Benefits of OTT advertising: Gijsbert Pols says ads are the future of streaming

As COVID-19 continues to affect people around the globe, sitting at home and streaming video has become more common than ever before. But our focus should turn to streaming in more ways than one. As entertainment apps see a bump during social distancing, and big players such as Disney, HBO and Amazon all join the party, it’s fast becoming a key vertical for both app developers and advertisers.

What is OTT? Over The Top (OTT) is a highly disruptive model, taking content that used to be served by legacy media and using the power of connectivity to provide these services over the internet. Think about it like this: if you watch Game of Thrones on a TV channel, that’s TV. But if you stream the same show to your TV/mobile phone — that’s OTT.

Adjust’s Innovations team has been researching how best to help marketers in the OTT space. We talked to Gijsbert Pols, from Adjust’s Innovations team, to learn more about this incredibly important part of the modern media landscape.

OTT content is consumed on many types of devices. A report from eMarketer showed that TV is by far the preferred device to consume OTT content for consumers in the US. In America, 63% of users say they access OTT services most frequently on their TVs. Mobile comes in second, but only weighs in at a modest 11.6%.

However, when you look at time spent per device, mobile makes up nearly a quarter of total time spent viewing — suggesting mobile viewers spend longer than average watching OTT content. While most people associate OTT with TV, a substantial and growing part of OTT content is consumed via mobile phones. In addition, mobile often has a supporting role in OTT consumption — for example Roku allows users to use their phone as a remote control.

This means that mobile users are strategically important for OTT services, and are worth focusing on when brainstorming campaigns. In addition, mobile companies are increasingly using advertising on OTT platforms for user acquisition. Even if mobile is a second screen for OTT viewers, nearly everyone owns a mobile device — and even users watching on connected TV can be enticed to install an app they saw while watching streams.

Gijsbert foresees that we will increasingly be seeing ads for mobile apps on OTT platforms, across devices, and this will have an impact on mobile installs — presenting a measurement challenge for marketers.

If we look at the increasing competition within the OTT space, the rise of mobile will make getting the most out of marketing crucial in the near future: “Think about Netflix over the last ten years — the first six, seven years, Netflix was virtually without a rival. Now there are other kinds of OTT platforms on the rise that will increase competition for eyeballs. OTT is no longer just a niche, but a play for the mass market.”

As the market grows and becomes hyper-competitive, it will become even more attractive for marketers of all types, with mobile marketing poised to benefit. Gijsbert believes that this competition will see UA managers become increasingly critical of which ad sources are driving LTV, meaning that measurement — and proving performance — is even more key.

In the current situation, advertising on all platforms is becoming more competitive. With budgets under pressure, ad spends in many verticals are becoming tighter, forcing more cut-throat decision-making with regards to performance. This impulse has not been spared in the entertainment vertical, with Adjust data showing that ad spend and installs are trending downwards, after a peak at the start of April. This suggests that UA managers are buying less installs.

Gijsbert thinks this will cause advertisers in the OTT space to become more creative: “Hulu recently announced space for pause ads and solutions like this are only going to become more common.”

There’s also the possibility that in-show monetization, providing shoppable content seamlessly inside the stream, could be adopted widely in advertising within the OTT space. TV shows like Amazon’s Making The Cut already allow viewers to purchase the designers’ products on Amazon Prime after the show has aired. China’s Tencent have developed technology to show ads seamlessly inside the video stream, allowing ads to be shown on — for instance — a coffee cup that an actor is holding onscreen. This effect will only be intensified in the mobile sphere, since mobile users are used to interacting intensively with ads, with direct benefits to shoppable content strategies.

“Because people will have less money to spend they'll be reluctant to have a lot of subscriptions and at some point, the OTT platforms will have to adjust to that,” says Gijsbert. “So I think we're going to see more ads. It's going to be interesting, I think they're going to do more product placement, and there's a big chance we are going to see more freemium models being offered as well, with limited content and ads injected in between.”

For apps that might be interested in advertising in the OTT space, there’s currently limited inventory. With advertising based video-on-demand (AVOD) seeing a boost during the COVID-19 lockdowns, as cash-strapped consumers vote with their wallets, Gijsbert sees this low inventory problem as something that will change going forward.

Streaming service Reelgood revealed that AVOD saw growth of 148% during the COVID-19 period. There’s already plenty of ingenuity in terms of ad formats on OTT, with Hulu Sling TV offering their pause ads, and introducing a primetime ‘happy hour’ for free to households. This freemium model is likely to become more common going forward.

“It's going to be very interesting to see how the economic downturn works out because that might accelerate some of the dynamics that are going on now,” says Gijsbert.

“A lot of analysts expect subscription fatigue at some point, so people will be tired of combining subscriptions — but because they want to see the content they will become more tolerant of advertising.”

We're used to seeing ads on TV or YouTube says Gijsbert, who predicts that what will change most fundamentally going forward is content going OTT that hasn’t been OTT so far.

“The OTT platform Hotstar have already acquired the rights to stream the Indian Premier League in 2017. There was a very hot bidding contest for the rights, even Facebook participated in it.”

In the long-run, once we emerge from the current corona crisis, Gijsbert thinks we are going to see more and more ads on OTT. “There's no way around it.”

Adjust’s SDK currently supports measuring your OTT apps across Android TV, TVOS (Apple TV), Fire TV, Windows (Laptop/Desktop/Native), MacOS (Laptop/Desktop/Native), Safari (Laptop/Desktop/Web) and Android / iOS devices.

You can read more of Dr. Gijsbert Pols’ forecast on the future of OTT and how Adjust can help you with OTT and CTV advertising, see our groundbreaking CTV AdVision or request a demo today!