Why Modern Brands Are Embracing OTT Advertising
During the holiday season, the M.O. for brands is to run direct-response ads that convert sales. While discounts and special offers help increase return-on-ad-spend (ROAS) during the busiest shopping time of the year, savvy marketers know that bottom-of-the-funnel advertising alone is not a sustainable strategy for growth. Brands that thrive also invest in long-term brand building. While the returns may not be felt immediately, building brand equity over time lowers customer acquisition costs (CAC) by strengthening a brand’s foundation and decreasing a heavy reliance on digital ads.
As cost per acquisition (CPA) rates continue to increase across digital platforms, OTT has emerged as a viable advertising option for modern brands. While digital is still the primary driver for customer acquisition, the reach of OTT TV ads can create a halo effect in addition to providing targeting opportunities and performance metrics.
According to the Interactive Advertising Bureau (IAB), 78% of direct to consumer (DTC) brands with marketing budgets greater than $1 million per year plan to increase their ad spend on digital video as a whole in 2020, an increase of more than 50% from a year ago and a faster pace than buyers for legacy brands. While more than 80% of advertisers agree that a multi-platform buying approach, including digital and TV, is important, nearly 60% of ad buyers plan to increase their TV spend in the next 12 months, with half reporting increases in OTT advertising.
What Exactly is OTT Advertising?
OTT stands for “over the top” and refers to video ads that are delivered through streaming platforms outside or “over” traditional cable television systems such as Time Warner or Comcast. Among streaming platforms supporting OTT advertising, Hulu leads the way. Currently more than half of Hulu’s users watch their content with OTT ads. Amazon, Disney, Apple TV, and Netflix, on the other hand, are solely subscription models that don’t currently run ads outside of product placement. In addition to streaming networks, OTT devices include set-top boxes like Roku and the Amazon Fire TV Stick; Smart TVs from Samsung and LG; Gaming consoles including Xbox and PlayStation; and all standard mobile devices.
Through OTT, advertisers can also use programmatic buying and real-time bidding to optimize ad spend. The real-time reporting and targeting capabilities of digital video combined with the reach and credibility of broadcast TV give brands the best of both worlds. Taken as a whole, OTT advertising offers modern brands a viable option for reaching audiences across platforms and devices, outside of digital and traditional TV.
What Makes an Effective OTT Ad?
The purpose of an OTT ad is not fundamentally different than a traditional broadcast TV spot. The concept and creative should be geared towards attracting audiences to the top of the customer acquisition funnel. The ads are primarily meant to introduce the brand, pique interest, and drive audiences online to find out more. If audiences have already heard of the brand through other channels, the ad serves as an additional touchpoint to strengthen brand recognition.
While it might be tempting to list product features and try to drive people to purchase immediately (e.g. direct-response advertising), when concepting an ad built for awareness, it’s best to reconnect with the foundational building blocks of a brand’s identity. Revisit questions such as; Why do we exist? What do we stand for? How do we want to make our customers feel about our brand? Think about using the ad to appeal to the emotional side of the viewer. Humor, aspiration, and desire all work for OTT ads if they tie back to a brand’s purpose.
When to Start?
With the average time investment for brand building campaigns ranging from 3-6 months, the ideal time to start is Q1 and Q2. Focusing on strengthening brand equity for the first half of the year sets things up for Q3 when retargeting and product consideration should be the focus, before getting into heavy direct-response advertising during the Q4 holiday season. Using OTT ads as the centerpiece of a campaign also allows for cross-platform content to be created for digital, retail, and experiential, featuring consistent concepts and messaging.
By starting early in the year, brands can also take a “test and learn” approach. Ollie is one brand that has been testing the effectiveness of OTT advertising. The challenger dog food brand tested a month-long video advertising campaign on Hulu in an effort to diversify from social media and help inform the brand’s approach to longer-form video marketing, said co-founder and chief experience officer Gabby Slome. “Instead of crossing our fingers, going out with one commercial and really going boom or bust,” Slome said, “we’re able to A/B test a few iterations.”
Given the affordability of inventory on ad-supported streaming networks, the ability to measure performance, and the continued rise of CAC on digital channels, expect to see even more modern brands utilizing OTT in 2020 as a new era of TV advertising continues to gain steam.
Want to learn more about OTT advertising for your brand? Contact us today.