As OTT Advertising Soars, a Hardware Company Wants in on the Action

13 Jan

2019 may long be remembered in the advertising industry that over the top (OTT) advertising really took off. According to the Interactive Advertising Bureau (IAB), OTT spending grew 37 percent this year, reaching approximately $7 billion in revenue. What’s more, these ads aren’t being ignored; 76 percent of people who regularly watch streaming media use services that are ad-supported.

Now, OTT ad revenue has been growing steadily for a few years now. But this year’s growth blows out predictions from earlier this year, which forecasted only $3.8 billion in 2019 and $5 billion in 2020.

One particular interesting stat from the IAB report is that ads on connected TVs now account for 45 percent of all digital video impressions, beating out mobile and desktop video impressions. In other words, on-demand content of OTT is most popularly watched on connected TVs where advertisers can directly reach audiences.

All of this growth has spurred an interesting move from at least one TV manufacturer. Vizio, a television manufacturer, recently announced it is launching a “direct-to-purchase” advertising platform that “enables advertisers to buy TV inventory.” Called Vizio Ads, the platform is actually folded into an advertising platform the firm already owns. Previously, advertisers could use Vizio’s SmartCast platform, which allowed advertisers to buy ad space on other OTT apps. The new service, though, allows advertisers to buy ads on Vizio’s own OTT service called WatchFree, which offers news, sports, shows, movies, and more. WatchFree is, as the name suggest, completely free for consumers, and is essentially a repackaging of another firm’s streaming service (Pluto TV, if you’re interested).

What’s interesting is that Vizio’s smart TVs use data from “more than 12 million active and opted-in TV devices,” meaning that Vizio collects data on what people are watching, when they’re watching, and other data, which they presumably package and allow advertisers to select the audience segments they want to reach.

In this sense, Vizio is seeking to replace services, such as Roku and those offered by cable TV companies. And it makes sense, given the increase in cord cutting, which is projected to be done by 40 million households in the U.S. this year.

What does this mean for advertisers? Well, for one, it means more inventory but potentially more competition—and potentially lower prices. Cable and broadcast network providers have long held a semi-monopoly over ad inventory. Now hardware manufacturers using their data to deliver targeted ad inventory may rival what cable companies currently offer. This is certainly expanding the available inventory, however, meaning that advertisers can both narrowly target audiences in one format, while also casting a broader net with other formats. Either way, we see this as a win for advertisers!

If you’re interested in exploring new opportunities like these, give us a call. We can help you find the right channels and media to reach the audiences that matter most to your business.

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