New Study Provides Proof of Explosive Growth of OTT Ad Spend

What: SpotX, a video ad serving platform, released figures illustrating explosive growth in global over-the-top (OTT) video advertising spend across its platform.
Why It Matters: SpotX’s data revealed that the portion of overall ad budgets spent with OTT inventory owners increased from 8 percent in October 2016 to over 26 percent of total spend for October 2017. This equates to nearly 18X growth in advertiser dollars spent on OTT inventory year over year in October.

As consumers begin to view more and more video on their devices, marketers are increasingly betting on OTT when it comes time to allocate budgets. According to SpotX’s data, overall ad spend on OTT inventory increased 18X between October 2016 and October 2017. On top of this revelation was the estimate that OTT is expected to account for around 30 percent of video ad spend by the end of 2017, as the holiday season brings 2017 to a close.

According to SpotX, this is the first time any SSP has disclosed such granular figures. Fueling the growth are SpotX's top DSP partners: Adobe Advertising Cloud, dataxu, The Trade Desk, VideoAmp, and ZypMedia.

Growth of OTT Spend Partly Due to Improvements in Programmatic

According to Kelly McMahon, VP of Global Demand Operations at SpotX, this shift in ad spend can be attributed to the fact that “we’re seeing consumers shift in how they are consuming video content this year faster than any previous year: from desktop to mobile, now it’s Smart TVs and OTT technology.”

Ian Monaghan, Special Operations Consultant at Adobe Advertising Cloud echoed McMahon’s sentiments, stating that since people now have more content to stream on more devices than ever before: “Even in live sports, long considered a holdout where traditional broadcast viewing dominates, OTT options have entered the mainstream.”

McMahon added that this shift in consumer behavior caused companies to “embrace their abilities to use programmatic." Before, while many transactions were handled via traditional sales channels, companies have been motivated to “understand how to use inventory programmatically.”

At SpotX, McMahon explained that they have “made a rather large investment in OTT and CTV strategy, providing tools to media owners to sell their OTT CTV inventory programmatically” and investing in educating buyers and making transactions simpler.”

The problem isn't just explaining how to buy and sell OTT inventory: OTT itself has presented plenty of challenges in terms of how to measure its effectiveness for targeting purposes. But thanks to OTT's popularity among consumers, the industry has developed new types of data and measurement tools that help make it more competitive with TV and digital. “To advertisers, OTT has historically been on an island -- not fully digital or fully TV in terms of targeting and measurement capabilities, but often presented as both,” Monaghan added. He pointed to the addition of Nielsen Digital Ad Ratings as “bringing OTT up to speed for TV buyers and Adobe Advertising Cloud's innovations in planning and measurement are bringing it up to speed with digital.”

Programmatic Aids in Linking Consumer Behavior to Digital Activity

Understanding how consumers engage with brands across multiple channels and devices is step one for any brand looking to maximize the effectiveness of their OTT investments. Tim Sims, SVP, Inventory Partnerships at The Trade Desk explained that since “digital media consumption is increasingly fragmented, marketers need to be able to link audiences together and understand how each performs.”

In this sense, programmatic is a useful tool, because “programmatic advertising enables advertisers to reach and engage with customers along their entire journey and also measure how different channels are performing as part of the overall marketing mix,” said Sims. For this reason, Sims argued, The Trade Desk acquired cross-device identity graph company Adbrain to “add a data set of cross-device IDs to our own demand-side platform” and “to provide a unified view of the customer in targeting and reporting.”

Going omnichannel is also essential for platforms to be competitive, Sims said. “That’s why we’ve worked so hard over the last few years to grow our global footprint as well as our cross-device services marketplace, a platform feature with identity-linking graphs from companies like Oracle, Tapad, LiveRamp, and Drawbridge, as well as Adbrain,” he said.

Adobe's Monaghan asserted that while “linking what a viewer is watching to consumer data is a key part of any modern advertiser’s toolkit, marketers often lack the tools to make data actionable in advertising.” With that in mind, Adobe launched its Advertising Cloud, and “tightly integrated it with Adobe Analytics Cloud, which helps brands measure customer data and act on it. Together, we're enabling advertisers to reach discrete audiences on any screen.”

The Future of OTT: More Deterministic Data for Effective Audience Targeting

What do the targeting techniques of the future look like? The Trade Desk’s Sims argued that his team is “seeing more deterministic data sets coming into the market, which is key for creating identity graphs that allow for effective audience targeting.” As global access to the Internet and connected devices increases, marketers will access more and more data that tells them what consumers care about, why they do what they do, and what devices they use to do it.

In the meantime, Sims says, “brands are excited to leverage this new channel to extend their message and reach customers in a targeted, personalized way across their entire journey.”


Gretchen Gardner @gardnergretchen

Gretchen is a communications specialist and owner of GMG Strategic Communications. She currently lives in Buenos Aires, Argentina, where she works with Argentine and international ventures on shaping their content, branding and marketing strategies to position them for success in global markets. She is also a lover of all things information and has worked consistently in journalism since college, most recently as a writer at Portada and as the deputy editor of The Bubble, the first informal, English-language news portal in Buenos Aires. She hails from Washington, D.C. and has a bachelor's degree in history and Hispanic studies from Hamilton College as well as a master's in international relations from the Argentine university Universidad Torcuato Di Tella.
Gretchen is a communications specialist and owner of GMG Strategic Communications. She currently lives in Buenos Aires, Argentina, where she works with Argentine and international ventures on shaping their content, branding and marketing strategies to position them for success in global markets. She is also a lover of all things information and has worked consistently in journalism since college, most recently as a writer at Portada and as the deputy editor of The Bubble, the first informal, English-language news portal in Buenos Aires. She hails from Washington, D.C. and has a bachelor's degree in history and Hispanic studies from Hamilton College as well as a master's in international relations from the Argentine university Universidad Torcuato Di Tella.

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