Market Dynamics in OTT and CTV Advertising Landscape

The OTT and CTV advertising markets have expanded quickly, driven by various factors shaping the market dynamics.

• The advancement of technology and infrastructure has enabled faster internet speeds, higher video quality, and more interactive features. For example, 5G networks are expected to boost the performance and accessibility of OTT and CTV content, especially on mobile devices.
• New formats such as 4K Ultra HD, HDR (high dynamic range), and VR (virtual reality) are enhancing the viewing experience and creating new opportunities for advertisers
• The proliferation of OTT platforms and services offers a wide range of content genres, formats, and price points. Some of the major players include Netflix, Disney+, Hulu, Amazon Prime Video, Peacock, Paramount+, Apple TV+, HBO Max, Pluto TV, Tubi, and more. According to Statista, there were over 300 OTT services available in the US as of December 2021.
• With the rise of cord-cutting and cord-never consumers, who prefer to stream video content online rather than pay for traditional cable or satellite services, according to eMarketer, there will be 106.7 million US households with at least one CTV device in 2022, up from 88.7 million in 2019. The number of US households without a pay TV subscription was projected to reach 44.3 million in 2022, up from 34.4 million in 2019.

The convergence of these factors has paved the way for advertisers to seize a momentous opportunity in leveraging OTT and CTV advertising to effectively engage a vast, captivated, and precisely targeted audience. With the exponential growth of OTT and CTV viewership, advertisers now have an unprecedented chance to deliver their messages directly to consumers in a personalized manner by tapping into the power of data-driven insights and immersive ad formats, ensuring optimal reach and resonance with their desired audience.

US OTT ad spending was estimated to reach $21.25 billion in 2022, up from $14.34 billion in 2019. US CTV ad spending was projected to reach $14.12 billion in 2022, up from $8.88 billion in 2019.
(Source: eMarketer)

As OTT and CTV audiences continue to expand at a remarkable pace, advertisers and publishers are presented with both immense opportunities and unique challenges. On one hand, the growing audience base offers a larger pool of potential customers to engage with, enabling advertisers to reach a broader market and maximize their brand exposure. However, with increased competition and a fragmented landscape of platforms and services, advertisers and publishers must navigate the complexities of audience fragmentation to strike a balance between creativity, relevance, and seamless user experience.

Innovations in Content Discovery Mechanisms

One of the key challenges for OTT and CTV advertising is content discovery. With so many platforms and services available, consumers may have difficulty finding the content they want to watch or discovering new content that matches their preferences. This can affect their satisfaction and retention rates, as well as their exposure to ads.

To address this challenge, OTT and CTV platforms are innovating and evolving their content discovery mechanisms, such as:

• Personalization and recommendation algorithms use data and machine learning to tailor content offerings based on the user's behavior, preferences, demographics, location, device type, etc. For example, Netflix uses a complex algorithm that analyzes over 100 factors to generate personalized recommendations for each user.
• Voice search and control features, allowing users to use natural language commands to search for or control their content. For example, Amazon Fire TV supports Alexa voice assistant integration, enabling users to ask questions or make requests related to their content.
• Aggregation and curation services provide users with a single interface or app that combines content from multiple sources or platforms. For example, Roku offers The Roku Channel, a free ad-supported service that aggregates content from over 190 channels across genres such as news, sports, and more.

The Roku Channel serves as the ideal destination for individuals seeking both free and premium television content, regardless of their location. It offers a vast array of options, including a plethora of popular movies, beloved shows, constant live news coverage, and much more, all available for free.
In addition, users have the convenience of effortlessly adding and organizing their preferred premium subscriptions such as Showtime, Starz, and Epix. With a single login, unified billing, and a centralized platform for streaming, The Roku Channel ensures a seamless experience for accessing and enjoying a diverse range of entertainment.

Content discovery mechanisms have evolved over time, from manual browsing and searching to algorithmic recommendations and personalized suggestions to voice control and interactive features. By aligning OTT analytics and reporting best practices with the latest trends, advertisers and publishers can notice a dramatic improvement in ad optimization and the resulting revenue.

Some of the latest innovations in this space include:

• Contextual Targeting: This is a technique that matches ads to relevant content based on keywords, topics, genres, etc. For example, an ad for a sports drink could be shown during a sports-related show or movie. Contextual targeting can help increase ad relevance, engagement, and brand safety.
• Dynamic Ad Insertion (DAI): This is a technique that inserts ads into video streams in real time based on various criteria such as device type, location, time of day, etc. For example, an ad for a local restaurant could be shown to viewers in a specific geographic area. DAI can help increase ad inventory, flexibility, and personalization.
• Interactive Ads: These are ads that allow viewers to interact with them in various ways, such as clicking, swiping, tapping, etc. For example, an ad for a car could let viewers explore its features, book a test drive, or request more information. Interactive ads can help increase ad immersion, retention, and conversion.

These innovations can help improve content discovery for both consumers and advertisers by delivering more relevant, engaging, and personalized experiences.

Key Metrics and Tips to Improve Ad Analytics Performance

The key metrics and tips to improve them for boosting ad analytics performance in OTT and CTV advertising are:

1. Completion Rate: The percentage of ads that are watched until the end by the viewers A high completion rate indicates that the ads are engaging and relevant to the audience. To improve this metric, advertisers should optimize the ad length, format, and creative quality, as well as target the right segments and platforms.
2. Viewability: The percentage of ads that are actually seen by the viewers, not just served. A high viewability rate means that the ads are reaching their intended audience and have a chance to influence their behavior. To improve this metric, advertisers should ensure that the ads are placed in prominent positions, avoid low-quality inventory, and use verification tools to measure and optimize viewability.
3. Click-through Rate (CTR): The percentage of viewers who click on the ads after watching them. A high CTR indicates that the ads are driving traffic and conversions to the advertiser's website or app. To improve this metric, advertisers should use clear and compelling call-to-actions, offer incentives or discounts, and align the landing page with the ad message.
4. Return on ad spend (ROAS): The ratio of revenue generated by the ads to the cost of running them. A high ROAS means that the ads are profitable and efficient. To improve this metric, advertisers should track and attribute conversions across devices and platforms, optimize the bidding strategy and budget allocation, and test different ad variations and creatives.

Trends Forecast in OTT and CTV Advertising

As OTT and CTV continue to grow and evolve, so will the trends in advertising. Some of the future trends that we can expect to see include:

• Addressable Advertising: This is a technique that allows advertisers to target specific households or individuals based on their demographics, behaviors, preferences, etc. For example, an ad for a pet product could be shown only to households that own pets. Addressable advertising can help increase ad precision, efficiency, and ROI.
• Programmatic Advertising: This is a technique that automates the buying and selling of ad inventory using data and algorithms. For example, an advertiser could use programmatic platforms to bid on ad impressions across multiple OTT and CTV services based on their goals and budgets. Programmatic advertising can help increase ad speed, scale, and optimization.
• Attribution Modeling: This is a technique that measures the impact of ad exposure on consumer actions across different channels and devices. For example, an advertiser could use attribution models to track how many viewers who saw their OTT or CTV ad later visited their website or made a purchase. Attribution modeling can help increase accountability, transparency, and effectiveness.

These trends can help enhance OTT and CTV advertising performance by leveraging data-driven insights and strategies.

OTT and CTV are transforming the way consumers watch video content and how advertisers reach them. By understanding the latest trends and the future of OTT and CTV performance analytics, advertisers and publishers can optimize their campaigns, measure their outcomes, and drive revenue.