Over-the-top (OTT) advertising complements linear TV campaigns and to answer advertisers’ need for premium video content, flexibility and outcomes delivery. Kevin van der Straat, Director Global Solutions & Innovation at Xaxis, outlines the growing opportunity for OTT advertising and the rewards that can come with it.
Last year was inevitably tough for the TV advertising industry, with pandemic-related economic uncertainty, cancelled programming and the abrupt suspension of film and series production causing UK TV ad revenues to fall by 10% in 2020, according to the GroupM end-of-year forecast.
While the outlook for the coming months is promising – with a 10% gain expected in 2021 and a return to pre-pandemic levels forecast for 2022 – advertisers are still rapidly adapting their approach, with many viewing the new year as a chance to revise and restart ad strategies. First, they are reducing reliance on live programming, which is still unpredictable, and replacing it with acceptable substitutes such as premium video content in the entertainment, lifestyle and gaming sectors. Second, advertisers are seeking greater flexibility. They are operating in pause and shift mode as they determine where to invest, and are dramatically reducing timeframes between planning and live campaigns.
Finally, the economic disruption caused by the pandemic is creating urgency to grow revenues through performance-motivated media investments, meaning advertisers navigating financial recovery are compelled to focus on ROI. Expectations of TV advertising are changing; shifting away from traditional awareness goals towards performance and conversion metrics that provide measureable outcomes.
Fortunately, over-the-top (OTT) advertising is ideally placed to complement linear TV campaigns and to answer advertisers’ need for premium video content, flexibility and outcomes delivery. In 2021, advertisers will increasingly depend on OTT to make the most of their TV and digital video ad spend.
The growing OTT opportunity
The pandemic acted as an accelerator for change on already shifting consumption habits. When the UK went into lockdown in March 2020, average consumption of audio visual content increased to almost six and a half hours per day, an hour and a half more than the average for 2019. The OTT video market benefitted enormously from this surge, with revenues growing over 18% to reach £1.7 billion. This increase was boosted by the launch of new streaming platforms such as BritBox, Apple TV+ and Disney+. But existing services also saw impressive growth, with All 4 views up 30% year-on-year, and hours spent on the ITV Hub increasing 82%.
Continued expansion is expected throughout 2021 and beyond, with the compound annual growth rate (CAGR) for OTT predicted to be over 10% until 2024. This ongoing growth of OTT provides plenty of new opportunities for advertisers to reach engaged and attentive viewers. Over three-quarters of consumers are happy to view ads if it enables them to access content for free, and demand for high-quality ad-supported video is increasing.
The rewards of OTT advertising
There are numerous benefits to brands in embracing OTT advertising. Although linear TV remains a highly effective channel for achieving impact and mass reach, supplementing linear buys with OTT allows brands to reinforce their campaign messages and also reach incremental audiences that aren’t necessarily watching linear TV.
Brands can benefit from OTT’s advanced targeting capabilities, which enable them to deliver a relevant experience based on the viewer’s location, interests and situation, and increase advertising efficiency. The channel is also more measurable than traditional TV, especially as it is available across multiple connected devices such as connected TVs, tablets, desktop computers and smartphones, allowing brands to track desired outcomes. And, with OTT inventory available to buy programmatically, advertisers can achieve faster turnaround, allowing them to be more flexible and agile with their ad strategies.
OTT ad breaks are well-suited to modern consumers’ desire for short-form content, with 90 second ad breaks versus up to three minutes per block on linear TV. These shorter breaks mean brands benefit from reduced ad clutter and stronger consumer attention. The performance of OTT advertising is also exceptional, with viewers 53% more likely to search for a brand and 52% more likely to buy a product after seeing an OTT ad than after seeing a linear TV ad. OTT advertising amplifies the effectiveness not just of linear TV advertising, but also related messaging running across other digital channels.
The year ahead won’t just be about recovery for the TV advertising industry, it will be about adopting a fresh approach that combines the efficiency, performance and flexibility of OTT with the quality, engagement and scale of TV content. The time is right for advertisers to go ‘over the top’ and embrace OTT advertising as an integral part of their 2021 advertising strategies.
By Kevin van der Straat
Director Global Solutions & Innovation
Xaxis