‘Ad’dition by Subtraction
How T.V. is losing its place at the top of the ad world because of OTT.
TV has long been heralded as the gold standard for advertisers. As a rare opportunity to target engaged consumers in their own homes the total annual spend on television commercials has led the ad market since 1954 . However dominant Television’s past has been, its future is swiftly fading as the light of digital ads grow brighter and brighter. The new medium has seen a steady rise in ad market share since it burst onto the scene at the end of the 20th century. Digital is now poised to overtake television thanks to explosive growth spurred by the new age of digital video. As more and more consumers cut the chord and groves of content owners migrate to the lucrative self-distribution options of digital, broadcast television could end up by the wayside.
By 2019 Digital ad spend is set to overtake Television ad spend as the market leader.
There are two major factors pulling ads from TV and pushing them into video.
New Opportunities for Content Owners:
For content owners such as networks the opportunity is immense. OTT simply represents a better option than cable. By self-distributing via OTT, networks have full control over their content, their audience, and their revenue, forsaking a financially strenuous relationship with Cable providers. Networks are free to navigate both distribution channels, committing to an OTT strategy while keeping one foot in traditional cable. Any cannibalization of cable viewership by OTT is welcome. Content creators such as YouTubers and Filmmakers also benefit, increasing their share of revenue and taking control of their fans via self-distribution. Content owners would not be sitting so pretty, if consumers hadn’t demonstrated their desire for cable alternatives.
It is well documented that consumers, particularly the millennial generation, have little love for cable. In the US 25% of homes are now cable free, a number made up in part by 400,000 new Cord-Cutters from 2015 and the millions of Cord-Nevers, young adults who have never had a cable subscription and likely never will. The reason? Netflix, Hulu, Amazon Prime, and a whole parade of new OTT content options from Networks are simply better. Nearly half of the US population subscribes to at least one of the big three OTT services (Netflix, Amazon, Hulu) and 16% subscribe to at least two OTT services. The number of “self bundlers” subscribing to multiple services has increased by 10% over the last 3 years. There is a paradigm shift occurring that terrifies cable; consumers understand it makes no sense to pay for bundled content they do not want. OTT is allowing enlightened consumers to bundle as they please, a fact more viewers realize everyday. The opportunity to reach this new audience is drawing content owners and in turn advertisers to the OTT digital space.
By 2019, advertisers will be spending more on digital ads than any other medium. As OTT continues to expand its share of the global media market, digital ads will become increasingly lucrative. The value of an OTT ad to marketers rivals that of television, with the precision to target a captivated audience by demographics and the opportunity for new types of ads that go beyond commercials to engage viewers. The CPM for OTT ads is proving to be drool-worthy for content owners. Those who can execute a winning OTT strategy, bringing eyeballs to their content, will be the ones who capitalize on the new medium’s lucrative and rapidly expanding advertising marketplace.
Unreel.me helps content owners jump on the growing ad spend on OTT inventory by providing them with video apps across all platforms to self-distribute their content. Content owners can monetize their videos on their own personal apps with SVOD, VOD, ads and several other options.