The over-the-top (OTT) and connected TV (CTV) market has been on the upswing over the last few years. More people flocked to video streaming services during the lockdown period, which gave an additional boost to CTV. While the growth presents numerous opportunities for digital TV advertising, it also poses a few challenges.
According to Comscore’s State of OTT reportOpens a new window , about 69.8M households used OTT services in April 2020, a growth of 5.2M households compared to April 2019. As the saying in the advertising industry goes, ‘money follows eyeballs’, which was true for mobile advertising. The same can be expected for OTT advertising. Having said that, though more consumers are adopting CTV and OTT, advertisers will have to overcome several complex challenges before making the best of these services. Here are a few of them.
Learn more: CTV Content Consumption Study by IAS Reveals New Ad-Engagement Behavior and Motivations
1. Lack of Regulation Leads To Ad Frauds
OTT advertising currently lacks any rules or regulations that govern ad quality. Further, the app ecosystem is decentralized, has higher CPMs, and lacks widely adopted industry standards. All these factors make OTT advertising vulnerable to ad fraud. While ad fraud on these platforms is low compared to mobile or desktop, the problem is real and exists.
According to predictions by CHEQOpens a new window , marketers expected to lose more than $4 billion last year, just due to OTT ad fraud. With the growing popularity of OTT services, these frauds, too, will grow. According to DoubleVerify, an ad fraud detector, it had seen a 161% increaseOpens a new window in fraudulent impressions on CTVs from January to April in 2020 compared to 2019.
The growing ad fraud problem is a significant challenge for programmatic ad buying. Ad fraud leads to fake video traffic, standard naming conventions, and completion metrics, causing wastage of ad dollars for companies. With OTT services increasing by the day, tracking ad fraud becomes increasingly challenging.
What exacerbates it is that the detection of ad frauds on these platforms is trickier. This is due to the following reasons:
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- There is dearth of IVT (invalid traffic) detection solutions adoption specific to the environment by buying and selling partners.
- There are very few central application repositories with quality assurance processes compared to Android or Apple app stores.
- There are no accepted naming conventions for app or bundle IDs within the ecosystem. This leads to different terms being used to identify ad inventory by vendors.
- There is an abuse of the popular adoption of server-side-ad-insertion (SSAI) integrations. Fraudsters can take advantage of this ad insertion method to mask ad frauds through the appearance of valid SSAI integrations.
2. Campaign Measurement and Management Is Difficult
A primary factor to consider when running ad campaigns on OTT services is the ability to measure their performance. And to be able to measure it, you need to have a tracking mechanism. Unfortunately, tracking campaign performance on OTT platforms is not easy. For starters, internet browsers have identifiers to track user behavior, such as cookies. However, OTT platforms lack cookies and need alternative identifiers. This presents issues for frequency capping and audience management.
OTT platforms pose another challenge. Most OTT platforms, such as Netflix and Disney Plus, offer shared streaming, where multiple users can share a single account. These users could be family members or friends sitting in different locations. While many OTT service providers now include functionalities to measure campaigns, it is still at a household level and not a device-level. While this does offer a potential understanding of the household’s behavior, it still has its drawbacks.
The phenomenon of account sharing between family members remains a complication. Further, identifying their behavior uses probabilistic techniques to isolate session data between web, mobile, and OTT devices. In 2019, ITAB Tech Lab proposed a framework for implementing identifiers for advertising (IFA) Opens a new window on OTT platforms. While it helps in measuring user sessions at a device-level, implementing IFA depends on the OTT service.
Further, to target individuals, deep integration of video delivery platforms, ad monetization technology, and the media owners’ DMP (data management platform) or IMP (identity management platform) is needed. While a few solutions are available in the market, most of them are built from a technology perspective but with little experience in the inner mechanics of ad monetization and underlying technologies.
Learn more: Driving Higher Engagement with CTV Ads: mediasmart Announces New Capabilities
3. Lack of Granularity Poses Programmatic Advertising Challenges
A significant challenge for measuring campaign performance on OTT is the lack of granularity. This challenge, combined with a fragmented marketplace, leads to ad buyers preferring direct buying over programmatic.
Consider the fragmented landscape of OTT services. There are currently more than a few thousand over-the-top (OTT) services worldwide, comprising both domestic and international. According to an Ampere Analysis studyOpens a new window , an average subscription video on demand (SVOD) household can access more than 100,000 hours of content via an average of 3.8 different services. Further, many platforms offer ad-free as well as ad-supported streaming services, giving the audience the freedom to choose the ones they want to subscribe to. Hence, tough competition exists between streaming companies for a share of the audience’s time and wallet.
There are also multiple ways to watch a single program across a few streaming platforms. For example, a consumer can watch an NBC program live on NBC, delayed via on-demand on Hulu or NBC’s app, or a connected device, such as Amazon Fire Stick or Roku. This means that advertisers can purchase inventory through different service providers to reach the audience watching the same content in different ways.
This poses a difficult problem to solve. Some OTT service providers prefer to sell inventory directly, some through aggregators, and many through both. You can buy directly from OTT services if you want more control over where you want to run ads. However, you will have limited control over unique reach and frequency. On the other hand, you can aggregate a few OTT services through programmatic buying for better control over frequency and reach. However, you will have limited granular control over where you want to place your ads.
4. Fragmentation Creates Challenges for CTV Ad Creatives
While most of the challenges facing OTT and connected TV (CTV) advertisers are similar, a few additional challenges exist for the latter.
For starters, CTV programs are delivered to consumers over internet-connected devices, which use IP addresses. The challenge with this is IP addresses assigned to households are usually dynamic and keep changing every few days to few months. With these continuously changing IP addresses, it becomes difficult for media buyers to identify which households they are reaching.
Another challenge for CTV advertising is getting the right formatted creatives for the individual platforms, which is difficult and takes time. Due to fragmentation, each platform has its own specifications for an ad creative. Further, they do not speak the same language in terms of ad formatting, ingestion, or communicating what content it is advertising beside. In case you do not have access to the right ad creatives, you must go through a chain, from a creative agency to the seller’s agent. And at the end, the creative may not be formatted as per the platform specs. Manually formatting an ad may impair its quality and burn an impression opportunity.
This specifically becomes a challenge if you want to place the same ad creative across platforms. As such, you will need to find vendors who can automatically transcode these creatives to ensure its quality and successful delivery to a wide variety of platform specs.
Fragmentation causes another problem for campaign performance measurement on CTVs. If you want to create a post-campaign report on where you ran your campaigns on CTV, then the report will be filled with several different IDs that may not make sense. This is a problem both on the buying and selling platforms. While the IDs are expected to provide a better understanding of an ad opportunity, you will be unable to extract much meaning for targeting with confidence.
Learn more: 5G Promises To Bring Low-To-No Latency To OTT Advertising
Opportunities Are Aplenty, But Need To Overcome Challenges
There is no doubt that OTT and CTV are on the growth path, with more people cutting cords and opting for streaming services, providing an abundance of opportunities for advertisers. However, there are also several challenges you need to overcome. Hence, take the obstacles mentioned above into account before planning your ad budget for CTV and OTT platforms.
Which other digital TV advertising challenges have you witnessed in CTV and OTT services? We would love to hear on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .