The increased usage of mobile smartphones over the last several years has ushered in a new era of digital advertising. Brands now use location data to target anonymous audiences based on where they are, where they have been and where they may be going. Mobile smartphones also led to advancements in attribution, as advertisers use mobile data to measure foot traffic, and in turn, the effectiveness of their advertising. Now, these capabilities are coming to TV, specifically over-the-top/connected TV, and they are poised to change the game for television advertisers.
The growth of mobile and location-based advertising has shaped the future of programmatic. By 2020, two-thirds of programmatic ad dollars will be spent on mobile ads, according to eMarketer. Meanwhile, OTT/CTV is taking off. According to research from Beachfront, a video supply-side platform, CTV ad requests were up 1,640% year-over-year last fall, growing from 1.7 billion CTV ad requests in November 2017 to 29.9 billion in November 2018. The OTT/CTV ad spend is predicted to reach $34.92 billion, or 49.7% of all U.S. programmatic ad spending by 2020, per eMarketer forecasts.
Much has been written about the promise of OTT/CTV, but it is the convergence of OTT/CTV and mobile that has the potential to power the next wave of sophisticated advertising for brands. By integrating these channels and technologies, television advertisers will unlock increased reach and frequency, improved targeting, and powerful attribution capabilities. These advancements will be particularly relevant to advertisers seeking to measure the effectiveness of their TV advertising budgets, as these advertisers can now measure not only lift in foot traffic driven by their ads, but also lift in online conversions.
The coupling of mobile and OTT/CTV opens up expanded reach and frequency for household-addressable TV advertising, a major need of advertisers desiring to reach precise audiences at scale.
Reach is increased by delivering household addressable targeting to millions of households that are not watching TV through the set-top boxes of a multichannel video programming distributor (MVPD). The additional households reached include both nonsubscribing homes within the MVPD’s footprint, as well as residences nationwide that are outside of the provider’s footprint.
Frequency is increased as addressable programmatic TV advertising is not limited to the standard two minutes per hour of advertising typically controlled by an MVPD. Instead, addressable programmatic advertising has access to all of the ad spots made available for programmatic sale by the device providers and cable networks. Oftentimes, this inventory is more than the two minutes per hour available to MVPDs.
On the targeting side, brands can use mobile data signals to target audiences far more accurately than the traditional TV targeting method of advertising on shows that index highly against their desired demographics. Now, rather than casting a wide net and inevitably wasting impressions on unqualified prospects, advertisers can focus their budgets on only the households that meet their target criteria.
In addition to targeting the right households, OTT/CTV advertising improves the chances that the ads will be watched in full. For example, viewers complete 98% of midroll ads served during live and full-episode content, according to FreeWheel data from Q3 2018.
Improved targeting can increase the opportunity for more advertisers to run their performance advertising budgets, which are usually reserved for driving purchases instead of solely increasing brand awareness, on OTT and CTV inventory.
For many advertisers, driving foot traffic to one of their locations is a primary goal. This is especially true for multi-location brands in the retail, automotive, quick-service restaurant (QSR), banking and real-estate sectors, as well as in similar industries. These advertisers know that if they can increase foot traffic to their locations, increased revenue is likely to follow.
By integrating anonymized mobile data with household viewing data from addressable TV campaigns, it is now possible for advertisers to understand how much incremental foot traffic was driven to their locations by their OTT/CTV advertising campaigns. The attribution results, in turn, enable them to optimize spend against the most favorable messages and households, which delivers further improved performance.
Once a campaign is optimized, advertisers can compare the cost per incremental store visitor to the average spend per store visitor, and quickly gain an understanding as to the return on investment that each campaign is delivering.
Only the Beginning
The convergence of mobile and OTT/CTV is just beginning. Not only is viewing of ad-supported streaming TV growing quickly, but TVs are becoming more and more like oversized mobile devices with each product cycle. Today, most new TVs connect directly to the internet via WiFi, and come connected to their own app stores where viewers can access a huge variety of streaming content.
With the increased bandwidth associated with 5G, it is likely that many new TVs will bypass WiFi connections and connect directly to the internet via cellular connections, just like smartphones do today. At that point, the TV will basically be a 50-inch version of a cellphone that hangs on your wall, and convergence will be largely complete.
Frost Prioleau is co-founder and CEO of Simpli.fi, a Texas-based programmatic platform.