Brown to measure the be more accepting of pre-roll ads. effectiveness of its ads; in a study posted in October, 12 Sponsored Content that firm found that OTT ads beat PC and mobile And as all these viewing platforms add interactive The Move to Server Side ads for brand awareness and brand favorability, while features that invite viewers to lean back less, you can Ad Insertion mobile ads did better at advancing purchase intent. expect more ads inviting you with some clickable call to action. Said Hulu’s Naylor: “That won’t be the 13 OTT Ad Delivery Case Naylor said Hulu’s ad completion rates are above 90%, measure of success so much as the new normal.” l Study: Hyundai’s ‘Skip’ which makes it easier for the company to bill only for Ad fully completed spots. Viewers also have the option of fleeing ads: The premium for ad-free viewing is $4 15 What Advertisers Are Saying About OTT above the service’s usual $7.99 “limited commercials” monthly option. 18 Programmatic, Social, VR and the Future of Crackle relies on Moat’s viewability analytics to track OTT Advertising ad completion—nearly 100% on smart TVs, Santaella said.
What’s Next? The future of online video is so open that people can’t even agree on how many screens viewers will watch at once—if virtual-reality takes off, two will be the default for VR regulars. The growth of over-the-top services
OTT’s Advertising Problem // March 2017 // Sponsored Content
The Move to Server Side Ad Insertion
TV consumption is making a clear migration problems, resolution changes, loss of playback reliability increases audience engagement, from broadcast and classic managed IPTV buffer, etc., negatively impacting the viewing which ultimately increases viewing time and platforms to over-the-top (OTT) delivery. experience) and development considerations market share. Meanwhile, advertising is an integral part of (implementing client-side ad insertion requires video monetization strategies for broadcasters developers to use many SDKs on the client The challenge of monetizing OTT video and other video content providers. Though devices). content will only continue to grow as primary screen advertising has long been viewership on multiscreen devices is expected optimized, the art of making money while These challenges are causing many to increase going forward. Market research delivering video content to consumers on broadcasters to move to server-side advertising shows that to optimize revenue opportunities connected devices is still evolving. Traditional insertion (SSAI). SSAI is, in a way, a return for streaming video, advertising needs to be content providers are accustomed to linear to the origins of online advertising, because targeted to the individual user and delivered TV monetization models. But the internet is the material – both content and commercials – in a way that enhances the quality of a viewer’s an unmanaged network with unclear paths to arrives as a single stream from a single source. experience. Personalizing ads reduces the monetization. In addition, an inherent tension The difference is that the advertising is no consumer desire to employ ad blockers exists between delivering a premium OTT longer static. It is dynamically inserted before and increases the value of the overall video viewing experience – complete with start- the video stream is delivered. Commercials streaming experience. over and time-shifted TV functionality – and are personalized for each individual stream at monetizing streaming video offerings and the moment of delivery. The video ecosystem Implementation of server-side advertising in services. as a whole is now moving in this direction. a practical and cost-effective manner across a Ad blockers are resolved, latency is mitigated broad range of platforms and delivery fabrics In the Pay TV domain as well as modern by a move to the edge of the network, and demands a software architecture. Learn more syndicated content, the majority of services development efforts are consolidated. about SSAI in the Elemental white paper today rely on client-side advertising insertion. Dynamic Ad Insertion. In brief, the client device stops playing back In addition, end users do not experience the content, sends out a VAST request, gets video buffering, freezing, blocking, spinning a response, loads the asset, and then restarts wheels and other viewing interruptions. It playing back the content. There are challenges is especially important when streaming live with this approach, including ad blockers, content to deliver a consistent quality of latency (going from playback of one asset to experience so audiences do not feel they have another can cause problems such as stitching missed something vital. This consistency and
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OTT Ad Delivery Case Study: Hyundai’s ‘Skip’ Ad By Rob Pegoraro
2 Introduction The Hyundai ad starts out like many other car that’s already developed its own cultural quirks. It also commercials: From a back-seat perspective, we see a demonstrates how, on this stage, audience metrics can 3 OTT Advertising young man behind the wheel of an Elantra rolling down a quickly indicate whether the ad did its job or if it has Prepares for a New tree-lined street. YouTube’s usual skip-ad button appears already been forgotten. Chapter at the lower right corner—but before you can think to click or tap it, the driver reaches back to give it a whack himself. Fun With The Format 9 How OTT Providers Are Targeting, Tracking And The Korean car maker came to Innocean with a tough Timing Ads Then he repeats that gesture, growing frustrated as the request: Make us something memorable about the new button doesn’t respond. Through the windshield, we Elantra that shows off one of its key safety features—and 12 Sponsored Content can see a mother and a daughter looming in the street conveys that message inside the 15-second duration of a The Move to Server Side ahead—which is when the car beeps and brakes itself YouTube pre-roll spot, copywriter Jeff Barry said in an Ad Insertion automatically. A voiceover lauds the Elantra’s pedestrian- e-mail. aware automatic-braking feature—and then the irked 13 OTT Ad Delivery Case driver gives the skip-ad button one more tap. “We gave a couple of parameters and guidelines,” said Study: Hyundai’s ‘Skip’ Monique Kumpis, Hyundai Motor America’s senior Ad The “Skip” ad, created for Hyundai by the Huntington group manager for brand marketing and advertising. “But Beach, Calif., agency Innocean Worldwide, shows the the main thing was, ‘how do we draw them in quickly and 15 What Advertisers Are Saying About OTT creative possibilities of video ads in an online medium get them to stay?’”
18 Programmatic, Social, Barry and his colleagues took inspiration from an earlier VR and the Future of ad that poked fun at YouTube’s skip-ad feature: Geico’s OTT Advertising “Unskippable” pre-roll ads.
The Martin Agency’s spots, AdAge’s 2016 campaign of the year, mocked the tone and style of 1970s TV ads as well as YouTube’s skip-ad button by blurting out the sales pitch in the first few seconds. They then taunted the viewer by noting that it was too late to skip the marketing bit of the message, then turned the rest of the Hyundai / INNOCEAN
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clip into a bloopers reel of sorts. “Skip” won a bronze award in the “Video - Online Commercial” category at the Interactive Advertising “We took a step back and looked at the process by which Bureau’s MIXX awards. In an e-mail, the jury chair of viewers engage with and ignore pre-roll advertising,” that contest, 72andSunny partner and executive creative 2 Introduction Barry said. “Most people click ‘skip ad’ without a second director Matt Murphy, offered a single-sentence summary thought in order to get to their content as fast as possible. of what made the ad resonate: “Life is full of distractions, 3 OTT Advertising So we decided, why not do it for them while stopping including the button that allows you to SKIP THIS AD.” Prepares for a New them in their tracks with a jarring visual, all while Chapter breaking the fourth wall.” (“Fourth wall” is theater jargon Lessons Learned for the invisible but assumed barrier separating the stage This Hyundai ad stands out not only for having some 9 How OTT Providers Are Targeting, Tracking And or set from reality. Anytime somebody in a show or an sport with a YouTube advertising trope, but also for Timing Ads ad stops and speaks to the camera, they’re breaking the simply not being a cut-down version of what runs on TV. fourth wall.) 12 Sponsored Content “Creatives, they want to take their 30-second spot and The Move to Server Side Measuring Its Success cut it down to pre-roll,” Hyundai’s Kumpis said. That’s Ad Insertion Innocean’s ad ran mainly on YouTube from April through not a good idea, especially in a medium as fundamentally August of last year, a logical spot given that site’s support twitchy as online video. “If they’re going to stay with you 13 OTT Ad Delivery Case of the skip-ad button—a feature of Google’s TrueView for your advertising, it has to be for a reason,” she said. Study: Hyundai’s ‘Skip’ format, launched in 2010, that lets the viewer ditch the rest Ad of the ad after its first five seconds. “Smart digital marketers embrace that consumers have more control than ever and therefore must use storytelling 15 What Advertisers Are Saying About OTT Google got to charge more than average: 79% of viewers in an engaging way,” Murphy said. “Realizing that watched the ad to completion over the first two weeks, consumers have the attention span of a goldfish, great 18 Programmatic, Social, which Barry said beat the 55% average completion rate for online videos must grab your attention quickly.” VR and the Future of 15-second TrueView clips by almost a quarter. It racked OTT Advertising up a total of 10 million impressions on YouTube and “What this taught us was that each medium should be elsewhere. treated individually,” said Innocean’s Barry. “A TV ad should not just be rehashed for online content, but instead, From Hyundai’s perspective, that completion rate was “far we should pay close attention to how each medium is beyond our normal,” Kumpis said. “We loved it, because it perceived by viewers and consumers.” made such better use of the medium.” “Consider the medium,” Kumpis advised. “People have The ad also earned critical approval too. In October, other things to do.” l
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What Advertisers Are Saying About OTT By Kendra Chamberlain
2 Introduction The rise of online video has given marketers a holistic story,” said Bill Davaris, chief creative officer at collection of new devices and platforms to reach the advertising agency Madras. At Madras, it’s called 3 OTT Advertising consumers on—and brands have responded by moving “always on” marketing, though others refer to it as Prepares for a New more ad dollars to digital video marketing. However, omnichannel marketing. The idea is to craft a single Chapter digital video is just one piece of the marketing puzzle. consistent message and deliver content around that message to different devices and platforms. And it’s 9 How OTT Providers Are Targeting, Tracking And “We never see digital video being a thing and TV possible only through leveraging the vast amounts Timing Ads being a thing. We always want to approach it as a of data that’s available in the online world about consumers and their behaviors. 12 Sponsored Content The Move to Server Side Using Data to Drive Results Ad Insertion Thanks to digital advertising technologies like data management platforms, programmatic buying 13 OTT Ad Delivery Case platforms that have largely automated much of the Study: Hyundai’s ‘Skip’ processes of media buying, and closed-loop analysis Ad that marry sales data with marketing data, brands are better able to target audiences and measure the 15 What Advertisers Are Saying About OTT performance of a campaign than they ever could on linear TV. 18 Programmatic, Social, VR and the Future of “Data is incredibly important—it informs everything OTT Advertising we do,” said Trish Cox, VP of advertising and brand at T-Mobile, a mobile carrier that is a major advertiser in the United States. “We can’t create unique content that drives engagement without first knowing how that video is being consumed. It always goes back to our consumer focus.”
There are a number of ways that data can be used to
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inform marketing. First-party data from a brand’s own the incredible amount of mobile video that’s being platform can be married with third-party census-level consumed, and adding in new partners for us to be or sales data to help further define audiences. Data able to reach those new consumers.” management platforms help brands better understand 2 Introduction their target audiences and how and where to find them; and programmatic ad selling and buying enable “Video platforms like 3 OTT Advertising brands to target or re-target those audiences across YouTube and Facebook are Prepares for a New inventories in real time. hugely important.” Chapter — MARK AIKMAN, GENERAL MANAGER 9 And data also enables brands to carefully track OF MARKETING SERVICES, MERCEDES- How OTT Providers Are BENZ USA Targeting, Tracking And how well a specific ad format, for example, or an Timing Ads entire campaign, is performing. “It’s really a more sophisticated model,” said Andy Ladden, another chief 12 Sponsored Content creative officer at Madras. “You’re almost able to track Each of those social video platforms have their own The Move to Server Side [the campaign] by IP address, and you know this user quirks—for example Facebook ad creative needs to Ad Insertion saw a banner ad here, they saw a social video there, be able to deliver a message without sound, while they were on YouTube, and by the sum total of that, Snapchat video ads need to look best in a vertical 13 OTT Ad Delivery Case you can see what’s working, and what’s the right mix.” orientation. And brands also can tailor the content of Study: Hyundai’s ‘Skip’ the ad to the platform or device that it’s being seen Ad The OTT Platforms on. “If we’re delivering a network message across all There’s no shortage of digital ad inventory online, channels, we’ll develop unique and meaningful creative 15 What Advertisers Are Saying About OTT and the world of online video is only growing, from for each audience—sports vs. gaming vs. travel—to ad-supported OTT services, to social video networks highlight what’s most important for that user,” said 18 Programmatic, Social, like Facebook and Snapchat, to TV networks’ digital T-Mobile’s Cox. “The content should look and feel VR and the Future of video initiatives such as TV Everywhere services or different, and be created accordingly, depending on OTT Advertising direct-to-consumer OTT platforms. This spectrum of where it’s being consumed, whether it’s for social, OTT platforms offer marketers new channels to reach native or pre-roll.” consumers on. YouTube, however, is its own beast, thanks to its “Video platforms like YouTube and Facebook are massive global audiences, an entire generation of hugely important,” Mark Aikman, general manager of premium online video content producers, and the fact marketing services at Mercedes-Benz USA, said. “Both that YouTube is one of the top search platforms online. of those are mobile, and we are also thinking through Today, it’s not uncommon for brands to establish their
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own YouTube channels where longer-form marketing their digital platform. They have a very influential and content and even branded entertainment content can powerful digital platform.” be found. Networks also now typically offer TV and digital 2 Introduction Mercedes-Benz, for example, offers a host of longer- media inventory as a package. And those packages are format videos on YouTube. “On our YouTube channel, particularly important for big live tent pole events like 3 OTT Advertising you’ll find a number of video brochures that are really the Super Bowl. “As a large advertiser, we are going to Prepares for a New long format pieces of content that really help a shopper media upfronts with networks, and digital streaming Chapter understand the vehicles,” Aikman said. “We are also packages are often a part of that,” Aikman said. “Fox producing a tremendous amount of entertainment- has live stream [inventory] that comes along with your 9 How OTT Providers Are Targeting, Tracking And based video content.” Super Bowl buy, for those people that may not be Timing Ads watching it directly on the TV,” he added. The early days of YouTube advertising were mired in 12 Sponsored Content concerns over the quality of user-generated video that But brands are quick to point out that while digital The Move to Server Side ads were running against, but the sheer scale of online ad dollars are growing, traditional linear TV is still Ad Insertion video left brands wanting more. In Davaris’ words, the top platform for delivering marketing messages. brands are “absolutely addicted” to impressions. But “Television is still an important part of the marketing 13 OTT Ad Delivery Case impressions aren’t really the end game anymore. mix,” Aikman said. “This was one of the hottest years Study: Hyundai’s ‘Skip’ in the television upfronts in a while.” l Ad Lots of impressions “doesn’t necessarily lead to a successful campaign, it doesn’t necessarily lead to 15 What Advertisers Are Saying About OTT more sales or brand loyalty,” Ladden said. “So that’s what brands and agencies are struggling with now, to 18 Programmatic, Social, link it back to business results.” VR and the Future of OTT Advertising Blurring Lines Between Digital and TV TV networks have also entered the digital video fray, and marketers have been eager to participate in digital advertising through TV networks’ OTT properties. “We’re realizing that some TV channels have really powerful digital platforms that are very influential,” Davaris said. “A big reason why a client might go with a CBS is because the way CBS also helps through
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Programmatic, Social, VR and the Future of OTT Advertising By Tara Seals
2 Introduction As the OTT advertising market matures, many in the watching on TV in real-time and sells mobile advertising space expect the service to more fully meld into the technology. “The OTT advertising market is truly an 3 OTT Advertising wider marketing industry—and to collect a range of new extension of broadcast TV. We should think of OTT as Prepares for a New technologies and platforms along the way. we think of network, cable and addressable TV ads. In Chapter fact, thinking of OTT as a form of addressable TV ads “Unified planning, buying, measurement and attribution is a great lens to see what is in the future for TV ads. In 9 How OTT Providers Are Targeting, Tracking And are still lacking, but as these data-driven systems mature less than three years, i.e., by 2020, we will not be talking Timing Ads we will see investment across online video grow at about OTT, programmatic, addressable and linear TV as rapid clip,” said Ashish Chordia, CEO and co-founder different things.” 12 Sponsored Content of Alphonso, a company that tracks what people are The Move to Server Side Indeed, it makes sense for digital video advertising to be Ad Insertion seen as a complement to linear TV investment. Research firm eMarketer expects that U.S. digital video ad 13 OTT Ad Delivery Case spending will see double-digit growth annually through Study: Hyundai’s ‘Skip’ 2020. TV ad spending will grow much more modestly, at Ad rates ranging from 2% to 2.5%, but will remain dominant, with total ad spending reaching $77.17 billion in 2020, 15 What Advertisers Are Saying About OTT more than quadruple the $16.69 billion for digital video.
18 Programmatic, Social, However, as Chordia indicates, there’s still work to do VR and the Future of when it comes to enabling cross-screen engagement—and OTT Advertising it’s here that ad platforms are working overtime to make it happen.
“Almost everyone recognizes the value of having a unified video marketplace for building campaigns across video on demand, OTT, mobile, social—but there’s a lot of inertia in terms of creating standards for measurement across those platforms,” said Jay Prasad, chief business officer at
OTT’s Advertising Problem // March 2017 // share: An eBook from the editors of
VideoAmp, another ad-tech company that sells software Overall, programmatic ad spending grew from $5 billion to marketers for cross-platform advertising. Others in the in 2012 to $39 billion in 2016, according to Zenith crowded space include TubeMogul and Marin Software. Research, at an average rate of 71% a year. It’s also starting “Right now, doing things cross-platform is an inefficient to spread into the “traditional” media—some television, 2 Introduction process, because you have one system for TV, one for radio and digital out-of-home platforms already offer mobile, one for social video—and there’s a lot of walled automated and data-driven trading of inventory. 3 OTT Advertising garden stuff. Our goal is to make that all seamless.” Prepares for a New Chapter Ad-Tech Evolves Part of the solution may be addressed by programmatic “Programmatic ads have already 9 How OTT Providers Are Targeting, Tracking And (algorithm-determined) advertising, which is already taken over the space in OTT and Timing Ads becoming the de facto digital standard. “Programmatic online advertising.” ads have already taken over the space in OTT and — ASHISH CHORDIA, CEO AND CO- 12 Sponsored Content online advertising. All the major OTT and online video FOUNDER, ALPHONSO The Move to Server Side providers do some form of programmatic—be it open, Ad Insertion private market or some other combination to manage inventory, price, etc.,” Alphonso’s Chordia said. “Programmatic buying of digital media has become the 13 OTT Ad Delivery Case norm in major markets, and is aggressively following Study: Hyundai’s ‘Skip’ Programmatic advertising will grow 31% to account for this path in smaller markets,” said Benoit Cacheux, Ad 58% of expenditures in 2017, faster than all other digital global head of digital and innovation at Zenith. “We channels, according to Zenith Research’s Programmatic believe that the growth of programmatic will continue 15 What Advertisers Are Saying About OTT Marketing Forecasts. Zenith is an advertising agency to be fueled by improvements in the quality of media that is part of the multinational French Publicis Media available in programmatic environments—especially 18 Programmatic, Social, advertising and public relations company. private marketplaces—and the greater availability of VR and the Future of programmatic mobile media, as well as the sophistication OTT Advertising At first programmatic marketing was often used to reach provided by ad tech solutions such as data management target audiences as cheaply as possible, with little regard platforms and connected ad tech stacks.” for the quality of the sites in which the ads appeared. It is now being used in conjunction with data segments But programmatic advertising is just one piece of a larger to target individuals in intelligent and creative ways, puzzle. For example, sales of virtual reality equipment are identifying those most likely to be receptive to a brand’s poised to grow as the price point of headsets dip below messages and encouraging them along the path to $100. More publishers are creating exclusive content purchase, often in premium environments. for the format, and brands are now realizing the value
OTT’s Advertising Problem // March 2017 // share: An eBook from the editors of
of developing these experiences. Overall, VR is moving The opportunity is not lost on the social networks from a format owned by the gaming and entertainment themselves. “While YouTube is the largest provider in industry to one that holds promise for the automotive the OTT space when it comes to video advertising, with industry, travel and tourism, consumer packaged goods share up to 30-40%, Facebook is certainly not too far 2 Introduction and retail. behind. They have big plans to evolve by shifting their focus from mobile-first to video-first,” said Anupam 3 OTT Advertising “What VR has going for it is that it’s immersive,” Prasad Gupta, chief product officer at 4C Insights, another Prepares for a New said, noting that the main VR metric is how long someone company working to aid marketers with multi-screen Chapter is “gazing” at the ad—it’s called the gaze-through rate. advertising products. “Combine that with Facebook’s “Whether it’s a ball game or watching Shark Week, the ad infrastructure, targeting (people-based marketing), 9 How OTT Providers Are Targeting, Tracking And experience is immersive as well. This is a youthful, tech- measurement and creative intelligence capabilities, and Timing Ads oriented segment, they watch very little linear TV, and they are making their way to becoming the most advanced they’ll appreciate an awesome VR creative in a game they 12 Sponsored Content love.” The Move to Server Side Ad Insertion And, Prasad added, VR ads can be mixed with ads in other formats: “You can create a bucket of those exposed 13 OTT Ad Delivery Case to a VR ad, and then can have a follow up—like offering Study: Hyundai’s ‘Skip’ a store locator or call-to-action on mobile,” he said. Ad “It’s a potential great first touch point, and a doorway to a potentially long engagement exposure. You can 15 What Advertisers Are Saying About OTT sequentially serve the creative: Three VR ads, three on desktop, four on mobile. You’re with them across 18 Programmatic, Social, screens.” VR and the Future of OTT Advertising Another hot space to watch going forward is social video. Research from Brightcove, which provides online video hosting and player technology, shows that three-quarters (74%) of global consumers connect watching a video on social media to their purchase decision-making process, demonstrating why brands are so enthusiastic about video on social platforms.
OTT’s Advertising Problem // March 2017 // share: An eBook from the editors of
video platform out there.” “The ‘content first’ paradigm that has dominated the content and marketing worlds has been massively The theory is that if the live video push within the social subverted over the last five years,” explained Hudes, who media space continues to grow, as it is expected to, is the chief revenue officer for YuMe, another ad-tech 2 Introduction opportunities around live ad formats will also come into company. “We now need to begin with thinking about the play. This is already starting: For instance, the only ad ‘audience first’—their unique characteristics, behaviors 3 OTT Advertising format that Snapchat offers is video. and motivations—and build content and marketing Prepares for a New campaigns around these attributes. It’s not just the Chapter “More people viewed the VMAs on Snapchat than linear prioritization of the audience that has shifted: audiences television and the company recently announced a deal to today are more dynamic, fluid and ever-changing.” 9 How OTT Providers Are Targeting, Tracking And debut BBC’s Planet Earth II on its mobile platform,” said Timing Ads 4C Insights’ Gupta. “So, I view Facebook and Snapchat He added: “The net effect is that if we align brands with as the next-gen video platforms that have a lot of growth the specific and targeted audiences they want to reach, 12 Sponsored Content potential.” we will continue to see online video ads that are more The Move to Server Side personalized, targeted and optimized to meet key brand Ad Insertion And to keep up with the advertising momentum being objectives: engagement, consumer favorability and brand seen on social media, these platforms also will look to add recall metrics.” 13 OTT Ad Delivery Case more long-form content. Study: Hyundai’s ‘Skip’ To be clear, brands are seeing OTT video drive sales Ad “Take Disney, who is already catching on to this trend today: A study YuMe did last September found that the by creating a Snapchat channel that will allow long-form power of video is that it’s actionable. In fact, the study 15 What Advertisers Are Saying About OTT content tailored to their target audience to be seen by found that 66% of digital video viewers took action after Snapchat’s 150 million active daily users—where 60 seeing a digital video ad, either by sharing, engaging with 18 Programmatic, Social, percent of these users fall into Disney’s target audience,” the brand or buying products. In addition, video ads were VR and the Future of Gupta said. shown to be nearly twice as effective in driving purchases OTT Advertising than image or text ads. Refocusing On The Audience In all, brands, content owners and platforms are looking “All of this could be a renaissance for the creative to keep up with what YuMe executive Michael Hudes agencies,” VideoAmp’s Prasad said. “It’s not about calls “liquid audiences,” which are dynamic in nature, repurposing the creative over and over, and just re- moving fluidly throughout their day between different sizing it. It’s saying, ‘I have 16 platforms, and I can plan devices and across multiple screens. a sequential campaign across all of them.’ The thinking process becomes, ‘what should I say and when?’” l
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