The Future of Advertising is Over The Top

Picture this: It’s 1989 and you are probably sitting down to watch a TV show together as a family. Or it’s 1997 and you and your friends are gathering around the tube in your college dorm to watch the latest episode of “Friends” or “Beverly Hills, 90210.” It was a time when you had to wait a WHOLE WEEK to see what happens to Ross and Rachel.

People watched the evening news every night on schedule because that was when you could find out what was happening in worlds far away and at home. We would see ads for the latest cars, snack foods, and laundry detergent and ad campaign success was measured in rating points and sales. 

Fast forward just a couple of what seems like short years and here we are in a time when people are consuming “TV” content almost every second of the day on their phones, tablets, laptops, and yes, still even real television screens. And while we are still watching TV, the way we do it has changed dramatically in recent years and will continue to do so at an even more rapid pace. 

How the Pandemic Impacted TV Viewership

In 2019 and early 2020, it appeared that linear TV viewership was on the most rapid decline we had seen in quite some time. Enter COVID-19. People started tuning back into local and national news to get up-to-date information on the worst pandemic since the Spanish Flu. Families who no longer had to leave the house to go to work or take the kids to school started to gather around the TV again. However, the comeback was short-lived and the recovery of traditional TV has leveled off and started its decline once again.

Some of the questions more and more advertisers are asking themselves is how do we as marketers continue to reach our target audience with consumer-based messaging when so many people are looking elsewhere for their TV fix?

What is OTT?

You can’t read an article regarding the future of advertising without seeing the letters OTT. But what is OTT exactly? OTT stands for “Over The Top” and it is essentially a way to view content without a wired cable subscription (Comcast, Cox Media, Spectrum, etc.) or using linear TV (NBC, ABC, CBS, FOX). OTT simply requires an Internet connection. 

Examples of OTT include Netflix, Hulu, Disney+, Fubo, and YouTube TV.  By 2023, it is projected that nationally, “traditional” TV viewers 18 years and older will decrease by 10% while OTT (Over The Top) viewers will increase by 13% to over 260M viewers.(Source: emarketer September 2020) 

The Benefits of OTT

How do marketers buy into OTT and ultimately measure it effectively to make sure that they are actually talking to the right audience? 

A primary challenge of OTT is that many of these OTT streaming platforms are NOT ad-supported (AVOD). Good news marketing world! Research shows that people are embracing more ad-supported channels. YouTube, Hulu, Prime Video, Peacock, and Paramount+ are some of the more popular platforms that do accept paid media advertising. 

Additionally, later in 2022 and early 2023, Disney+ and potentially Netflix are predicted to launch an ad-supported version of their platforms as well (Source: The Verge May 2022; Nytimes.com May 2022). Why? Because they know that the revenue potential is extremely high. 

One of the benefits of OTT is that it is actually more targetable than traditional TV advertising. In years past, marketers would place a commercial in a program that was shown to reach a target audience of adults ages 25-54. But if we combine that placement with OTT, we can target households who have an adult 25-54, but also have a certain income level, live in a specific zip code, have kids of a certain age, drive a specific model vehicle, and perhaps even speak a specific language in the home. This is how we as marketers can be more deliberate about our messaging and placement and ultimately be more efficient with our advertising dollars. 

None of this is to say that TV is dead. Traditional advertising still performs well with certain demographics and it is still very relevant in today’s advertising world. It is still the place where many consumers watch local news, their favorite cable channel and especially live sports. However, instead of a “TV first” approach, marketers would be better served with an “audience first” approach for the best possible return.