With renewed optimism around economic recovery, marketers are resetting priorities to capitalize on an impending wave of consumer revenge spending — the kind of shopping or buying that people do to make up for lost time or missed experiences.
However, as brands focus on matching that potential surge in demand, they are also contending with brand loyalty erosion stemming from new customer behaviors formed during the pandemic.
According to a new McKinsey report, among the three-quarters of Americans who changed their shopping behavior since COVID-19 began, nearly 40% changed brands, with the level of brand switching doubling in 2020 compared to 2019. As marketers accelerate investments to build their brands and win new customers, the fundamental questions to ask become: What new consumer habits will stick? And what are the most effective channels for reaching and engaging consumers in a changed world?
Consumer TV audiences have switched to streaming
Television viewing habits have permanently changed with the surge in streaming TV audiences. This year, eMarketer forecasts that 230 million people are expected to stream via over-the-top channels, which is 69% of the U.S. population, and nearly nine in 10 consumers have access to a connected TV device. According to the IAB, as streaming growth spiked, so did the use of ad-supported OTT, with 76% of those who regularly stream video having watched ad-supported OTT.
Furthermore, as advertisers follow the consumer’s lead, the ability to target with precision and rapidly increasing scale drive an even bigger share of media budgets for streaming this year. According to an IAB survey, marketers are reallocating 21% of their 2021 linear TV budgets to CTV and eMarketer projects CTV advertising in the U.S. will soar to $17.44 billion in 2022.
However, the spiraling growth of streaming TV options is bringing greater fragmentation to the OTT ecosystem and adding more complexity for marketers. Today, there are a plethora of options to reach audiences that are potentially watching the same shows on different streaming platforms. Media buyers can go direct, work with aggregators or buy programmatically. As such, marketers need a deep understanding of providers’ varying capabilities — what they are buying and where their ads are running, along with transparent and detailed reporting to measure performance.
What follows are three imperatives for marketers to seize the growing CTV and OTT advertising opportunities ahead.
Premium inventory matters more than ever
Brand safety and ad fraud remain top advertiser concerns in 2021. According to a recentPixalate study, programmatic CTV/OTT ad fraud hovers around 20 percent. As such, working with trusted partners that focus on premium quality content is even more important to protect brands from reputational and financial risks.
While many CTV and OTT providers claim to offer premium inventory, marketers need to understand the structural differences in media buying models and the interpretations of inventory quality and sources.
For instance, providers focused on a single platform or walled gardens are limited in their ability to reach audiences beyond their subscribers. When a marketer places a buy with multiple disparate providers, cross-platform frequency capping is also an issue. This can lead to a poor consumer ad experience when viewers are served the same ad multiple times in the same viewing session. On the open exchanges, there is little control over where ads may run, and brand safety, transparency and algorithmic control concerns remain.
Choosing a partner with directly sourced inventory and with upfront, secured deals that unlock quality premium content assures advertisers that the exact destination and quality of content will be in place. This control and transparency are essential safeguards for eliminating unnecessary risk in investment and achieving effective ROI.
Local relevance remains a top priority
To respond to ever-changing local market dynamics, taking a regional approach by aligning local spot buys with the progress of business reopenings in different states is the optimal path forward. The ability to geotarget and use dynamic creative makes OTT campaigns even more compelling. Furthermore, as national advertisers prioritize local advertising, they are seeking more granular insights at national and local levels to personalize, localize and deliver more relevant ads.
The addressability of OTT enables advertisers to target local audiences at scale. They can target by designated market area (DMA), states and ZIP codes, and then combine this geotargeting with behavior and interest categories. With addressable targeting, viewer data is captured and analyzed into audience segments, such as luxury travelers, and applied to campaigns. And with dynamic ad insertions, advertisers can easily swap out creative to deliver a personalized and relevant OTT advertising experience.
The power of pairing OTT and linear
Advertisers are leveraging ad-supported OTT to complement linear as an audience-reach extension, capturing shifting audiences by engaging with viewers that they would not reach with linear alone. Without CTV and OTT in the mix, advertisers are potentially missing out on a huge local audience segment.
The ability to manage incremental reach and frequency across CTV, OTT and linear also provides advertisers with greater performance insights. For instance, with automated content recognition (ACR) technology embedded in smart TVs, advertisers can measure both CTV and linear ad campaigns’ effectiveness to better plan and optimize media spend. Access to this data shows an advertiser whether they have gained a higher percentage of incremental CTV reach.
Additionally, advertisers are looking for greater simplicity and scale in planning, buying and measurement. They are seeking unified packaged solutions — thus the need for tighter integration and packaging between ad-supported OTT and broadcast TV inventory.
The stage is set for marketers to shift even bigger budgets to streaming TV as an integral media mix for driving brand awareness and performance marketing. Working with partners that deliver brand-safe premium content, local audience targeting at scale and performance insights is driving advertiser success in the post-pandemic era.