31st Dec, 2023 | Nisha D.
Image Source: OTT Trends
Let’s talk about the cool changes happening in ads!
You know how TV ads used to be a big thing?
Well, now they're getting a makeover, and it’s called Over-the-Top (OTT) advertising.
More people are choosing online streaming, and guess what?
Marketers are noticing and bringing ads to your favorite streaming platforms.
In this blog, we're going to check out OTT advertising—that's the kind of ads you see on streaming platforms. We'll look at some interesting numbers and then dive into the top five trends that are changing how these ads work.
OTT advertising refers to the delivery of video content via the internet, bypassing traditional cable or satellite television providers.
Over-the-Top platforms include streaming services like Netflix, Hulu, Amazon Prime Video, and others that allow users to consume content at their convenience, independent of scheduled television programming.
To set the stage, let's take a glance at the current state of OTT video in the United Kingdom, according to Statista:
Revenue Projection: The revenue in the OTT Video segment is projected to reach US$14,780.00 million in 2023, with an annual growth rate of 8.6%.
Moreover, there is an anticipated annual growth rate of 4.75% (Compound Annual Growth Rate, CAGR, from 2023 to 2028), leading to a forecasted market volume reaching US$18,640.00 million by the year 2028.
User Penetration: The user penetration in the OTT video segment is expected to hit 95.3% in both 2023 and 2028.
Average Revenue per User (ARPU): The ARPU is estimated to be US$228.90 in 2023.
The Over-the-Top (OTT) landscape is evolving at an unprecedented pace, reshaping how we consume digital content.
As streaming platforms continue to gain momentum, it's crucial to stay abreast of the latest trends shaping the OTT industry. In this section, we'll delve into five key OTT advertising trends that are revolutionizing digital entertainment.
In the era of OTT, the one-size-fits-all approach to content delivery is a relic of the past. Hyper-personalization is emerging as a game-changer, allowing platforms to curate content experiences that cater to individual preferences and behaviors.
OTT platforms are leveraging advanced algorithms and machine learning to analyze user behavior, ensuring that viewers are presented with content that aligns with their tastes and preferences.
This trend not only enhances the user experience but also maximizes engagement and encourages prolonged viewing sessions with automation.
As the demand for tailored content experiences grows, we can anticipate a surge in platforms investing in sophisticated recommendation engines and AI-driven personalization strategies for ads.
While on-demand content remains a staple of OTT platforms, live streaming is experiencing a noteworthy resurgence. The immediacy and real-time engagement offered by live streaming are capturing audiences in new and compelling ways.
Whether it's live events, sports, or interactive shows, the live format fosters a sense of community and urgency, driving higher viewer participation. This trend is not only limited to entertainment but also extends to e-sports, virtual events, and behind-the-scenes glimpses, creating a dynamic and immersive viewing experience.
In the coming years, we can expect OTT platforms to invest more heavily in live streaming capabilities, offering diverse and real-time content to capture the attention of audiences seeking immediate and interactive experiences in their ads as well.
Monetization strategies within the OTT space are undergoing a paradigm shift. While subscription-based models have been prevalent, innovative approaches are gaining traction to diversify revenue streams and cater to a broader audience.
Freemium, a hybrid model offering a basic level of service at no cost, is gaining momentum in the OTT landscape. Platforms like the Roku Channel and Peacock provide viewers access to selected content, including popular classics, TV shows no longer in production, and a glimpse of original content without the commitment of a subscription fee.
This model not only addresses subscription fatigue but also serves as a strategic entry point for viewers who may later opt for premium features.
For consumers, freemium models present an opportunity to explore content without financial commitment, while for content providers, it acts as a gateway to attract and convert users into subscribers.
In the present landscape, consumers exhibit a greater inclination to view advertisements in return for reduced monthly expenditures. This shift in consumer behavior is anticipated to fuel significant growth in Advertising-Supported Video on Demand (AVOD) throughout 2022 and beyond, consequently capturing a considerable share of advertising revenue from linear TV.
An illustrative example of this trend is GroupM's projection, foreseeing a doubling of Connected TV (CTV) budgets by the year 2026.
Image source: OTT
The future of OTT monetization is likely to witness a fusion of subscription and advertising models, providing viewers with more choices while ensuring sustainable revenue for content providers.
The traditional linear viewing experience is evolving into a two-way street, with interactive and shoppable content taking center stage. Interactive ads, branching storylines, and shoppable content are blurring the lines between entertainment and commerce.
Viewers are not just passive consumers; they are active participants, influencing the direction of the story or making purchases directly through the platform. This trend not only enhances user engagement but also opens new avenues for e-commerce integration within the OTT space.
As the demand for immersive and participatory experiences rises, OTT video platforms are likely to invest in technologies that enable seamless integration of interactive and shoppable elements into their ads content.
The reach of OTT platforms is no longer confined to regional borders. The globalization of content is a significant trend, with platforms expanding their libraries to cater to diverse audiences around the world.
OTT platforms are increasingly investing in creating and acquiring ads that resonate with audiences globally. Original productions from different regions, coupled with localization features, are breaking down cultural barriers and making content more accessible to a worldwide audience.
Looking ahead, the trend of global expansion is likely to intensify, with OTT platforms actively seeking ways to provide localized content experiences that transcend geographical and cultural differences.
OTT advertising is not just a trend; it's a dynamic force reshaping the digital advertising landscape. As we look ahead, the trends highlighted here underscore the need for adaptability and innovation.
Advertisers must harness the power of targeted advertising, embrace interactive and cross-platform strategies, leverage ad-supported models, and stay attuned to the evolving landscape of programmatic advertising.
In conclusion, those who navigate the ever-changing currents of OTT advertising with creativity and strategic insight will find themselves at the forefront of a digital revolution, connecting with audiences in ways that were once thought impossible.
The future of advertising is OTT, and it's a landscape full of opportunities for those ready to explore and innovate.
There are three main ways:
Demand-Side Platforms (DSPs): These platforms allow you to bid on ad inventory across multiple OTT providers in real-time.
Direct Deals: Negotiate directly with specific OTT platforms for premium ad slots.
Supply-Side Platforms (SSPs): If you're an OTT provider, you can use SSPs to sell your ad inventory to DSPs and advertisers.
Reach cord-cutters: Target audiences who have ditched traditional TV but still consume video content online.
Precise targeting: Utilize data-driven targeting based on demographics, interests, and viewing habits.
Engaging formats: Go beyond traditional banner ads, explore interactive elements, and leverage the "lean-back" experience for impactful visuals.
Advanced measurement: Track ad performance precisely with metrics like impressions, completions, and even brand lift.
Both deliver ads through connected devices, but OTT emphasizes delivery across all devices (phones, tablets, TVs) while CTV specifically focuses on internet-connected TVs. Think of OTT as the broader umbrella and CTV as a focused part under it.
Costs can vary depending on factors like targeting options, ad formats, and platform popularity. Generally, it's more expensive than traditional TV but often cheaper than digital display ads due to higher engagement and viewership. Consider cost-effectiveness alongside reach and audience relevance.
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