Summary of “OTT’s Advertising Problem” a paper published by Fierce Online Video

summaries

Here’s an Executive Summary of a white paper just published by Fierce Online Video.

VOD’s Vicious Cycle

  • The OTT market is exploding; the associated ad market is not. And, may never! Challenges? (1) Ad-blocking (2) Ad-fraud (3) Measurement
  • Premium AVOD (ad-based VOD) is caught a vicious cycle:
    • >> Viewers love Netflix-style content – expensive! >> Ads alone can’t pay for such content b/c the math-attention equation simply doesn’t add up. >> And, without the content, never will.
  • The Big Exception: YouTube
    • Sheer volume of users + Free content contributions = Success
    • But, too late for others.
  • VOD businesses succeed with high quality (for subscriptions) or high quantity (for ads). Most new ad-based OTT businesses achieve neither.

Are there Specific Opportunities for Limited Success?

  • Ads on VOD services can be localized. Perhaps viable for some local ad segments?
  • Services like Hulu combining cheaper subscriptions with limited ads. Those ads are premium, given the rich targeting data available to Hulu.
  • Sponsorship and branding of content will be more effective than generic ad “slots”. Also, advanced formats like Turner’s Podbusters.

Major Challenges Ahead

  • Personalized & targeted ads mean creatives are more likely to be compelling to viewers. But the major challenge is that frequency goes way up. Major annoyance!
  • No standard measurement of ad views on VOD. Why? Google, Facebook and Twitter don’t want to work together. Result? Page views and ad impressions no longer tell the whole story.

So What Works?

  • OTT ads are best for building Brand profits.
  • PC and mobile ads are better for driving Brand sales.
  • Server-side advertising helps reduce buffering & deters ad blocking.
  • Great Creative! A 15-second Hyundai ad on YouTube that made fun of ad-skipping was a big hit. 79 percent of viewers watched the whole ad, compared with standard average of 55 percent.
  • Different online outlets should be served with different creative.
  • Users should be tracked across ad platforms to A/B test what works.
  • Virtual reality may become mainstream and become another piece of the digital ad arsenal.

The Big Takeaway

  • The target customer and creative message should always drive the choice of platform!

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