Live TV programming and shared media experiences have played an essential role in keeping us connected, informed, and entertained this year. As a result, the demand for OTT streaming services has catapulted, with a notable spike being recorded during the first quarter as COVID-19 quarantines took hold. Total viewing hours increased by 2.3 billion across live, DVR, VOD, and OTT in April 2020 vs. April 2019 (Comscore). By the end of April 2020, Disney+ had emerged as the fourth largest SVOD service in the US with a 25% market share, just six months after launching. The demand for streaming services has developed considerably throughout the year, and similar numbers are expected to emerge as many regions face second lockdown measures.
For OTT players, monetization options have shifted in recent years to accommodate the mounting demand for more personalized and relevant video experiences to the broadest range of consumers. With virtual, shared experiences now being of greater significance than ever before, media companies have a unique opportunity to leverage OTT to personalize their content and differentiate their services from others.
Targeted advertising is growing – alongside adverts that are tailored more closely to the content, viewer demographics, and even the device. The ever-increasing amount of direct-to-consumer (D2C) and TV Everywhere (TVE) multiscreen services offered by broadcasters enable advertisers to move to ‘one-to-one’ session-based conversations with targeted audiences in a high-value premium TV environment.
High-quality, first-party data gathered from long-standing relationships established with end-users makes this specific targeting possible. We touch upon this subject in the MediaKind 2021 Sports D2C Forecast, which you can read here.
What is targeted advertising?
As today’s consumers embrace OTT video services, Broadcasters and Multichannel Video Programming Distributions (MVPDs) are looking for new monetization methods through targeted advertising. The traditional cable and satellite pay-TV bundles have been joined by SVOD, AVOD, and a new generation of blended Freemium models.
Service Providers can now consider dynamic ad insertion (DAI) solutions, designed to enable personalized video services across linear, OTT, and streaming. Targeted advertising to consumers through OTT or VOD services is not fully monetized yet. As such, it offers an excellent new opportunity for providers to add real value and relevancy to consumers. By analyzing consumer profiles, TV operators and service providers can better understand consumer behaviors and the types of content different audience segments regard as premium.
This can encompass personalizing titles within OTT or VOD libraries to helping distributors and buyers decide which shows to purchase based on the demographics of the audience. Personalized advertising enables broadcasters and service providers to better control the content delivered to viewers, based on geographical, device restrictions, and local window programming, as well as facilitate new monetization opportunities for existing inventory and content assets.
Data, Actionable Insights, and Security
As TV services start to overlap with social media and mobile viewing, there is a need to balance data collection, privacy, and creating actionable insights. For all the possible benefits, there is also the potential for a consumer backlash if data is mishandled.
Services still need to comply with distribution rights agreements. However, the complexity behind implementing these agreements is multiplied by the number of criteria that drive such deals (zip codes, device types). This results in millions of possible different combinations that require careful management, particularly in large US operators.
The complexity mentioned above behind handling distribution rights agreements has been one of the main drivers behind the work that resulted in the launch of the SCTE-224 standard. This is now regarded as the most advanced and standardized data model dedicated to distribution rights. SCTE-224 is being rapidly adopted by both broadcasters (to define such rights) and operators. You can read more on this in MediaKind’s recent application paper ‘TV Advertising: trends and opportunities.’
Join me at the Future of Video Summit!
On Wednesday December 16, 11:45 ET, I’ll be joining an illustrious panel session at the Parks Associates’ Future of Video Summit to discuss ‘How Ad-Based OTT Went Mainstream.’ I’ll be featuring alongside Henry Embleton (Crunchyroll), Stefan Van Engen (XUMO), Jennifer Vaux (Roku), and moderator, Steve Nason.
Advertising-driven OTT services are witnessing an incredible growth period as consumers become increasingly attracted to free, ad-based content offerings. This session will examine the key factors that have driven the growth in ad-based offerings, how they fit in with today’s OTT service space, and what the future looks like for the market.