Research by Ampere Analysis has revealed that online households now have an average of 4.5 different connected devices. It also reveals that that over the top (OTT) boxes and sticks - aka devices that distribute streaming over the Internet alone, such as a smart TVs, Amazon Firesticks, Google Chromecasts and Sony PlayStations– are one of the fastest growing categories. The popularity of these devices has led to increased interest and importance being placed on OTT advertising as a result.
OTT advertising is defined as content transported from a video provider to a connected device outside of telecoms and cable networks. As such, OTT advertising is generating a lot of buzz within the industry, as consumer consumption habits evolve with the growing prominence of using connected devices to access video content.
With OTT demand continuing to expand, US streaming service Hulu has announced that it’ll be opening access to its video inventory to programmatic advertisers with their own private marketplace (PMPs). The PMPs will be for standard 30-second commercial breaks, and potentially include audience targeting possibilities across Hulu’s subscriber base of over 20 million.
Video advertising via OTT and connected TVs allows marketers to combine the viewability and big screen engagement of traditional TV, with the precision and targeting of digital web advertising. According to Nielsen, the average OTT viewer is more affluent and younger than the traditional TV viewer, and typically demonstrates a higher video completion rate compared to desktop and mobile users. The last point can be attributed to the fact that there isn’t often a choice for the user to skip or click away from the ad, which is an additional benefit for advertisers.
The current barriers to adoption for OTT include technological issues around video delivery and/or quality as well as household bandwidths, both of which are crucial for overall user experience.
Despite these barriers, Magna, a division of Interpublic Group, has estimated that OTT services’ ad revenues in the US totalled over $2 billion in 2018, which is 40% higher than the previous year. This trend is likely to continue as more households become connected through OTT devices.