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Perspectives

DCN’s must reads: week of January 14, 2021

Here are some of the best media stories our team has read so far this week:

Advertising | Industry-Research | Perspectives

Media industry predictions for 2021: OTT, video, social, and more

There is no doubt that 2020 was a year for the books. The pandemic turned nearly every aspect of life upside down, affecting many industries. While some were severely hurt, others greatly benefited. The advertising industry was no different, experiencing ups and downs. 

Looking ahead to this new year, we predict there will be some major turning points, particularly in OTT, social media, video and conferences. Here at MediaRadar we’ve taken a look back at 2020’s unique advertising trends and predicted what 2021 will bring. 

The OTT shakeout will play out faster than expected

Last year, we predicted that the numerous OTT launches would lead to a crowded, overly competitive market. Since then, we’ve seen a significant movement of advertisers to the new platforms and the pandemic has been a large catalyst of this shift. 

For 2021, our prediction remains, although we think the process is accelerating. What’s causing it to speed up? 

Competition in the OTT space is bruising. HBO is going to get a seat at the table, as they’re bringing blockbuster movies directly to their platform. Like a game of poker, they are raising the stakes. Moving forward, it will be more expensive for others to win if they don’t match the quality and breadth of offerings currently in the market.

Disney and Netflix are also consuming a disproportionate share of the winnings, with Disney’s growth happening much faster than expected. These platforms’ tremendous success, however, may leave fewer consumers able to buy alternate paid subscription services (SVOD), as households won’t subscribe to every OTT service.

Many of the top firms, including Disney and AT&T, are saddled with meaningful debt. This will encourage firms to sell their under-performing or less-core assets. For example, AT&T sold Crunchyroll to Sony in December 2020. Wall Street Journal reported, “Crunchyroll is the latest asset that AT&T is cutting loose to trim the debt load.” 

Years worth of change in the OTT space were squeezed into 2020. This means the endgame will arrive faster than anticipated.

Social will remain powerful in 2021, but year-over-year growth will be tepid

While 2020 disrupted many types of business models, social media was not one of them. 

In 2020, Facebook’s ad sales performance was tremendous, as seen in its stock ending the year up 83% from their March lows, while popular app TikTok claims to have reached almost 20% of Americans every single week.  

But, 2021 will offer fewer advantages. Take away the mandatory stay-at-home quarantine, as well as the most generous presidential election ad spend ever, and what is left could be more challenging. There could also be a hostile regulatory environment, with bi-partisan support to curb ad targeting. Apple has already promised to disable the ability to track and target users across apps on iPhones in early 2021.

Time spent on video will decline

Online video certainly benefited from the increased time people spent at home during the quarantine. But, as the population is vaccinated, the amount of time spent away from our  screens will increase.  

Based on Alphabet’s quarterly filings, YouTube revenue was up 30% year-over-year (YoY) in Q2 2020 to $5B. In the summer of 2021, it will be a challenge to reproduce these numbers, especially in Q3 when people spend more time outdoors. 

The return of in-person events will bring much-needed relief 

Live events have proven to be the hardest area of life to migrate online during the pandemic.  This is not a case where people feel virtual has been a positive substitute.

In business, live trade shows allow for professional and social interaction, facilitating deal-making, etc. Without the ability to meet in person, the demand for lead generation has increased significantly. 

Luckily, we expect the second half of 2021 to be a major turning point for the conferences industry, with in-person events returning en masse. Informa, one of the largest event companies in the world, saw its stock price shoot up 21% in a single day when the efficacy of early vaccines was announced. 

Advertising trends will look more like 2019 in the second half of 2021

The popular logic today is that the world has changed and, even when vaccines are administered and the world begins to emerge from Covid-19, we will not be returning to what we knew before. However, it will not be as radically different as some have hypothesized.

In 2020, we saw markets like live events, travel, and restaurants drastically reduce their ad spending as they cut costs to survive. Meanwhile, children’s toys, food subscription boxes, RV’s, and communication services like Microsoft Teams accelerated their advertising to capitalize on opportunities in the market. 

However, we do not expect this to last, especially as we get into the second half of the year. For example, we expect travel companies to begin advertising soon, to attempt to lure consumers and capitalize on pent-up demand. China’s Golden Week holiday offered a preview, as over 500M people traveled during the holiday, 80% of pre-Covid levels.

Looking ahead 

Not only will 2021 bring the much-needed Covid-19 vaccine, but also some much-needed relief for businesses of all kinds. In the advertising space, we look forward to seeing the industries most impacted by the coronavirus return to more stable advertising spending. 

The “Streaming Wars” will be interesting without quarantined consumers, the return of live, in-person events will restore a key part of the B2B market, and much more. Most importantly, we look forward to the breath of fresh air that this new year will undoubtedly bring.

Perspectives

DCN’s must reads: week of January 7, 2021

Advertising | Innovation | Perspectives

The 4 most important questions to ask when evaluating identity solutions

The identity solution landscape is growing fast. I can count at least 10 solutions that launched last year alone. Third-party cookies are approaching their final exit. Identity is seen as a viable and sustainable way to keep digital advertising running and help large and small businesses alike survive. That’s all good news.

But like most things in adtech land, parsing through how technical solutions differ often requires an advanced degree and a good translator. It is technical for a reason. However, that doesn’t mean technology can’t be accessible and approachable.

I’ve spent the bulk of the last two years working on an identity solution, so I have some opinions. I’ve also spent a good deal of that time talking to other identity solution providers. There are a lot of smart people working on very difficult problems from a multitude of angles. If you’re not excited about the amount of innovation happening at this tremendous clip, you may be in the wrong industry.

For those not steeped in the tech parlance, however, vetting identity solution partners is daunting. So, in an effort to provide clarity, I’ve culled my top four starter questions that every identity solution partner should be able to answer. Frankly, these are questions every marketer, publisher, SSP, DSP, and data provider should ask.

Four critical questions to ask identity solution partners

1. Does your solution support the authenticated or open web?

The authenticated web refers to those users that register and login to a site, app, or platform. Email address is the most common form of authentication, and that identifier then becomes the key to accessing content or other services. Early estimates predict that publishers can achieve at best 10-20% of authenticated users by 2022. That’s great progress to be sure. But what about the other 80% of consumers? Capturing their attention is just as important as authenticated users. This is particularly true for those businesses interested in top funnel activities like prospecting. For maximum scale and coverage, consider leveraging both authenticated and open web identity solutions. 

2. Does your solution support enriched or empty IDs?

An enriched ID is exactly what it sounds like. These solutions were built with data enrichment at the core with the goal of helping marketers and publishers execute more relevant and responsible advertising. Some IDs offer up to 200+ behavioral attributes within their IDs. This offers a treasure trove of privacy-compliant, pseudonymized data for targeting, optimization, reporting, frequency management, and more. But not all identity solutions are created equally. Many others are empty. They exist to leverage first-party data alone, which may sacrifice accuracy based on a single contextual visit or single point of view (the publishers), as well as scale. Additionally, some require a fee to use them and charge additional costs to coordinate and attach relevant data for addressable advertising. Weigh all of these costs and factors when evaluating your identity partners.

3. Where privacy is concerned, is your ID transparent or opaque?

You could ask “Is your ID privacy compliant.” However, the above question will tell you much more about a company’s actions when it comes to compliance. Until U.S. federal law exists, I’d advise to look to Europe’s GDPR, some of the strictest regulation around consumer privacy, for guidance on how to vet an identity partner.

GDPR prioritizes control, transparency, and accountability when it comes to consumer data. In that spirit, look for a solution that makes it easy and accessible for consumers to access, request, and delete their data. Further, seek a partner that minimizes its data collection and communicates accountable IDs to every channel. This ensures a clear, auditable trail as opposed to opaque providers who obscure themselves to users, reduce the ability to see data sharing across platforms, and hide tracking methods.

4. Is your ID solution interoperable or siloed?

You may be wondering with so many ID solutions out there, can they and how will they talk to each other? That’s an excellent question. This is a critical area to dive into with your partners for several reasons. Number one, there may be translation activity fees you need to build into your budget if the ID solution is not interoperable out of the gate. Second, if the ID isn’t freely accessible, you may experience some technical difficulties with sharing across various platforms in other regions. And, third, if the solution doesn’t permit communication across and between IDs, all that rich consumer profiling and segmentation work you did on the front-end may be lost in the lack of translation.

All the right answers

If, however, you find a solution that does all of the above — true interoperability across channels, platforms, and other IDs — that means your portfolio approach will be working most effectively. I trust these four questions will lead to lively and transparent conversations. We all need to be talking more and more openly to solve for a post-cookie, privacy-first world. What questions are you asking identity solution partners? I’d love to hear what’s top of mind for you as you navigate this landscape

Perspectives

DCN’s must reads: week of December 17, 2020

DCN’s must reads: week of December 17, 2020

Innovation | Perspectives

Focus on the future for a successful automation journey

The automation of repeatable and scalable processes, especially marketing processes, has become a competitive imperative for all brands and business. A dramatic drop in costs, combined with increasing access to technologies that underpin access to content and shopping, allows an increasing number of customers to use different channels and devices to make buying decisions. And for sellers, the ability to acquire new audiences while retaining and communicating with existing customers has enhanced the customer experience. It also permits insights to evolve rapidly.

However, it is no longer humanly possible to effectively manage digital marketing at scale. That is where automation comes in. Employing automation for digital processes helps with stabilization. It will also result in fewer opportunities for human error, fewer unproductive work hours, less burnout, and reduce training and HR costs. There are some key components that must be considered to embark on a successful automation journey, though.

The importance of creating a future state 

Before an organization can implement any kind of useful automation strategy, they must establish a well-defined and achievable set of objectives and goals for the business as a whole. This future state vision is vital for creating sustainable automation practices. Without it, only short-term issues can be solved, if anything at all. 

Of course, an organization may not yet have a full understanding of the uncertainties and wild cards of their business. Or the maturity levels of the market may differ significantly from what has already been put in place internally. Whatever the variable, businesses need to work backward from a clearly delineated future state to create a strategic plan that brings value to the entire organization.

Look at the automation journey holistically

Over the last two to three years, many Fortune 1000 companies have started to see automation as a strategic imperative. Acquiring and retaining talent is becoming very expensive, and manual tasks are becoming commoditized or simply not scaling. In addition, many of the cutting-edge technologies that help with automation, including cryptocurrency, machine learning, AI, and big data, are becoming more affordable and accessible.

This is particularly critical for organizations that tend to be stifled by legacy practices and systems. Disrupting existing processes will inevitably cause contention and create push back. This is particularly true if they’re working well in the here and now. You will be met with resistance and it will be a challenge to arbitrate. That is why impossible to pivot overnight. But if you know that these changes are necessary for your business to scale when looking at it from a future state, the challenge must be faced and taken head-on.

For these reasons, it is critical to start the journey. The best way to begin is by using hyper-automation. This approach involves looking at an organization holistically across multiple departments, identifying as many business processes as possible, and by focusing on the organization’s future state as the main objective.

Then, you’ll use a combination of tools to automate them. One type of automation will not work for each and every process. So, comprehensive tech stacks must be developed across the entire organization. A mix of technologies, packaged software, machine learning, and infrastructure will be necessary to deliver the work.

Marketing teams are not alone in this need. In fact, in some industries, the necessity has been much more obvious. Take BPOs and call centers, for example. As voice recognition software has become increasingly accessible and mainstream, these types of organizations have had to rapidly adapt in order to scale. Now, the majority have created workflows that can recognize the human voice associated with a specific account. This enables calls to bypass human interaction entirely.

Back-office automation

Many companies are also automating their “back offices,” which refers to processes that are not client-facing and do not impact the market. This low-risk approach gives organizations the opportunity to build and develop automation processes internally, without having to worry about significant revenue damage if the strategy fails. 

Human resource departments serve as a good example. Both recruitment and employee onboarding are process-driven tasks with many manual components. From posting job descriptions and mining for resumes, to handing out and filing benefit forms, automation simplifies and scales these processes. It enables large volumes to be handled faster, more efficiently, and with less error.

Building your center of excellence

Comprised of key stakeholders across all areas of an organization, a center of excellence (CoE) works across business units to provide leadership, share best practices, and improve overall efficiency. Establishing a strong CoE is a critical precursor to the automation journey. That’s because this team is responsible for developing and driving the business’s all-important future state. 

It can be helpful to think of the CoE as the gutters along the sides of a bowling lane. Their purpose is to provide the bowler (i.e. a company’s teams) with guidelines for aiming the ball (i.e. a set of tech tools) down the lane. The pins are the company’s future state. And, if the execution is successful, the ball will reach the pins without veering into the gutter. Whether there’s a strike, a spare, or a split will depend on the bowler’s aim and execution. The CoE sets the guidelines while the teams execute the plans.

In other words, the COE will map your business’s existing state and future state, and balance the transition from what’s working well in the now to the gradual adaptation of what will work in the future at scale. They’ll also take human creativity into account—your company’s “secret sauce,” so to speak—when determining what does and does not need to be automated. 

Success, organizational adaptation & measurement

Speaking of that “secret sauce,” you can use it as a general guideline for evaluating automation need. If human creativity is your organization’s secret sauce—i.e. the main ingredient driving revenue and growth—automation may not be right for you. But if you have many repetitive tasks and/or elements that have been commoditized, it’s a tactic to strongly consider.

Success metrics for implemented automation processes can be measured in two phases—internal, then external. 

In terms of the first phase, it’s okay if internal back-office processes fail because they are not impacting the market or revenues. But eventually, an organization will have to automate externally in order to have a real ROI. Based on the success of their internal automation, the organization will need to figure out how to turn their strategies outward to create front-office, market-facing processes. That’s when the automation journey becomes fully holistic and the businesses can arrive at its true future state.

It’s also important to make sure individuals across the organization are aligned with the automation journey. This is critical, as there is always resistance—especially in the case of employees who fear losing their jobs. Properly educating the workforce is essential for encouraging this mindset change. It is also critical to invest in career pathing, reskilling, and other professional development rewards.

When embarking on an automation journey, you should never lead with technology. Instead, the most critical component to consider at the outset is the future state of your business. If you put your tech needs first, it will be very difficult to create sustainable automation processes that will benefit the organization as whole. Instead, focus on creating a solid CoE that provides a framework for implementation and evaluation. Doing so will greatly improve your automation success.

Advertising | Perspectives

Why cohorts is a privacy detour the media industry should avoid

With the end of cookies and Mobile Advertising ID’s fast approaching, there is no shortage of discussion about ways to maintain some form of user identification. We need to figure out how data-driven advertising will work within the scope of privacy regulations and technical possibilities. Lately, this debate has revolved around two very different strategic approaches: shared user IDs and cohorts.

Shared user IDs

Shared user IDs aim at solving three main issues related to third-party IDs (and their disappearance):

  • The inefficiencies related to cookie matching and the drop off between platforms using different identification framework. This renders up to 50% of web-based user data and inventory to be unusable.
  • The need for user IDs to be accessible to 3rd parties to the main web server. Instead, these will be replaced by a shared first-party ID, which the server itself provides.
  • The need for greater control around the usage of IDs and associated data, particularly concerning privacy preferences expressed by users.

On paper, shared user IDs are a very efficient and privacy compliant replacement for cookie-based IDs. Their main challenge is adoption by publishers and technology platforms as a scalable alternative to third-party identifiers. Like any currency, their value grows exponentially with usage. This implies a limited value to start with and a difficult take-off (the infamous “chicken and egg” challenge). The next few months will be critical for shared identification solutions to establish themselves as viable and scalable alternatives to third-party identifiers.

Cohorts

On the other hand “cohorts” approaches aim at grouping users into segments to avoid user-level data distribution. They have become a topic of discussion following Google Chrome’s Privacy Sandbox experiments. Cohorts have even been presented as the solution to privacy concerns. They are not.

Cohorts are merely a way to avoid the problem. The approach aggregates people’s data  to pretend that we are treating them as groups rather than individuals. However, no regulation prevents marketers and publishers from addressing individuals. Instead, it requires those individuals to be informed about the data that is collected on them, how it is processed, the purpose of that processing, and to say whether they are ok with it.

A personal approach

Is it better to harass a group of people who have seen a particular product on a website until they buy it? Or is it better to engage in conversation with a single person to understand whether they are truly interested in the product and should be shown the ad?

Personal data is not the problem; it is how we use it that matters. Circumventing privacy by grouping personal data into “cohorts” and pretending we’re off the hook is a way to trick the letter of the law. However, more importantly, it is a way to trick users from the transparency and choice they deserve. And also, maybe, this is a way to trick the Open Web into using suboptimal methods to identify people and leverage marketing data to power advertising investments.

Another critical issue is that this may provide an opening for the large platforms to – in all impunity and under the disguise of (forced) consent — to exploit the largest “personal data vacuums” ever created.

The road to a privacy-first shared user identification future is a bumpy one. Using cohorts may seem like a safe way to avoid the bumps on the road. But they are merely a detour. And as often, taking a detour is longer and less efficient. This is particularly true if that road is controlled by an entity that can raise the toll price at will.

Perspectives

DCN’s must reads: week of December 10, 2020

Here are some of the best media stories our team has read so far this week:

Perspectives | Revenue | Supporter Spotlight

Putting the value back in our industry’s opaque VAT

As 2020, without a doubt the most challenging 12 months in our lifetimes, stumbles to the finish line, one undeniable lesson learned for all publishers is the need to focus on the sustainability of revenue streams. The turbulence of the market, the unexpected upheaval from factors that are unanticipated and entirely out of our control may well have become the new normal. So now, more than ever, publishers need to choose AdTech partners wisely and select those who can demonstrate the ability to deliver a tangible contribution to the bottom line.

Value chain drain

Earlier this year the UK’s ISBA (the Incorporated Society of British Advertisers) released their Programmatic Supply Chain Transparency Study in association with the Association of Online Publishers and conducted by PwC. This groundbreaking examination of the digital industry’s programmatic advertising supply chain shines a bright light on the lack of transparency shrouding AdTech costs levied against publishers and advertisers. Estimates of these fees range anywhere from 15% to 51% of revenue lost by publishers and of non-media expenses paid by advertisers. Graeme Adams, head of media at BT Group, took part in the investigation and branded the lost cash “a big hole in the value chain.”

These unattributable “taxes” are slow leaks in the plumbing of our ecosystem. They expose both the opaqueness inherent in the marketplace and the lack of trust in advertising technology third-parties. Certainly, we all agree there needs to be a greater level of transparency and accountability throughout what has now become the world’s largest advertising segment. And studies such as these are necessary to facilitate adoption of broadly applied standards and practices. However, painting all AdTech providers with the same negative broad brush runs the real risk of our “throwing the baby out with the bathwater.”

ROI vs. ROWe

Clearly there are technology vendors out there whose contributions to the efficacy of your programmatic advertising investment or a publisher’s bottom line are rightly suspect. Indeed, there are companies whose primary goal is self-serving. While they may promise to do no harm, they often fall short of guaranteeing measurable results and fully transparent visibility into their operations.

Their compensation is not directly tied to your ability to generate incremental income. Their tools are available for you to activate without the guarantee of a return on your investment. On the other hand, there are a select group of AdTech software providers who receive compensation only when their solution delivers measurable incremental revenue and income. That’s the ultimate measure of accountability.

Vendor or partner

Therefore, working with the right AdTech third-parties can make the difference, not only on your ability to “make your numbers,” but actually become the deciding factor between the survival of your business or its demise. We would modestly suggest that one way to decide who your best options are is to understand the nuanced differences between a vendor and partner:

Vendor: A party in the supply chain that sells goods and services to companies or consumers.

      A vendor is a general term used to describe any seller of goods or services.

Partner: A person or organization you are closely aligned with in some way.

                To partner is to join with another organization in a shared activity.

In summary we recommend a very careful evaluation among the myriad of third-party solution providers. Seek partnerships based upon full transparency, a shared commitment to mutually beneficial results, incremental revenue and income contribution to your bottom-line, and a guaranteed return on your investment.

About the author

Bruce Brandfon is Chief Media Officer of Duration Media. Prior to that he was Executive Vice President of Webspectator . He was Vice President and Managing Director at Publicitas. Prior to joining Publicitas, Bruce was Vice President of Sales for the Philadelphia Media Network. He has also held leadership positions at Scientific American, Newsweek, and Time Inc. Brandfon is Director of the Board of Advisors at Planet Forward. And he’s an Adjunct Professor of Media Studies at Westchester Community College. He contributes frequently to industry publications.

Perspectives

How to survive in the consent economy

Our previous article outlining the birth of the consent economy warned that the initial waves of privacy regulation in the U.S. are growing stronger. The recent news that California voters passed Proposition 24 proves the point. It also elevates conversation around what the future may hold in terms of national regulation, especially given California’s large influence on the tech industry.

Proposition 24 is better known as the California Privacy Rights Act (CPRA) and builds upon the existing California Consumer Privacy Act (CCPA) passed in 2018. CCPA left room for interpretation, particularly around whether selling targeted ads qualified as selling California residents’ personal information. The CPRA goes one step further in expanding the rights of California’s citizens through new consent definitions among other things. 

While the CPRA won’t be enforceable until 2023, it could severely impact publisher revenue. The added uncertainty around any federal or additional state regulations coming out prior to the deadline makes immediate action a smart choice. If stricter federal regulation rolls out, it will be important to have set the groundwork that will give yourself a head start.

Anticipating what’s to come 

The European privacy regulation landscape offers parallels, that can and should be drawn from, as we face a similar trajectory.

The existing CCPA borrows heavily from the “right to be forgotten” principle enshrined in the European Union’s General Data Protection Regulation (GDPR). To make it easier for publishers to process first-party user data and to obtain consent in compliance with the rules laid down by GDPR, the IAB Europe created the Transparency & Consent Framework (TCF). 

As the shortcomings of TCF v 1.0 became apparent, TCF v 2.0 was introduced to clarify and strengthen the regulatory framework. This dialing up of control measures is exactly what we’re seeing play out in California with the passage of CPRA as an addendum to the CCPA.  

The CCPA limited “selling” data. However, the CPRA is closer in nature to the relationship between the GDPR and TCF by now including restrictions on sharing of personal information as well. Publishers will be required to allow citizens to opt-out and the CPRA. It requires that all third parties with whom a data owner may have sold or shared information be notified as well.   

This new regulation also establishes an enforcement arm. This would be the first agency dedicated to privacy rights enforcement in the U.S. The five-person board will appoint a Chief Privacy Auditor in a structure similar in nature to the GDPR’s European Data Protection Board. In this latest version, California will now have the authority to levy larger fines, which has already occurred with GDPR violations. 

The lessons learned from GDPR and CCPA can help anticipate the future. There’s no doubt that publishers are entering challenging territory with these regulatory demands and the concerns around ad blocking further compounding the path to protecting and growing revenue. Publishers should only be fearful if they are unprepared in their strategy for how to monetize both a consented and non-consented user.

Revenue diversification in the consent economy

The time is now to challenge old belief systems. With the passage and evolution of new regulations, one must begin taking the first steps in the inevitable long-term journey towards revenue diversification. The reality of garnering 100% consent has shown itself to be elusive, if not impossible. In European markets, depending on the country, we have seen anywhere from 50-80% consent adoption. With outcomes like this, having a proper plan in place will enable you to monetize both consented and non-consented traffic, starting with how your ad server is configured and building the initial infrastructure.

When a user provides consent, most of your current monetization partners and policies will be fine and won’t require additional changes. When user consent isn’t provided, a shift in tactics is required. You’ll need to work with partners that will still have the ability to serve ads when user consent is not present. And keep in mind that you should always beware any provider who requires access to your user data to do this. In these situations, contextual targeting and semantic targeting can serve as effective and compliant alternatives.

Even when ad supported situations are off the table, other options exist. A subscription-based limited- or ad free experience, as we’ve seen publishers like Business Insider and The New York Times create, offers additional revenue streams while still staying true to the essence of your brand. 

Another option is to consider ecommerce as it aligns with your brand and brand experience. Publishers like BuzzFeed, Hearst, and Meredith have taken this route through online stores, licensing agreements, and product development. These additional revenue streams increase the long-term value of your audience while still providing value. 

Welcome to the new frontier

This new frontier can be intimidating. However, publishers who successfully diversify revenue streams will be positioned best for long-term sustainability. With the user now occupying a seat at the table, the consent economy can also be seen as an opportunity for publishers. 

Respecting the wishes of the user always pays in garnering trust and attention. This balance between respecting data privacy and delivering on expectations for personalized interactions, not only protects existing revenue, but could also lead to revenue growth through new audiences. Taking the first step now sets you on the path to positioning yourself well for survival in this new consent economy. 

Perspectives

DCN’s must reads: week of December 3, 2020

Here are some of the best media stories our team has read so far this week:

Perspectives | Video

What the future looks like for OTT

In 2020, the over-the-top (OTT) landscape shifted greatly, ushering in a new era for subscription-based OTT video streaming services. New players like HBO Max, Disney+, and Peacock joined the scene. All the while, service providers like Netflix, Hulu, and Amazon Prime Video continued to dominate the market. 

So, what is next? OTT services are predicted to generate just over $158 billion in ad revenue by 2024. 

As OTT experiences these major growths and investments, it brings about some key advertising questions – What are the best practices for selling advertising in this emerging channel? Which channels have the best measurement? How is OTT different from linear TV? And, more. With that, MediaRadar hosted a virtual panel to explore these recent and upcoming changes in OTT, plus what the future holds for this type of advertising.

Los Angeles Times reporter Wendy Lee moderated the discussion. And panelists included Bill Condon of Xumo, Justin Gutschmidt of Premion, and Matt Graham of Acorn TV, as well as myself. Here is a recap of some of the key insights discussed. 

Ad innovation 

While TV advertising has been largely the same for decades, OTT platforms are changing the game, offering new ways for advertisers to get their messages across. Hulu, for example, has a choose‐your‐own‐adventure‐type ad option, allowing viewers to select which of multiple ad options they would like to watch. Hulu also uses interstitial and binge ad options, a format where viewers can watch all their ads at once so they don’t have to be interrupted later. 

After a lifetime of seeing TV ads presented in one way, these new, more creative ad options feel refreshing. They also help keep audiences engaged. With more of a change in what they’re watching, most people are much less likely to get bored. In fact, Hulu claims that the options provided by their platform lead to a 150% increase in brand recall.

Targeting 

OTT advertising offers many advantages to brands looking to get more for their money, as well as more views, more click‐throughs, and more sales, and provides opportunities to get a message in front of the right people at the right time. Leveraging the audience data that OTT channels provide, advertisers are able to produce highly targeted campaigns. They can segment audiences based on geographic location, demographics, preferred content, and much more. Advertisers can also capture impression data for guiding future ad buys.

By narrowing down an ad’s audience to include only those to whom it is relevant and applicable, brands drive awareness. They also save money by not showing ads to obvious dead ends. Audiences also appreciate not being shown ads that don’t apply to them.

Consolidation 

As OTT content becomes more popular, the industry is starting to consolidate. For example, Xumo was acquired by Comcast in February 2020. According to Bill Condon of Xumo, being tied to a larger company has boded well for them. 

“Right before the pandemic hit, we were doing well. But, being tied to a larger company has been really beneficial. I’d say there’s four key areas in terms of what has been helpful to Xumo,” Condon explained.

Condon shared that distribution, discoverability, content, and data were four primary benefits of the merger for Xumo. With Comcast’s help, Xumo now reaches a wider audience and is easier for potential audience members to find. It has also seen a large increase in the content acquisition budget, and has access to more data and data processing tools. Other companies are likely to undergo similar merges and find similar benefits, moving forward. 

The number of unique OTT providers will likely decrease, now that all of the major players have introduced their OTT platforms. The average OTT consumer is willing to pay for about 3.2 platforms. Past this threshold, they are willing to accept ad-supported OTT, which major leaders already offer (i.e. Peacock and HBO Max starting next year).

What’s Next? 

At MediaRadar we track what happens to our customers and, out of those 2,400 customers we track, there was more M&A activity last quarter than any single quarter in our ten years of doing this. As for the number of OTT platforms, this consolidation is a strong sign that the industry is maturing. As the platforms band together for various benefits, we will soon learn what else they can offer. 

With many big name players already on the scene, the future of OTT advertising will be interesting. As advertisers continue to capitalize on the benefits of OTT, it is only a matter of time before we begin seeing even more of its potential and profitability play out. 

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