For TV advertisers, life used to be much simpler. Millions of people watched TV, in one way, from one place. Audience size was the only metric that mattered. Now, everything’s changing. People are cutting the cord on linear TV. Some, “cord-nevers”, were never attached in the first place.
A complex and fragmented market makes it much harder for advertisers to spend their limited dollars in the right place to reach as many eyeballs as possible.
It’s far from all bad news, however. The rise of “over-the-top” (OTT) and connected TV (CTV) is generating unprecedented volumes of consumer data that, used in the right way, can assist advertisers to target and personalize ads in a way that’s never been possible before. But to do that they should bring together new data capabilities, the right talent and the right technology platform.
The rise of online TV
As viewership of (OTT) video-streaming services, like Netflix, Amazon Prime and Hulu, continues to rise, linear audiences are in decline.
The growing US audience for online TV will reach 250 million viewers by 2022, according to eMarketer estimates.1 Subscription OTT viewers currently make up 51 percent of the US population and eMarketer expects that figure to rise to 58 percent over the next four years.1
These consumers include cord-cutters and cord-nevers, with cord-cutters set to become the one of the largest groups by 2022.
Fragmentation and measurement
As more streaming services enter the market, ratings for each service erode. With more viewing options competing for a finite number of viewing hours, advertisers need to spread investments across more platforms.
At last count, at least 45 video-streaming apps were available. This makes it challenging for advertisers to balance limited video dollars across multiple platforms. More highly watched services, Netflix and Amazon, don’t accept ads, while those that do have much smaller audiences. And this audience fragmentation may cost advertisers more on a cost-per-thousand impressions basis.
That could change, however. Netflix price increases may eventually put a ceiling on the number of subscriptions that consumers are willing to take up. This could lead Netflix and Amazon to follow Hulu’s model of offering lower-priced subscriptions to those willing to see ads. It could also see smaller services exiting the market or consolidating with other platforms. Apple’s recent announcements of a TV service may cause big shifts too.
Measurement remains an issue as well. Despite digital delivery to known customers, OTT lacks standardized measurement and is hard to compare with linear TV ratings.
Where next for advertisers?
To deal with OTT fragmentation, advertisers should focus on developing intelligent operations, harnessing data, new technologies and human ingenuity to monitor what media target audiences are consuming, and follow audiences to those media. To overcome measurement issues, they should try new testing opportunities that measure campaigns across media.
Most important of all, advertisers should start piloting programs now to test out OTT platforms. Those that get in early are expected to be favorably placed when the speed of consumer “cord-cutting” picks up.
Accenture’s Media Management team has been working with major advertisers for years, helping to manage the transition from linear TV to OTT and on-demand delivery models. Contact us to improve your return on advertising dollars in an increasingly-fragmented market.
This article was originally published in our Spend Trends application. Spend Trends captures the latest insights and perspectives from our global team of category specialists from the market-moving news to what we think it means for our clients, to in-depth supply market overviews.
Sources and References:
- Verna, Paul. “Q3 2018 Digital Video Trends.” eMarketer. September 27, 2018. https://content-na1.emarketer.com/q3-2018-digital-video-trends.
- “US TV Ad Spending to Fall in 2018.” eMarketer. March 28, 2018. https://content-na1.emarketer.com/us-tv-ad-spending-to-fall-in-2018.