Marketers have always been looking for ways to reach their target audience. Earlier in the 20th century, mainstream messaging mediums included newspapers, radio, and billboards. Starting in the 1960s, television became mainstream, and businesses had a new avenue for reaching their audiences. Leveraging the power of video messaging, coupled with massive reach into virtually every U.S. living room, advertisers could get more creative with their ads and have a greater impact on their branding than ever before.
Fast-forward to the 21st century, and digital advertising such as PPC text ads, display ads, native ads, and video ads became booming businesses, because they each combined significant reach with sophisticated, granular targeting and deep reporting analytics. However, what was still missing was the combined power of television’s messaging medium alongside the pinpoint targeting and reporting accuracy associated with digital advertising. That is, until the advent of streaming TV.
Starting slowly in 2015 and growing at an accelerating pace, many traditional TV viewers have been “cutting the cord” by dumping cable or satellite TV in favor of subscription-based streaming services like Hulu, Sling TV, and Philo — which have ads along with tiered subscription fees.
Moreover, when it comes to younger viewers, many Millennials and Gen Zers have never had a cord to cut in the first place; they have gone straight to streaming services, skipping traditional networks or broadcast television entirely. The OTT/CTV advertising markets have manifested themselves as advertisers realize the need to follow where consumers are spending their time: in streaming TV.
A Decline in Traditional Television
While the majority of a business’ advertising budget may still go to traditional TV, connected TV (CTV) digital advertising has been steadily rising, allowing companies to reach the members of their target audiences who have cut their cords. In 2019, approximately 20 percent of an upfront advertising budget went to OTT services, including CTV platforms like Roku and Amazon Fire. This year, that number went up to between 25 percent and 30 percent (1).
Annually, we see a decline in subscriptions for cable and satellite TV by about seven percent, and approximately 20 percent of households in the US have cut the cord entirely. This means that we will only see a rise in OTT and CTV digital advertising. The future presents many more lucrative growth opportunities for advertising on streaming services than on standard television.
The COVID-19 pandemic has only accelerated viewers switching away from cable and satellite and toward streaming platforms. Comscore noted a 16 percent increase in households in the United States this year alone, with 37 million households streaming as of July (3). Since TV and movie studios were shut down for so much of the year, many people were drawn toward the more diverse, screen-agnostic, and often cheaper options offered on streaming services.
Streaming platforms have frequently been adding new content to draw in new subscribers. It is certainly working in light of the pandemic; with less new content airing on traditional networks, people are finding new shows and movies in other ways on streaming platforms.
A Rise in OTT and CTV Advertising
Since so many people have been switching to streaming services, the OTT and CTV digital advertising industry is now necessary for businesses to efficiently reach their target audience. This may mean businesses have to split up their TV budgets into two — one for traditional linear TV and one for streaming TV. Still, in doing so, they can see a better return on their marketing investments because they can now combine the power of TV reach and messaging with a digital toolset for precise targeting, tracking and attribution. Advertisers can run more campaigns that are more audience specific, improving overall ROI.
“Primary screens are getting smarter. Smart TV adoption is up significantly, some with Roku built right into the unit. Many viewers also use their main screen as the primary method for watching Apple TV. And while NetFlix is still ad-free, many of the most popular platforms are ad-supported, including Hulu, NBC’s Peacock, and nearly all of the MVPDs” (2). While viewers can pay to remove ads from some streaming services, many people choose to pay for the less expensive options and just watch the ads. With a rich portfolio of streaming apps for viewers to choose from, most of them ad-supported, national brands and local advertisers can now easily reach cord-cutting audiences with OTT and CTV campaigns that combine the best of TV and digital advertising.
Traditional television was a huge boom for businesses, as it gave them a new way to reach their audiences at scale. When people started switching to streaming television, marketers initially either ignored the streamer segment because it was too small or too fragmented to warrant much of an effort. However, once there was enough critical mass in streaming viewership, technology platforms evolved to enable efficient buying of these streaming audiences at scale. OTT and CTV advertising quickly emerged as an exciting and important part of any holistic marketing strategy.
There are a variety of OTT solutions providers on the market to serve the needs of advertisers, from national to local. JamLoop is an OTT ad platform provider that specializes in working with local businesses who have traditionally bought local linear TV, and are now looking for ways to reach digital streaming audiences. With powerful proprietary bidding technology, direct publisher access, real-time reporting, and a team of hands-on campaign management experts, JamLoop
works with hundreds of local and regional agencies and brands to run OTT and CTV ad campaigns successfully. Contact JamLoop today to receive an unmatched service experience powered by a cutting-edge ad technology platform.
(1) Peterson, Tim. “‘CTV took from everybody’: How connected TV won this year’s upfront.” Digiday. 28 Oct 2020.
(2) Qayyum, Hamid. “OTT and CTV Advertising: Now Is the Time.” DMCNY. 13 Oct 2020. http://dmcny.org/ott-and-ctv-advertising-now-is-the-time
(3) Williams, Ryan. “Streaming Service In-Home Usage Shifts During Summer 2020.” Comscore. 29 Jul 2020.
About the Author
Auz Burger is a freelance writer who specializes in advertising technology. She has a BA from Washington State University and has been writing and editing professionally for 10 years. Connect with her on Twitter at @AuzBurger.