As viewers increasingly replace their cable and satellite TV subscriptions with OTT, or over-the-top, streaming devices, advertisers risk missing out if they continue to focus on traditional linear tv. Without the interference of the traditional middlemen, OTT offers content owners and advertisers alike the opportunity to connect better with audiences and ultimately drive more revenue.
Historically, advertising has been a key component for content owner's profitability. Now, as more content owners make the switch to OTT, they fear advertising will cost them viewers and rely heavily on subscription revenue instead. If they don’t incorporate advertising into their monetization strategy, it's likely content owners will end up leaving a significant revenue stream on the table. In fact, many video businesses find the most success strategically combining advertising, subscription and, transactions, or a hybrid model to monetize their content.
Compared to traditional television, OTT is much more capable of delivering a highly engaged and targeted audience for advertisers. It’s become increasingly challenging to advertise effectively on traditional TV, yet advertisers continue to spend significantly more on traditional TV (around 70 billion), compared to digital video (around 13 billion).
People’s tolerance for advertisements is at an all time low and thanks to the DVR, viewers take every opportunity to fast-forward through advertisements. Cable networks continue to saturate their programming with longer and more frequent advertising. As a result, viewers are becoming increasingly fed up paying a premium to be bombarded with an excess of untargeted advertisements.
It’s difficult for traditional TV to deliver relevant ads to users. In order to appeal to the broad audience of traditional tv, the message must have mass-appeal and advertisers lose the opportunity to target specific audiences. This may work for massive consumer brands like Budweiser or Honda, but isn’t realistic for smaller, more specialized brands and products.
Today’s audiences demand control over their advertising experience and OTT platforms give users that control by offering the choice to either skip over advertisements or pay for an ad-free experience. People’s frustration with cable’s increasing advertisements has peaked. Viewers have realized OTT is more cost-effective, with similar content offerings, and offers control over advertising. In fact, “too many commercials” is one of the top reasons people cut the cord and cancel their cable subscription.
It isn’t just viewers that find OTT an appealing alternative, it gives advertisers the best of both worlds—the viewability and engagement of traditional TV advertising with the precision and direct targeting of digital web advertising. OTT delivers a highly desirable and engaged audience. According to Nielsen research, the average OTT viewers are younger and more affluent compared to traditional tv viewers. They’re also highly engaged, completing 98% of all video ads.
OTT provides more visibility into what’s being watched, who’s watching and on what device. This gives advertisers the ability to create highly personalized and interactive advertising experiences. Not only are the ads more relevant for users, behavioral and purchase data targets audiences who are most likely to make a purchase.
OTT’s precise targeting is an advantage for content owners serving the ads as well. Viewers are much more receptive to advertisements when they are relevant and given the opportunity to choose their experience. Video platforms like Zype make it easy for content owners to start making money with advertising and other video monetization models, without demanding a slice of the pie.
OTT offers a unique opportunity for content owners and advertisers alike. If content owners have a large enough audience, they have the opportunity to make more money by incorporating advertising into their subscription video business. Advertisers have the opportunity to deliver precisely targeted ads to a pre-qualified and engaged audience. Viewers are thrilled they’re served relevant ads and have the choice to opt out. Advertising with OTT is a win, win for everyone.
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