Many of today’s marketers are excited about over-the-top television, and for good reason. OTT viewership is growing rapidly, and ad dollars continue to funnel into the space at the expense of linear TV. There are now 60 million streaming-only households in the U.S., or one-third of all households, according to eMarketer, and analysts are anticipating a 50% jump in OTT ad spending from around $8 billion in 2021 to $12 billion next year.
Fueling this growth is digital media owners’ incredibly rich first-party data sets and a vast supply of streaming content that can be populated with ads that are specifically targeted to the viewers marketers want to reach. What’s more, this audience is far more tolerant of ads than some might think: Four out of five streamers watch ad-supported programming, according to a recent survey of 1,500 viewers conducted by Mintel on behalf of SpotX.
OTT’s growing popularity also comes at a time when increasing restraints on third-party data gathering, including new consumer privacy protections and the removal of cookies and digital ad tracking devices, are putting first-party data at a premium for all digital marketers. A first-party combination of subscriber data and registration data from streaming service providers such as Hulu and Sling, along with automatic content recognition data from device manufacturers such as Roku and Samsung, provides a direct window into OTT’s consumer viewing habits—unique insights that can inform an ad sales strategy with segments tailored to an individual marketer’s needs.
But as is often the case, those who stand to benefit most from the data—and that includes media owners and advertisers—don’t necessarily have the proper strategies in place to maximize its value. In order to match ads to the right audiences, buyers and sellers must know how to use the data to target audiences at scale. This is where both media owners and advertisers often struggle to harness all of the information and simplify their strategies. In many cases, the sheer amount of available data creates the temptation to slice and dice the audience too finely, without considering how to leverage all of the distribution channels within the complex OTT ecosystem in a more efficient way.
To change course, media owners can start by taking a closer look at how each of these channels operates independently and creates additional opportunities for advertisers, and then begin to refine their approach to segmentation.
Take advantage of the open CTV environment
One of the unique aspects of connected TV is that it is an open distribution environment. (CTV refers to the devices that streaming services use to deliver OTT programming via the internet.) This means that a major media company such as Disney or a cable network such as Discovery not only controls streaming content across its owned-and-operated apps, but also shares inventory with service providers and device manufacturers. These days, more customers are using a combination of direct-to-consumer apps, along with vMVPDs (virtual multichannel video programming distributors) and FAST (free ad-supported streaming TV)to watch a mix of linear and digital-only programming . In each case, the content owner gets a share of inventory—usually set by the terms of a carriage deal—that can be monetized through direct sale or programmatic advertising.
When first-party data is combined and analyzed in the right way, a media owner can expand its reach across all of these distribution channels, which in turn allows advertisers to find new audiences regardless of where they are consuming the content.
An automaker, for example, can match or layer on its purchase data with a media owner’s audience data to create custom segments, such as likely buyers of a specific vehicle who are golf enthusiasts and watch a lot of DIY home improvement programming. The challenge comes when both the media owner and the advertiser gets stuck in a cycle of creating finer and finer segments around these niche behaviors, limiting the number of unique audiences and failing to capitalize on the scale afforded by CTV. In our experience at SpotX, we’ve found that the most successful media owners take a more deliberate approach to the amount and type of segments they seek to leverage. There is no one proven method, but leveraging a sales strategy that is focused on targeting the top 10 to 15 segments usually works better than a pool of 50 or more.
Ideally, this effort will be a shared responsibility in which media owners work together with their advertising partners to identify the best opportunities as part of a complementary sales and marketing strategy.
Commit to a data-first strategy
The appeal of OTT advertising lies in its ability to create relevance, which is a function of using data effectively to match up audiences with the most appropriate ads. It requires the right combination of technology, resources and organizational support. Each media owner has a unique set of needs and circumstances, but there are key pillars for a data-first strategy that apply to every company. These include:
- Flexible planning. Media owners can work more closely with data/technology partners to understand what types of segments are trending and identify opportunities to leverage those segments, or cultivate their own segments, using first-party data to take advantage of seasonal opportunities, such as holidays or spring break.
- Robust technical solutions. An integrated solution is required to connect a media owner to multiple sources of first- and third-party data through a data management platform, and sometimes additional DMPs are needed to bring in advertiser data. In addition, media owners must be able to forecast, target and report in a privacy-compliant manner from those same platforms.
- Investments in data resources—and the best people. Media owners need to create strong teams of people, both internally and externally, who will contribute core strengths in such areas as product development, operations and data science. Those working on the front lines tend to have a deep understanding of issues related to data privacy and compliance.
For years, marketers have been lured by the promise of data-driven TV. Now, OTT has arrived, with digital entertainment options exploding and cord-cutting increasingly becoming the norm. As scrutiny intensifies on third-party data gathering across the digital spectrum, there is no better time to harness video, CTV and the power of first-party data to create a world-class advertising strategy.
