By Jeffrey Johnson
Television has evolved dramatically over the last century. Is your business prepared for what’s to come?
Quick Refresher: The Past
TV’s journey began more than one hundred years ago — or even longer. Innovators were experimenting with television transmission as early as the late 1800s.
In the 1920s, television and radio first became accessible to wider audiences. Both TV sets and radios relied on radio waves to transmit a signal. Unsurprisingly, this broadcast signal, sent over the air, was referred to as either “over the air” (OTA) or “broadcast TV/radio.”
The US takes credit for the world’s first broadcast television station, which launched in 1929 in New York.
Signal transmission continued its evolution and by the 1940s, physical, Coaxial cables took over radio wave transmission. Can you guess what this was called?
Picture quality and signal strength both improved dramatically with cable TV and radio. A few decades later, satellite television transmission helped a larger audience access a wider range of channels.
But it didn’t stop there.
The Present — And the Future
From watching TV on “the tube,” to Londoners streaming shows while on the tube, the way we watch TV looks pretty different these days.
Today, the major innovation in television delivery is called OTT. Like it’s predecessors, OTT is named for how it’s streamed. In this case, “over the top.” Instead of heavy cables or finicky satellite dishes, OTT uses the internet to deliver content to users worldwide. OTT refers to any video (or audio) that streams via the internet, whether on desktop or mobile devices, or through connected TVs (CTV). CTV refers to TVs that connect to the internet whether directly (like a Smart TV) or via an adapter, like a streaming stick or external console. The Media Rating Council (MRC) recently published guidance to align with the industry on clearer definitions for OTT and CTV, making it easier for different players to now buy media and measure their CTV ad performance.
OTT/CTV has not yet replaced costly cable or satellite subscriptions, but it’s well on its way. By 2030, eMarketer predicts only 35% of US households will have Pay TV by 2030, down from 58% today.
What are the opportunities business leaders should know about as OTT/CTV continues to corner the Pay TV market?
The Shift in User Behavior Is Opening up More Opportunities for Advertising
Gone are the days of piling in front of the TV with the whole family, squabbling over the remote. Viewers are not limited to one screen anymore. Nor are they limited to watching content as it broadcasts. Viewers can stream live content, or watch videos on demand. And there is endless choice. They can engage with subscription services, or rely on ad-supported free content. Audiences can watch together with friends or family in the same room or across continental divides, and on any size screen. OTT offers infinite possibilities, accessibility, and variety.
Even before a global shutdown, viewers were developing a habit of binging TV, whole seasons at a time, consuming hours and hours of content. The sheer volume of consumption gives advertisers and marketers a huge opportunity to get in front of engaged eyeballs.
Demand for Ad-Supported Content Is on the Rise
While subscription services like Netflix reigned for a while, seemingly endless streaming services have since launched. Peacock, Hulu, Amazon Prime, Apple TV+, Disney Plus, HBO Max, Paramount Plus…the list goes on and on, and that’s just for on-demand content. Viewers are feeling the burden of juggling multiple subscriptions, and a new term called “subscription fatigue” has started cropping up in trend reports.
This paves the way for ad-supported video on demand, or AVOD. Publishers are able to monetize their OTT/CTV inventory with advertisements instead of subscriptions. With the right platform, marketers can tailor their ad content to the audience or to the content genre, helping boost engagement. And viewers get to enjoy their content for free.
New Ad Formats Can Further Engage Audiences
Innovations in ad formats give publishers more opportunities to monetize their inventory, while advertisers get creative freedom and better conversion rates. From live streaming ecommerce (which found major success during China’s Singles’ Day shopping holiday), to contextual deep links, to rewarded video ads on mobile and desktop screens, to QR codes to engage with CTV content, evolving ad formats help combat banner blindness and deliver improved user experiences. Plus, this helps improve campaign measurability for marketers and advertisers.
As Pay TV declines, and more households “cut the cord,” business leaders should be prepared for the reign of OTT.
Over-the-top streaming comes with increased global reach and cross-channel targeting opportunities to deliver more personalized advertising content on an even larger scale.
In order for businesses to further, rather than inhibit, OTT/CTV’s success, improved transparency should be top of mind for business leaders, too. Marketers, advertisers, and DSPs must deliver relevant, engaging content while preserving viewer trust. Viewer demand for increased privacy controls is pushing the need for contextual advertising forward. After all, reaching audiences based on what they are watching, rather than who they are, is key when it comes to driving privacy-compliant conversion.
Is your business ready for the rise of OTT/CTV advertising? Give us a call to learn how Verve Group can help you reach your OTT/CTV advertising goals.