OTT Demand Once Preceded The Supply, But The Tide Has Turned

On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Chris LaHaise, director of TV solutions at dataxu.

Connected TV audiences are growing. And despite reports implying that the demand for connected TV inventory is far greater than the current programmatic supply, that’s not really the case anymore. While over-the-top (OTT) inventory has traditionally been in short supply, with new publishers coming online seemingly weekly, there is meaningful scale today.

The key to taking advantage of OTT is adopting the right mindset. Marketers shouldn’t think of OTT as a replacement for linear television, but rather as a way to find cord-cutters, cord-shavers and audiences that are difficult to reach in a fragmented media landscape.

When considering OTT in the context of a complement to linear that can offer incremental opportunities, the frame of reference for what “scale” is needs to change. Simply put, the supply of OTT inventory does not need to rival linear’s to achieve relevant scale because the best use of OTT also includes linear.

It is also important to consider how viewers tune in to OTT content and the unique opportunities this affords marketers. Consider findings from a recent study of ad effectiveness on Roku, the most popular connected device that’s leading competitive offerings from Apple, Google and Amazon. In the study, Roku reported that OTT ads were 67% more effective per exposure at driving purchase intent than ads on broadcast and cable television.

The efficacy rate of OTT ads shouldn’t surprise us, however, given the advantages of the digital targeting tools that can be applied. What’s revealing about the study is the fact that OTT ads require less exposure than linear TV to drive comparable brand lift. What advertisers did with 10 exposures on linear TV, the study found, they were able to do with just seven exposures on OTT, meaning it actually requires less scale for OTT to impact a campaign.

But the takeaway here is not as simple as OTT vs. linear because the story is actually a lot more nuanced than that. Data from the same study shows that the most efficient campaign is actually some combination of linear and OTT, which only required 6.5 exposures to deliver comparable brand-lift results. Why might this be the case?

One reason is that while consumers have been relatively quick to adopt OTT in recent years, we are still a long way away from seeing people abandon linear viewing. This is partly because old habits die hard. But consumers are also reluctant to abandon linear altogether because for many viewers OTT does not yet provide an adequate replacement for the TV content they are accustomed to, most notably local programming and live events like sports.

For most viewers, content is still king when it comes to TV, regardless of how they receive it. And if advertisers focus on achieving scale through a mix of linear and OTT, using the latter to take advantage of incremental opportunities, we can clearly see that impactful scale has been achieved today.

Follow dataxu (@dataxu) and AdExchanger (@adexchanger) on Twitter.

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