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Sharp annual fall in OTT programmatic ad spend

Sharp annual fall in OTT programmatic ad spend

Even as the TV advertising expects a surge in investment in the addressable market as the streaming market carries on growing, research from MediaRadar is warning that the ad-funded online market may be cooling leading to a marked decrease in over-the-top (OTT) ad spending in 2021.

The provider of sales intelligence and enablement tools for media and ad tech sales firms noted that while While OTT still grabs headlines and is full of potential, TV advertising still dwarfs the young format that has very limited inventory. It calculated that from January to May 2021, OTT advertisers spent $55 million in the US, down 40% from 2020 in which they spent $91.4 million over the same period.

Even though spending has decreased, the research also found that the number of brands increased slightly year-on-year, up from 2,300 in 2020 to 2,600 in 2021. This said MediaRadar suggests that OTT advertisers may be using programmatic to test the efficacy of their campaigns, and then strategically place spend where their programmatic efforts were successful. Moreover, the company noted that while OTT advertising may influence the way TV advertisers run their cross-channel campaigns, but it hasn’t become a mainstay for brands yet.

The research also looked at the prospect of brands in the post-pandemics period and how direct-to-consumer (DTC) brands have been uniquely positioned to benefit. MediaRadar observed that distinguishable brands already had their online stores up and running, and their digital marketing strategies in place, and even though they were in an advantaged position, accuracy and efficiency became even more important in the increasingly competitive eCommerce market.

The study showed that as a result of these dynamics, brands increased programmatic spending, often in new premium programmatic formats. It calculated that DTC companies typically increased their ‘experimental budget’ to 5-15% during the pandemic to see what worked best. DTC companies were found to have spent $879 million on programmatic from January to May 202, up 26% from 2020. In the same period a year ago they spent $697 million. The bottom line said MediaRadar was that even as foot traffic in brick and mortar stores increases, DTC programmatic spending was not levelling off

(source)