“On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Lindsey Harju, co-founder at Blinc Digital Group.
2020 will be a year of massive TV disruption. We’re already living in a golden age of content, and now with an explosion of high-end and flexible streaming services hitting the market, viewers have even more of an opportunity to turn tradition on its head.
For those who wish to engage in the TV game, it’s critical to understand the current landscape to stay on top of where and how fast it will shift. But there are several myths that may be holding back buyers and sellers from making good decisions about fast-evolving TV viewers.
Myth No. 1: OTT viewers pay their way out of all ads
You may see headlines about viewer preferences for ad-free experiences and surmise that video advertising has essentially died. What is not factored into those assumptions is the continued fragmentation of the streaming service landscape.
Early last year the average American subscriber was already viewing 3.4 different paid OTT services. But viewers increasingly have a wider range of choices with the introduction of new services, including Disney Plus. Paying a premium for more than a couple of ad-free experiences may not make sense, and overall consumer video spending is only anticipated to grow by 1% by 2024.
But providers aren’t only battling for a share of the TV-spend wallet. The more services a user engages, the more their viewership time is fragmented. If I start watching two additional ad-supported services, it is likely at the expense of my Netflix time, making that service less valuable to me as a consumer. Advertising serves as a path to revenue when subscriptions aren’t going to cut it.
Providers see the writing on the wall, with services like Peacock expected to go the ad-supported route. Viewers are also on board, with 52% of cord cutters and 47% of cord shavers expressing an openness to viewing ads while streaming content, according to a study by ZypMedia and The Harris Poll. Fifty-one percent even noticed that ads viewed while watching OTT content seemed more relevant than those seen during programming on traditional broadcast TV.
Adaptation is key. That means providing advertising options that work with how viewers consume content, such as Hulu’s binge friendly ads.
Myth No. 2: Unless you engage with a digital player like a DSP, you will completely miss the OTT audience
I’ve only heard this claim from one side of the industry, which is telling.
Large players have bought OTT content from their traditional TV providers for years. Many large networks and programmers bundle up their content, regardless of screens, to maximize their sale. In fact, one programmer claimed to be so agnostic that “an eyeball is an eyeball, doesn’t matter the screen,” and that it is content that matters in the end.
This does not mean that digital providers do not have an important role in this new advanced TV world. It just means that their role is less of a life raft and more of an opportunity to help buyers inject superior data usage, personalization and accountability. Smart buyers are considering all available options for premium video content, not just the networks, but that doesn’t mean those using traditional buying mechanisms are being completely boxed out of cord-cutting living rooms.
Myth No. 3: CTV and OTT mean the same thing
Over-the-top content (OTT) is video content streamed over the internet without requiring users to pay for a traditional cable or satellite bill. The device used doesn’t matter: It could be a laptop, mobile device or the front of your fridge, should it have an internet connection.
Connected TV is a TV that is connected to the internet. Connected TV takes the viewer conveniences of streamed content and puts it up on the big screen at home. It’s one of the aforementioned devices that could display OTT content.
Sounds straightforward, but many players – primarily from the digital space – use connected TV and OTT interchangeably. That’s a problem when a provider markets one capability to clients who interpret it as another. An ad served on a large screen in the living room will provide a much different brand experience than one served on a mobile device.
Words matter, especially when they are on an IO. Sophisticated TV buyers understand the difference, so using these words interchangeably can also expose TV naivete.
Kicking off 2020 with a clear view
If players struggled with the 2019 landscape, they definitely aren’t ready for the rapid changes we’re about to see in 2020.
The streaming wars have been in full force for months, which is driving even faster evolution of viewership behavior and introducing a plethora of new ad-supported video opportunities. It’s critical to become “disruption-ready” to win, or even just compete this year.
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