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OTT Programmatic Advertising Virtues & Woes

Cord-cutters and cord-nevers are not as elusive as they used to be. It used to be the case that most households had a cable or broadcast subscription offering hundreds or thousands of channels. Increasingly we want entertainment that fits into our daily lives. We want to watch what we want, when we want, and so many people are cancelling their TV subscriptions and turning to Netflix, Hulu, Amazon or other OTT services for their entertainment.

OTT, or over-the-top, is somewhat of an umbrella term for any device or service that can be used to stream digital content over a TV or other screen. A lot of things fall under the term, including gaming consoles, smart TVs connected to the internet (connected TV, or CTV), apps such as Netflix or Hulu, smart DVD or blu-ray players or HDMI streaming devices such as the Amazon Fire Stick or Roku. For advertisers who want to catch the cord-cutters and cord-nevers that they can’t reach over linear TV advertising, investing ad dollars into OTT platforms is the way to go.

OTT advertising has been a successful “top of the funnel” strategy able to reach a unique audience, and media buyers and advertisers have certainly taken notice. Pixalate, a marketing fraud and compliance platform, recently released its report, State of Connected TV/OTT: 2019 Ad Supply Trends Report. This report contains a breakdown of the OTT/CTV landscape in 2019, and one of the most surprising findings was the surge in OTT programmatic advertising. Last year, we saw OTT/CTV ad transactions grow globally by 330%.

OTT is still emerging as an advertising channel though, and it lacks cohesion in the ways people watch as well as the way advertisers and publishers buy and sell. In 2019, there was a huge increase in the apps, devices and services entering the market, and there just as many places for advertisers to go to buy OTT programmatic ads; DoubleClick Ad Exchange, FreeWheel, Nexstar, OpenX, PubMatic, RhythmOne, Rubicon Project, Sonobi, SpotX, Telaria, Verizon Media and Xandr being the biggest exchanges.

OTT programmatic buying has the potential to be a great investment, allowing advertisers to reconnect with their audiences fleeing linear TV. However, while it has plenty of benefits, it also has some challenges we should all be aware of.

The Virtues of Programmatic

Programmatic refers to the use of software to purchase digital advertising. Without programmatic technology, the ad buying system would have to rely on human ad buyers and salespeople and wouldn’t be nearly as efficient or able to handle such high volumes of transactions. Humans still need to plan and optimize advertising campaigns, but machines take care of the rest. The rapid rise in OTT programmatic advertising that we saw in 2019 can mean great things for advertisers.

Real-Time Data Analysis: Over programmatic ad exchanges, you can buy inventory using real-time data. This gives you unprecedented capabilities to analyze and adjust campaigns as they run. The only downside is that not all OTT programmatic platforms provide the same data; some may only provide impressions data while some can go much more in-depth. This makes managing cross-platform advertising campaigns a strategic game of chess.

Reach and Targeting Capabilities: In the US, eMarketer reports that we will have 197.7 million monthly OTT users by 2022. Every year more people stream content over OTT apps, and this growing audience is becoming much easier to reach programmatically. In the last 18 months, we have seen a 232% rise in OTT/CTV apps that support programmatic advertising. Not only is OTT programmatic an excellent way to reach a rapidly growing audience, but you can target users in ways you couldn’t target linear TV viewers such as demographically, geographically or by specific subject matter.

Efficiency: Programmatic software allows you to constantly measure campaign performance and make small tweaks to be the most effective. Unlike with linear TV budgets, these mid-campaign adjustments allow you to fully optimize your ad spend and leverage your creative, saving you resources that would have normally been wasted advertising to the wrong markets. Through programmatic direct buying, you can even purchase a limited number of views for an audience from a specific publisher. Through this strategy, you can maximize efficiency and minimize costs.

And the Woes

Buying OTT advertising isn’t a cakewalk. There is no one industry-wide platform to buy ads over, no standard data measurements, there isn’t even a single streaming platform that reigns over the others. OTT may be the best way to reach consumers who are ditching their old-fashioned TV subscriptions, but there are some things you need to know first.

Difficulty Measuring Viewability: VPAID tags are third-party measurement scripts that allow advertisers to track video ad performance and get metrics like viewability, completion rate and click-through rate. The VPAID tags that advertisers use for desktop display and video inventory don’t work in the OTT landscape. As an alternative, programmatic demand-side buying platforms (DSPs) can give advertisers data on completion rates, also called view-through rates, on OTT.

For clarity’s sake, viewability rate is the number of impressions garnered from an ad that is a certain percentage in view for a minimum amount of time. For instance a viewable impression may only be counted if an ad was 100% in view, completed up to 50% and the sound was on. In contrast, completion rate is the percentage of measurable impressions where the ad played to completion. Completion rate is not as reliable as viewability.

Ad Oversaturation: Anyone who has streamed their favorite TV show on an ad-supported platform such as Hulu, Pluto.TV or Crackle is all too aware of this issue. These platforms, unlike linear TV, have to handle countless on-demand streaming feeds instead of just one scheduled programming feed. In the programmatic exchanges you’re buying impressions instead of scheduled ad spots, and this system is not optimized to add variety during commercial breaks. This oversaturation has a negative impact on user experience and could make users turn to premium subscriptions to avoid it, not a good thing for advertisers.

The Confusing Path From Publisher to Impression: The programmatic supply chain includes more steps that you think. Demand-side platforms (DSPs), publisher ad serving software, sell-side platforms (SSPs), data management platforms (DMPs) - this only scratches the surface. When you buy OTT programmatic inventory on the open market, it’s hard to tell how many steps separate the final impression from the original publisher.

A piece of inventory may be passed among several players and between ad exchanges, and with each interaction, a partner takes their cut and the price is increased. In these conditions, it’s also difficult to determine the quality of inventory and whether it will perform well. This complexity makes ad fraud a huge problem, and to ensure you’re actually getting the impressions you paid for takes some industry know-how and sleuthing skills.

Fear Not, Your Stewards Await

Your media stewards, to be precise.

OTT programmatic buying allows you to maximize your ad dollars while targeting a younger and persistently elusive audience who have given up their traditional TV subscriptions. The number of Americans using streaming services is projected to keep growing with Nielsen reporting that 93% of US consumers will either increase or keep their existing streaming services subscriptions.

However, this probably isn’t an endeavor that you want to jump into alone. Our digital media buyers at The Ward Group understand the challenges present in this advertising channel, and it is our goal that your media budget is fully utilized and your message reaches the right viewers. Now that you understand a bit more of the benefits an OTT programmatic approach can provide - as well as the apparent obstacles - you’re ready for step two: contacting our media stewards to start building a plan that works for your brand.

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