The Untapped Opportunities of OTT

Viewership across “over-the-top” (OTT) devices—defined as an internet-enabled viewing device for your TV, including Apple TVs, Amazon Fire Sticks, Rokus, gaming consoles, and smart TVs—has been steadily increasing year-over-year. Just two years ago, OTT represented only 8% of digital video ad views. Now it represents 32%, according to the FreeWheel Video Monetization Report: Q1 2017, launching on June 14, 2017.

Despite this growth, advertisers and agencies have been cautious about doubling down on OTT investments. In this post, I address the top five challenges surrounding OTT and explain why these don’t need to be major blockers for advertisers looking to reach audiences across premium OTT content. I also highlight the distinctive advantages unique to the OTT market.

1. Viewability Measurement

“Viewability measurement doesn’t work on OTT.” This is largely true but is not as dire as it might seem. OTT apps—think of your favorite TV channel’s app on a Roku or an Apple TV—were never designed to allow third party measurement scripts (aka VPAID scripts) to run because of the risks of interrupting a user’s viewing experience if a script fails to run properly. Therefore, the viewability measurement that digital buyers rely on for desktop display and video inventory simply does not work the same in OTT.

Even without viewability measurement, if an advertiser or agency strikes a programmatic deal ID with one of our trusted publishers, they can be confident that their ads will be delivered in a brand safe and highly viewable environment (on a television set). This scenario is very different from using viewability measurement as a proxy to control for quality when buying on the open exchange. As an alternative, programmatic demand-side buying platforms (DSPs) can provide detailed reporting insights into ad completion rates (aka view through rates) on OTT. At FreeWheel, we’ve seen completion rates for OTT inventory exceed 90% on average, reaching nearly 99% on several occasions. These completion rates are an excellent proxy for measuring viewability when no other measurement is available.

If buyers can trust his or her partner and verify that the creatives are being viewed to completion, why should they need to pay extra for a viewability measurement solution?

2. Supply Path Optimization

One of the known challenges with buying display advertising inventory, particularly on an open exchange, is not knowing how many steps removed that final impression is from the original publisher. When you factor in all of the potential players that are passing inventory among each other and between exchanges, it is difficult to know if a slice of inventory is high quality or will perform well. Furthermore, each hop increases latency and the price as each partner takes their cut. Knowing that you can buy directly from a supply-side platform (SSP) that has direct relationships with their publishers provides buyers with a lot of advantages:

  • Access premium inventory before others. FreeWheel publishers utilizing the FreeWheel Markets SSP solution can provide buyers a direct path to their programmatic OTT inventory, allowing the buyer to win at the fairest price. FreeWheel’s ad server to SSP integration also permits programmatic demand to compete against direct sold campaigns, further increasing opportunities for buyers to scale on premium supply.
  • Connect directly with the publisher. OTT is the newest form of programmatic advertising and therefore more hiccups occur in deal execution between DSPs and SSPs as all parties continue to work out the kinks. Working with an SSP support and account team that can interface directly with a publisher to troubleshoot issues in real time is a huge advantage over other SSPs who do not have any insight into a publisher’s ad server setup or have a direct relationship. According to one of FreeWheel’s DSP test partners, the time and ease it took to resolve issues with FreeWheel was much quicker than other SSPs they had tested. When a deal needs to go live imminently and fulfill an entire budget on time, this speed and attention matters.
  • Quality ad environment. FreeWheel publishers map their entire content catalog, giving them absolute control over their inventory. This enables them to enforce restrictions like COPPA compliance or legal drinking age requirements. Additionally, most publishers require users to authenticate via their cable providers’ to watch shows on their OTT apps. If you’re buying directly from a trusted broadcast partner, you can be confident that your ads will appear to actual viewers. You can’t always be so sure when buying from a third party reseller.

3. Audience Targeting and Measurement

“I can’t buy it because I can’t measure GRPs.”
This is a common statement that we’ve heard from several linear TV buying groups at agencies. They are quoting their advertisers who are accustomed to GRP measurement and are not willing to shift traditional linear TV budgets over to OTT unless it contributes towards their overall measurement. Overcoming this blocker is challenging but the below technological advancements will help to shift over some of these budgets, to mirror the shifts in viewer behavior.

The first advancement is the ability to begin targeting users by device ID (a unique id assigned to each OTT device) which can give advertisers more abilities to leverage their first-party data or a data management platform (DMP) to target their identified audiences in OTT environments. The FreeWheel SSP just recently enabled support for publishers to share these IDs, if they so choose. FreeWheel also gives Publishers the option to pass the IP address of the OTT device, paving the way for cross-device, household targeting.

The second advancement to enable increased ad monetization is being driven by third party measurement providers. Nielsen has been making headway to extend their audience measurement methodology to OTT environments. Other measurement vendors including ComScore, are also releasing OTT audience measurement solutions which will facilitate increased ad spend in OTT.

In the short term, there are several parameters that buyers can take advantage of to more accurately target their audiences when buying OTT inventory through a DSP including geo, device, daypart, channel, and custom targeting provided by the publisher when setting up a deal ID such as show genre or “legal drinking age” compliance.

4. Frequency Capping

“I don’t want to saturate my viewers with the same ad multiple times in the same ad pod or within a viewing session.” Anyone who has watched a show on an OTT device has typically encountered this problem and can agree that it results in a terrible user experience. FreeWheel offers two solutions to combat this issue. Now that the SSP is starting to pass device IDs, DSPs can begin to utilize their internal frequency capping controls. Secondly, the FreeWheel ad server also helps publishers manage their ad pods to prevent the same ad from showing back to back.

5. Lack of Scale for Programmatic Buyers

“I have not been able to deliver my full campaign budgets across OTT.” This was reported by several agency traders and generally stems from the nascent state of OTT and the initial hesitation to make this inventory available programmatically. With more viewers moving to OTT and more inventory becoming available, publishers are becoming more open to programmatic.

Through the FreeWheel SSP it’s possible to work directly with a publisher to transact a deal ID.  We are also working to package together multiple publishers into a single deal to provide even more scale opportunities through private marketplaces. If you have any additional questions about deal opportunities or methods of achieving scale, please reach out to our team directly to learn more.

OTT Advantages

There’s plenty of untapped potential in OTT for advertisers to reach engaged audiences by leveraging the known advantages of programmatic advertising. We’ve already seen success from video game makers targeting viewers on PlayStation 4 consoles to promote new video game releases, a regional pizza company using DMA or city targeting to increase brand awareness, and from movie studios promoting movie releases by running 15 and 30 second movie trailers.

At a broader level, OTT has been successfully used as a “top of the funnel” strategy, reaching a unique set of engaged users who tune in to OTT devices to watch content that is inherently 100% in-view on their televisions. In about 34% of all viewing sessions, advertisers have the added advantage of reaching 2+ viewers per session, according to a recent study conducted by Nielsen. We’re eager to hear how your advertisers use OTT to achieve their goals with these engaged audiences.

As a next step, agencies should collaborate closely with their advertisers to set up OTT test budgets. When starting off I recommend limiting targeting as much as possible and then, once the campaign begins achieving scale, to slowly begin layering on more precise targeting, while always paying attention to the delicate balance between over-targeting and scale. Now that you are well-versed in the “challenges” of OTT:

  • Try buying as much as possible with test budgets to get ahead of the curve and fully grasp the advantages of OTT as an advertising medium
  • Discover and share new insights about your advertiser’s audiences
  • Price the inventory appropriately and work through the initial hurdles
  • Become an OTT subject matter expert.

The technology will only continue to improve so now is the perfect time to dive in.