For those who have been watching the “streaming wars” – the battle for attention and wallets that’s playing out across the landscape of connected TVs—November was an exciting month. First came the launch of Apple TV+ which debuted November 1st with nine titles and a reported budget of $6 billion for original content created with some of Hollywood’s biggest stars. Two weeks later came the launch of Disney+ which saw as many as 10 million consumers sign-up in a 24-hour period, drawn by its massive library of family-friendly content and hit titles from Marvel, Pixar, Lucasfilm as well as weekly episodes of the latest Star Wars series, “The Mandalorian.”
To put these back-to-back events in a more historical perspective, remember it was just a decade ago when Netflix began what many believed at the time was a foolhardy shift from mailing DVD’s in red envelopes to streaming shows on the internet. A couple years later came Netflix’s premier of “House of Cards,” the political thriller that brought viewers to the realization that going forward, the internet was as much a source of quality long-form entertainment as their premium pay TV bundle, or the movies. Fast-forward to today, and we see as broadband has continued to improve and Netflix has grown, so have the concerns and ambitions of former partners who used to license their content to the streaming pioneer that is now their rival. When Disney announced it was leaving Netflix, restricting the sale of its movies and launching its own streaming service, it became clear, the pre-internet era of entertainment was in the midst of transformation.
Now with the launch of Disney+, the media and entertainment giant is betting the farm on what we’re calling the “third revolution of TV” in which streaming is overtaking traditional broadcast television, and internet upstarts are winning Emmys, Oscars and Eyeballs.
Other media giants including AT&T and Comcast Corp. are also pulling content that had been previously licensed elsewhere and bringing it back into their own direct-to-consumer folds, making Netflix less of a binge watcher’s bargain. Going forward accessing all that great Disney, Warner and NBCU content will likely require subscriptions to multiple services. Depending on how loyal you are to “Friends” or “The Office” you may find your monthly streaming bill soon equaling the cost of your old pay TV bundle. Or, perhaps we’ll see advertising save the day, doing what it has always done, lowering the cost of access to quality content.
In the coming months, as more streaming services launch, expect more value-conscious viewers to dip in and out of services, mixing and matching their portfolios of both paid, ad-free SVOD services as well as free or lower cost ad-supported (AVOD) services like Hulu, Roku Channel, and YouTube, as well as newer entrants like Viacom’s recently acquired Pluto service, fuboTV, Tubi and NBCU’s Peacock (expected to launch in April 2020 with both ad supported and ad-free tiers).
If you’ve been watching this space as closely as we have, you already know ad supported (AVOD) viewing is quickly growing in popularity. A recent IAB study has shown that over three-quarters (76%) of those who regularly stream video say that they have watched ad-supported OTT (AVOD). And 49% of those streamers report that they watch ad-supported OTT streaming video the most (Source: IAB Ad Receptivity and the Ad-Supported OTT Video Viewer, October 2018). Advertisers are catching on fast, attracted by the incremental reach and opportunity to leverage the high-impact, brand storytelling power of big screen television seamlessly integrated with the precision targeting, analytics, and interactivity of digital media in a brand safe environment. For data-centric direct brands (DTC) that are used to real-time dashboards and one-to-one consumer feedback loops, OTT streaming video represents a compelling opportunity, which is why ad spend in this “TV meets digital” universe is expected to grow 37% this year reaching almost $7 billion (source: eMarketer, Oct 2019). This trend is further demonstrated by the growth in ad impressions seen on Connected TV screens. Looking at data from across Extreme Reach, Innovid, and FreeWheel, connected TV ad views now account for nearly half (45%) of all digital video ad impressions in Q2 2019 (versus relatively flat demand on mobile and decline in PC/desktop video ad delivery) (Source: Extreme Reach, Q2 2019 Video Benchmarks Report; Innovid Q2 2019, FreeWheel Q2 2019 Video Marketplace Report).
Why advertisers—including performance-focused direct brands—are flocking towards OTT:
- High value, incremental audience: OTT streaming video viewers are likely to be “cord-cutters and “cord-nevers” (the growing universe of “unreachables” who are watching less pay TV or were never subscribers in the first place). This younger skewing audience is also more likely to try new brands (Source: IAB, Ad Receptivity and the Ad Supported OTT Video Viewer, October 2018).
- Data-driven targeting: Brands can increase efficiency and reduce wasted impressions by leveraging a range of targeting options including: traditional age/sex demographics, location (from DMA down to zip code level), behavioral and interest based, contextual, and vertical targeting, first-party data targets and third-party segments, as well as cross-device targeting, and retargeting.
- Performance optimization: Access to near real-time reporting enables more rapid creative and content optimization than traditional television, which helps brands manage their performance goals.
While the “similar to digital” capabilities of OTT streaming video represent a big step forward for television, there are challenges in this rapidly evolving space. Our aim with this playbook is to highlight not just benefits, but also challenges, including measurement, which is not as mature as other digital platforms and requires diligence to “connect the dots” across the range of platforms and apps. But for brands that dive in now—especially those that have maxed out their reach on social platforms—there are new audiences to be tapped and insights to be gained through the closed loop, interactive capabilities of OTT streaming.
Click here to access the full IAB OTT Streaming Video Playbook for Advanced Marketers. You’ll find an overview of the technologies, key terms and definitions, campaign use cases, industry data as well as practical advice from brands on how to leverage the power of OTT streaming video. Given the rapid pace of change, we expect to be making updates to this document as the OTT streaming video and advanced TV space continue to evolve.
