March 2017
An eBook from the editors of
OTT’s Advertising Problem
2
Introduction
3
OTT Advertising Prepares for a
New Chapter
9
How OTT Providers Are
Targeting, Tracking and Timing
Ads
Sponsored Content
12 The Move to Server Side Ad
Insertion
OTT Ad Delivery Case Study:
13 Hyundai’s ‘Skip’ Ad
What Advertisers Are Saying
15 About OTT
Programmatic, Social, VR and
18 the Future of OTT Advertising
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An eBook from the editors of
Introduction
It’s no secret that the OTT video market is exploding.
With relatively new, heavyweight entrants like DirecTV
Now and HBO Now, alongside increasingly powerful
players like YouTube and Amazon, the space appears
positioned to gain significant traction in the years ahead.
But the market for advertising in the OTT space is still
very much in a state of flux. Ad blocking, fraud and
measurement metrics are ongoing issues for providers
of ad-supported online video content and brand
advertisers alike. Further, newer technologies ranging
from programmatic advertising to virtual reality promise
to create further complexity.
With the industry now hunting for results in the form
of dollar signs, is time running out to fix advertising’s
OTT problems?
This Fierce eBook will break into the OTT advertising
market in five parts. Read on.
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
OTT’s Advertising Problem // March 2017 // 
An eBook from the editors of
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OTT Advertising Prepares for a New Chapter
By Tara Seals
Compared with the paid, subscription video-ondemand (SVOD) services that dominate the over-thetop (OTT) market today (Netflix, Amazon Prime,
HBO Now and so on), ad-supported video-ondemand (AVOD) and live services have floundered,
mainly because they tend to lack compelling, premium
content that justify viable ad rates. However, market
shifts indicate that 2017 could be a bellwether year for
advertising’s role in the OTT video ecosystem.
The first generation of ad-supported services has
suffered because of two main issues: The sheer cost of
content acquisition and a lack of standardization for
ratings and measurement for digital content.
The acquisition issue is perhaps the biggest obstacle,
and it can be encapsulated in a sentence: Netflix spent
$6 billion on content in 2016—a chunk of investment
that advertising alone could never recoup.
The issue is circular: Without the right, differentiating
content, consumers won’t watch, and without eyeballs,
providers can’t charge viable ad rates. And without a
working monetization model, it’s impossible to invest
in differentiating content in the first place. Many of
the most successful OTT services have opted out
of that chicken-and-egg treadmill entirely and are
subscription-only.
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
“Online video advertising as a pure-play strategy is
broken because the CPMs are so low,” explained Dan
Rayburn, principle analyst at consulting firm Frost
& Sullivan. “For the premium content services, the
content acquisition costs are so high that you can’t
pay for it based on a CPM model alone. Consider
that Microsoft shelved plans to do a live service to the
Xbox, because it realized it couldn’t make its content
investment back—even though it’s the No. 1 non-payTV device connected to the TV in American homes.”
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
YouTube is the one looming exception in the adsupported market to date—and it gets by based on its
sprawling volume.
“YouTube, of course, has a massive ad-supported
online video business that has been growing
OTT’s Advertising Problem // March 2017 // 
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healthfully according to our calculations,” said
Forrester Research analyst Brandon Verblow.
“However, even YouTube falls short of Netflix in
terms of downstream bandwidth consumption, and
its estimated ad revenue is only a small fraction of
traditional TV ad revenue.”
In fact, “about 75% of YouTube content can’t be
monetized—it’s user-generated, gets no traffic or is of
bad quality, so no one will advertise,” Rayburn said.
“Its sheer scale is what it relies on.”
Joel Espelien, senior research analyst at The Diffusion
Group, noted that YouTube is a “different animal
because it really has relatively no content costs.
We’re talking about things like Minecraft videos that
someone uploads.” (Of course, it’s worth noting that
YouTube recently launched its own streaming live TV
service for under $40 per month.)
The end result is that the OTT advertising market is
like a barbell—weighted on both ends, with nothing in
the middle.
“It’s a good time to be HBO and Netflix, and shorttail content is doing okay,” explained Espelien. “And
meanwhile YouTube is fine. But the guys in the middle,
who want to make a service and or create their own
video channel and brand and then try to sell ads
around it—that’s a tough row to hoe. Those people are
struggling to eke out an existence and many of them will
not, because there’s not a bonanza of money. But really
high-end content—or a crazy big platform—that works.”
An eBook from the editors of
One example of a troubled player on this front is
Verizon Communications’ mobile-first Go90 service,
according to Rayburn. “They have a huge number
of people working on Go90 and it’s free—but no
one watches it,” he said. “The fact is, everyone is
competing for OTT ad dollars and eyeballs, and some
of these services just won’t make it because they don’t
have the content.”
New Models in the Works
This first generation of ad-supported OTT
approaches is poised for change, because that middle
no-man’s land is being filled out with services that are
experimenting with hybrid models. Hulu for instance
last year axed its ad-only tier in favor of a low-cost,
subscription-based, ad-limited tier.
“This provides some stable level of income via
subscriptions, as long as they keep consistent market
share, and then the advertising allows a bit of padding
to generate incremental income,” explained Glenn
Hower, senior analyst at Parks Research. “We’re seeing
fewer and fewer solely ad-supported services.”
Forrester’s Verblow said that growth in OTT
advertising will require the migration of traditional TV
content to digital platforms—something that hasn’t
been available in large amounts in any kind of adsupported OTT. There are, however, indications that
that this is about to change.
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
“Traditional TV providers control much of this
content, and they’ve been cautious about making
OTT’s Advertising Problem // March 2017 // 
An eBook from the editors of
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their programming available outside the lucrative TV
bundle,” explained Verblow. “Even if many viewers
want to cut the cord, they may not follow through as
they realize they cannot get all the content they want.”
Things are changing though. Dish Network’s Sling TV
has been offering streaming TV for more than a year,
and AT&T recently joined the fray with its launch of
its DirecTV Now OTT service, and there are several
other noteworthy services along these lines.
Most recently, Google’s YouTube launched its own
live TV service with dozens of channels, as well as the
Big Four networks, for under $40 per month. Hulu
is expected to launch a similar offering. Also helping
matters is the fact that CBS content—one of the last
Big Four TV network holdouts on live-streaming—
is now slated to appear on the upcoming Hulu live
“Professional productionvalue premium content does
attract higher CPMs than a
Minecraft video.”
—JOEL ESPELIEN, SENIOR RESEARCH
ANALYST, THE DIFFUSION GROUP
streaming service and could also start appearing on
other OTT services. CBS content is already on the
Sony PlayStation Vue service.
Armed with a stable of professional, premium video,
these services can, in theory, command viable ad rates.
Indeed, an object lesson could come from the TV
Everywhere world, where content providers offer those
with pay-TV subscriptions the ability to watch content
online.
“Professional production-value premium content does
attract higher CPMs than a Minecraft video,” Espelien
said. “If you look at NBC’s TV Everywhere app, it’s
now running ad blocks that are similar to what you get
on regular TV—there are 120-second breaks several
times during the show, and there’s no ad-skipping.
They also generally have a pretty good idea of who’s
watching. They’re not yet doing eyeball scans, but
they can resolve where I am down to my zip code, so
they can be a little targeted. That’s new—last summer
during the Olympics all you got was generic national
ads for McDonalds, etc. Recently I’ve noticed that
local ads have started to appear, indicating that they
can generate enough revenue off that online view to
treat it like traditional advertising.”
As for pure-play AVOD services from smaller players,
the path is less clear. Hower said that one of the
models being tested is custom content packages.
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
“In the short-form space, there’s a move towards
sponsorship and branded models, which has a few
implications,” said Hower. “This allows creators and
advertisers to have a mutual level of control over how
the brand is presented and how the messaging comes
across. It also allows advertisers to build one-on-one
relationships with creators and influencers—giving
OTT’s Advertising Problem // March 2017 // 
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them a hands-on relationship with how their message
is delivered and who it’s coming from. This approach
is a lot more resource-intensive, but there’s anecdotal
evidence that it’s creating better engagement.”
In contrast, in a typical insertion model, brands buy
15 or 30 seconds of media time, and the platform,
whether it’s YouTube, Hulu, DirecTV Now or
something else, places the ad depending on its own
parameters.
“I think going forward, we’ll see a lot more
experimentation in the OTT space,” Hower said.
“It’s full of so many different services now and the
An eBook from the editors of
churn rates are high—so providers have to move
beyond generating market share so they are looking
at retention and building value. And from that
standpoint, we’ll start seeing OTT 2.0—how do we
sustain our businesses now? Advertising will be a key
discussion point.”
The Need for Better Measurement
In theory, OTT services are counting unique
viewers, measuring time spent watching and tracking
demographic info on age and location. But none of
them are doing it the same way.
“A full 10 out of 10 advertisers are using Nielsen
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
OTT’s Advertising Problem // March 2017 // 
share:
ratings to evaluate the value of content on linear TV,”
Hower said. “But in the digital space, where you have
metrics like unique viewers and time spent viewing,
each evaluation technique has its own little quirks.”
For instance, YouTube’s standard for counting a
unique view is that a viewer watches a video for 30
seconds. In contrast, Facebook uses a three-second
standard, according to Hower. Also, it’s worth noting
that Facebook recently admitted that it miscalculated
the level of video viewership on the social network,
inadvertently inflating the platform’s average viewing
time. These incidents don’t exactly instill confidence
in advertisers.
“Everyone does measurement differently, and no one
wants to work together,” Rayburn said. “Sony, Twitter,
Google and Facebook are not going to get together to
share engagement numbers in a standardized way.”
This lack of standardization also extends to knowing
how to track viewership across linear TV and digital
viewing. “The idea with some of this, like the NFL’s
deal to show Thursday night games on Twitter, is to
reach a younger audience that may not be watching it
on TV,” said Rayburn. “But how do you know they’re
not watching on TV?”
An eBook from the editors of
buying, whether ads are targeted to specific users or
whether ads are interactive,” Verblow said. “These
are the factors that have the potential to generate
incremental value and the ones that should really
matter to advertisers and content providers.”
An example of this is the fact that content providers
and advertisers are looking to incorporate social data
into their measurement approaches.
“Snapchat has an analytics API, Facebook has an
API—so there’s more granular data available out
there,” Hower said. “But none of this talks to each
other. Advertisers are trying to get to that point where
they know what viewers are not only watching, but
also commenting on, what ancillary content they’re
visiting on YouTube and so on. The Holy Grail is
incorporating social, video chat, TV, digital video into
a full profile of what an individual viewer is watching,
and how. It’s a jigsaw puzzle with a billion pieces, and
we’re not there yet.” l
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
To really make a go of OTT advertising, marketers
will need to develop screen-agnostic planning and
execution to reassemble the audiences that fragment
across these screens. “Going forward, it will be
important to track innovations such as audience-based
OTT’s Advertising Problem // March 2017 // 
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An eBook from the editors of
How OTT Providers Are Targeting, Tracking And Timing Ads
By Rob Pegoraro
The OTT video market continues to undergo
dramatic changes, but according to three top
executives in the space, the advertising opportunity
remains strong. That’s because targeting technologies
are relatively robust, customers generally watch ads,
and experiments are relatively simple to conduct.
Indeed, identifying viewers to match them with ads is
easy at Hulu for one simple reason: Since the service
requires paying subscriptions, it literally knows where
its audience lives.
“The information you have about them (the
customers) is pretty bulletproof because they’re giving
you money,” said Peter Naylor, senior vice president of
ad sales for Hulu.
Hulu also asks viewers what kinds of shows they want
to watch. And since it’s an on-demand service, it can
assume more viewer interest in whatever’s playing than
any linear service could.
Naylor added that about 80% of Hulu ads are targeted
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
OTT’s Advertising Problem // March 2017 // 
An eBook from the editors of
share:
on traditional criteria—“demo, geo, gender, genre”—
with 20% booked using programmatic targeting that
calculates a spot’s real-time value and matches a buyer.
“It’s a material part of the business, and it’s growing,”
he said.
It’s not perfect: Hulu viewers have complained on
Twitter about seeing Spanish-language ads. “It could
potentially be a multicultural marketer,” Naylor said
of those gripes, adding that viewers may have had
somebody on their account watch a Spanish-language
show.
“It’s a material part of the
business, and it’s growing,”
– PETER NAYLOR, SENIOR VICE
PRESIDENT OF AD SALES, HULU
OTT services without a database of paying
subscribers must rely more on external data sources
such as Google’s ad-targeting services.
“We’re able to lean into a lot of the work they’ve done
around geographic targeting, demographic targeting,”
said Jamie Wilkinson, general manager at VHX, which
provides a white-label OTT platform to third parties.
Wilkinson added that VHX, which he co-founded
before Vimeo’s purchase of the firm last spring, can
also combine viewership data from across its partner
networks for a better understanding of viewers.
Not The Same Old TV Ads
The results of this data-driven market can sometimes
look much like the commercials that populate
traditional linear TV.
“The majority of the ads you see on our network
also run on linear TV,” said René Santaella, senior
vice president of global ad strategy and operations at
Crackle, Sony’s ad-supported streaming service, in
responses forwarded by a publicist. Hulu’s Naylor said
as much: “The majority of our ads are things you can
see on broadcast and cable.”
He added that although Hulu can target ads down to
Zip codes, many advertisers don’t bother. “A lot of
our geo-targeting is multi-state,” he said, noting that
Hulu’s biggest category of advertising is automotive.
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
Hulu touts a reduced ad load in its flagship
subscription product, and Sony’s Crackle is also
experimenting with fewer but more valuable ads.
Said Crackle’s Santaella: “You don’t want to hit the
same viewer over and over due to over-targeting.”
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
Last year, that ad-subsidized site rolled out a reducedadvertising product, Break Free, that pares the ad load
down to just five per episode during its original series.
The idea is binge-watching-friendly ads: Each of that
small group of advertisers can continue telling its story
over succeeding episodes.
Hulu has been conducting its own experiments to
OTT’s Advertising Problem // March 2017 // 
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see what formats resonate better with viewers. “We’re
totally open to accepting 5, 7, 37, 83 [seconds],”
Naylor said of the ad lengths Hulu can support. “Bank
of America gave us a sequential ad; you’d see three ads
from Bank of America, but it was a story.”
Viewing Platforms And Effectiveness
“The vast majority of our audience viewing occurs on
closed platforms on gaming consoles, streaming boxes
and mobile apps,” said Crackle’s Santaella.
Hulu enlisted Kantar Millward Brown to measure the
effectiveness of its ads; in a study posted in October,
that firm found that OTT ads beat PC and mobile
ads for brand awareness and brand favorability, while
mobile ads did better at advancing purchase intent.
Naylor said Hulu’s ad completion rates are above 90%,
which makes it easier for the company to bill only for
fully completed spots. Viewers also have the option
of fleeing ads: The premium for ad-free viewing is $4
above the service’s usual $7.99 “limited commercials”
monthly option.
Crackle relies on Moat’s viewability analytics to track
ad completion—nearly 100% on smart TVs, Santaella
said.
An eBook from the editors of
that aim to displace traditional cable and satellite
subscriptions opens other possibilities.
Hulu, for instance, is readying a live TV service for
launch this spring and now has a VR app.
VHC’s Wilkinson expects more live-streaming across
the company’s partner networks, which will in turn
call for different ad formats. “I would expect a different
kind of user behavior around live streams versus ondemand,” he said, suggesting that those viewers would
be more accepting of pre-roll ads.
And as all these viewing platforms add interactive
features that invite viewers to lean back less, you can
expect more ads inviting you with some clickable call
to action. Said Hulu’s Naylor: “That won’t be the
measure of success so much as the new normal.” l
2
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
What’s Next?
The future of online video is so open that people can’t
even agree on how many screens viewers will watch at
once—if virtual-reality takes off, two will be the default
for VR regulars. The growth of over-the-top services
OTT’s Advertising Problem // March 2017 // 
Sponsored Content
The Move to Server Side Ad Insertion
TV consumption is making a clear migration
from broadcast and classic managed IPTV
platforms to over-the-top (OTT) delivery.
Meanwhile, advertising is an integral part of
video monetization strategies for broadcasters
and other video content providers. Though
primary screen advertising has long been
optimized, the art of making money while
delivering video content to consumers on
connected devices is still evolving. Traditional
content providers are accustomed to linear
TV monetization models. But the internet is
an unmanaged network with unclear paths to
monetization. In addition, an inherent tension
exists between delivering a premium OTT
viewing experience – complete with startover and time-shifted TV functionality – and
monetizing streaming video offerings and
services.
In the Pay TV domain as well as modern
syndicated content, the majority of services
today rely on client-side advertising insertion.
In brief, the client device stops playing back
the content, sends out a VAST request, gets
a response, loads the asset, and then restarts
playing back the content. There are challenges
with this approach, including ad blockers,
latency (going from playback of one asset to
another can cause problems such as stitching
problems, resolution changes, loss of playback
buffer, etc., negatively impacting the viewing
experience) and development considerations
(implementing client-side ad insertion requires
developers to use many SDKs on the client
devices).
These challenges are causing many
broadcasters to move to server-side advertising
insertion (SSAI). SSAI is, in a way, a return
to the origins of online advertising, because
the material – both content and commercials –
arrives as a single stream from a single source.
The difference is that the advertising is no
longer static. It is dynamically inserted before
the video stream is delivered. Commercials
are personalized for each individual stream at
the moment of delivery. The video ecosystem
as a whole is now moving in this direction.
Ad blockers are resolved, latency is mitigated
by a move to the edge of the network, and
development efforts are consolidated.
reliability increases audience engagement,
which ultimately increases viewing time and
market share.
The challenge of monetizing OTT video
content will only continue to grow as
viewership on multiscreen devices is expected
to increase going forward. Market research
shows that to optimize revenue opportunities
for streaming video, advertising needs to be
targeted to the individual user and delivered
in a way that enhances the quality of a viewer’s
experience. Personalizing ads reduces the
consumer desire to employ ad blockers
and increases the value of the overall video
streaming experience.
Implementation of server-side advertising in
a practical and cost-effective manner across a
broad range of platforms and delivery fabrics
demands a software architecture. Learn more
about SSAI in the Elemental white paper
Dynamic Ad Insertion.
In addition, end users do not experience
video buffering, freezing, blocking, spinning
wheels and other viewing interruptions. It
is especially important when streaming live
content to deliver a consistent quality of
experience so audiences do not feel they have
missed something vital. This consistency and
OTT’s Advertising Problem // March 2017 // 
An eBook from the editors of
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OTT Ad Delivery Case Study: Hyundai’s ‘Skip’ Ad
By Rob Pegoraro
The Hyundai ad starts out like many other car
commercials: From a back-seat perspective, we see a
young man behind the wheel of an Elantra rolling down a
tree-lined street. YouTube’s usual skip-ad button appears
at the lower right corner—but before you can think to click
or tap it, the driver reaches back to give it a whack himself.
Then he repeats that gesture, growing frustrated as the
button doesn’t respond. Through the windshield, we
can see a mother and a daughter looming in the street
ahead—which is when the car beeps and brakes itself
automatically. A voiceover lauds the Elantra’s pedestrianaware automatic-braking feature—and then the irked
driver gives the skip-ad button one more tap.
The “Skip” ad, created for Hyundai by the Huntington
Beach, Calif., agency Innocean Worldwide, shows the
creative possibilities of video ads in an online medium
that’s already developed its own cultural quirks. It also
demonstrates how, on this stage, audience metrics can
quickly indicate whether the ad did its job or if it has
already been forgotten.
Fun With The Format
The Korean car maker came to Innocean with a tough
request: Make us something memorable about the new
Elantra that shows off one of its key safety features—and
conveys that message inside the 15-second duration of a
YouTube pre-roll spot, copywriter Jeff Barry said in an
e-mail.
Introduction
3
OTT Advertising
Prepares for a New
Chapter
9
How OTT Providers Are
Targeting, Tracking And
Timing Ads
12
Sponsored Content
The Move to Server Side
Ad Insertion
“We gave a couple of parameters and guidelines,” said
Monique Kumpis, Hyundai Motor America’s senior
group manager for brand marketing and advertising. “But
the main thing was, ‘how do we draw them in quickly and
get them to stay?’”
Barry and his colleagues took inspiration from an earlier
ad that poked fun at YouTube’s skip-ad feature: Geico’s
“Unskippable” pre-roll ads.
Hyundai / INNOCEAN
2
13
OTT Ad Delivery Case
Study: Hyundai’s ‘Skip’
Ad
15
What Advertisers Are
Saying About OTT
18
Programmatic, Social,
VR and the Future of
OTT Advertising
The Martin Agency’s spots, AdAge’s 2016 campaign
of the year, mocked the tone and style of 1970s TV ads
as well as YouTube’s skip-ad button by blurting out the
sales pitch in the first few seconds. They then taunted
the viewer by noting that it was too late to skip the
marketing bit of the message, then turned the rest of the
OTT’s Advertising Problem // March 2017 // 
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clip into a bloopers reel of sorts.
“We took a step back and looked at the process by which
viewers engage with and ignore pre-roll advertising,”
Barry said. “Most people click ‘skip ad’ without a second
thought in order to get to their content as fast as possible.
So we decided, why not do it for them while stopping
them in their tracks with a jarring visual, all while
breaking the fourth wall.” (“Fourth wall” is theater jargon
for the invisible but assumed barrier separating the stage
or set from reality. Anytime somebody in a show or an
ad stops and speaks to the camera, they’re breaking the
fourth wall.)
Measuring Its Success
Innocean’s ad ran mainly on YouTube from April through
August of last year, a logical spot given that site’s support
of the skip-ad button—a feature of Google’s TrueView
format, launched in 2010, that lets the viewer ditch the rest
of the ad after its first five seconds.
Google got to charge more than average: 79% of viewers
watched the ad to completion over the first two weeks,
which Barry said beat the 55% average completion rate for
15-second TrueView clips by almost a quarter. It racked
up a total of 10 million impressions on YouTube and
elsewhere.
From Hyundai’s perspective, that completion rate was “far
beyond our normal,” Kumpis said. “We loved it, because it
made such better use of the medium.”
The ad also earned critical approval too. In October,
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“Skip” won a bronze award in the “Video - Online
Commercial” category at the Interactive Advertising
Bureau’s MIXX awards. In an e-mail, the jury chair of
that contest, 72andSunny partner and executive creative
director Matt Murphy, offered a single-sentence summary
of what made the ad resonate: “Life is full of distractions,
including the button that allows you to SKIP THIS AD.”
Lessons Learned
This Hyundai ad stands out not only for having some
sport with a YouTube advertising trope, but also for
simply not being a cut-down version of what runs on TV.
“Creatives, they want to take their 30-second spot and
cut it down to pre-roll,” Hyundai’s Kumpis said. That’s
not a good idea, especially in a medium as fundamentally
twitchy as online video. “If they’re going to stay with you
for your advertising, it has to be for a reason,” she said.
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“Smart digital marketers embrace that consumers have
more control than ever and therefore must use storytelling
in an engaging way,” Murphy said. “Realizing that
consumers have the attention span of a goldfish, great
online videos must grab your attention quickly.”
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“What this taught us was that each medium should be
treated individually,” said Innocean’s Barry. “A TV ad
should not just be rehashed for online content, but instead,
we should pay close attention to how each medium is
perceived by viewers and consumers.”
“Consider the medium,” Kumpis advised. “People have
other things to do.” l
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What Advertisers Are Saying About OTT
By Kendra Chamberlain
The rise of online video has given marketers a
collection of new devices and platforms to reach
consumers on—and brands have responded by moving
more ad dollars to digital video marketing. However,
digital video is just one piece of the marketing puzzle.
“We never see digital video being a thing and TV
being a thing. We always want to approach it as a
holistic story,” said Bill Davaris, chief creative officer at
the advertising agency Madras. At Madras, it’s called
“always on” marketing, though others refer to it as
omnichannel marketing. The idea is to craft a single
consistent message and deliver content around that
message to different devices and platforms. And it’s
possible only through leveraging the vast amounts
of data that’s available in the online world about
consumers and their behaviors.
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Using Data to Drive Results
Thanks to digital advertising technologies like
data management platforms, programmatic buying
platforms that have largely automated much of the
processes of media buying, and closed-loop analysis
that marry sales data with marketing data, brands
are better able to target audiences and measure the
performance of a campaign than they ever could on
linear TV.
“Data is incredibly important—it informs everything
we do,” said Trish Cox, VP of advertising and brand
at T-Mobile, a mobile carrier that is a major advertiser
in the United States. “We can’t create unique content
that drives engagement without first knowing how that
video is being consumed. It always goes back to our
consumer focus.”
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There are a number of ways that data can be used to
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inform marketing. First-party data from a brand’s own
platform can be married with third-party census-level
or sales data to help further define audiences. Data
management platforms help brands better understand
their target audiences and how and where to find
them; and programmatic ad selling and buying enable
brands to target or re-target those audiences across
inventories in real time.
And data also enables brands to carefully track
how well a specific ad format, for example, or an
entire campaign, is performing. “It’s really a more
sophisticated model,” said Andy Ladden, another chief
creative officer at Madras. “You’re almost able to track
[the campaign] by IP address, and you know this user
saw a banner ad here, they saw a social video there,
they were on YouTube, and by the sum total of that,
you can see what’s working, and what’s the right mix.”
The OTT Platforms
There’s no shortage of digital ad inventory online,
and the world of online video is only growing, from
ad-supported OTT services, to social video networks
like Facebook and Snapchat, to TV networks’ digital
video initiatives such as TV Everywhere services or
direct-to-consumer OTT platforms. This spectrum of
OTT platforms offer marketers new channels to reach
consumers on.
“Video platforms like YouTube and Facebook are
hugely important,” Mark Aikman, general manager of
marketing services at Mercedes-Benz USA, said. “Both
of those are mobile, and we are also thinking through
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the incredible amount of mobile video that’s being
consumed, and adding in new partners for us to be
able to reach those new consumers.”
“Video platforms like
YouTube and Facebook are
hugely important.”
— MARK AIKMAN, GENERAL MANAGER
OF MARKETING SERVICES, MERCEDESBENZ USA
Each of those social video platforms have their own
quirks—for example Facebook ad creative needs to
be able to deliver a message without sound, while
Snapchat video ads need to look best in a vertical
orientation. And brands also can tailor the content of
the ad to the platform or device that it’s being seen
on. “If we’re delivering a network message across all
channels, we’ll develop unique and meaningful creative
for each audience—sports vs. gaming vs. travel—to
highlight what’s most important for that user,” said
T-Mobile’s Cox. “The content should look and feel
different, and be created accordingly, depending on
where it’s being consumed, whether it’s for social,
native or pre-roll.”
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YouTube, however, is its own beast, thanks to its
massive global audiences, an entire generation of
premium online video content producers, and the fact
that YouTube is one of the top search platforms online.
Today, it’s not uncommon for brands to establish their
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own YouTube channels where longer-form marketing
content and even branded entertainment content can
be found.
Mercedes-Benz, for example, offers a host of longerformat videos on YouTube. “On our YouTube channel,
you’ll find a number of video brochures that are really
long format pieces of content that really help a shopper
understand the vehicles,” Aikman said. “We are also
producing a tremendous amount of entertainmentbased video content.”
The early days of YouTube advertising were mired in
concerns over the quality of user-generated video that
ads were running against, but the sheer scale of online
video left brands wanting more. In Davaris’ words,
brands are “absolutely addicted” to impressions. But
impressions aren’t really the end game anymore.
Lots of impressions “doesn’t necessarily lead to a
successful campaign, it doesn’t necessarily lead to
more sales or brand loyalty,” Ladden said. “So that’s
what brands and agencies are struggling with now, to
link it back to business results.”
Blurring Lines Between Digital and TV
TV networks have also entered the digital video fray,
and marketers have been eager to participate in digital
advertising through TV networks’ OTT properties.
“We’re realizing that some TV channels have really
powerful digital platforms that are very influential,”
Davaris said. “A big reason why a client might go with
a CBS is because the way CBS also helps through
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their digital platform. They have a very influential and
powerful digital platform.”
Networks also now typically offer TV and digital
media inventory as a package. And those packages are
particularly important for big live tent pole events like
the Super Bowl. “As a large advertiser, we are going to
media upfronts with networks, and digital streaming
packages are often a part of that,” Aikman said. “Fox
has live stream [inventory] that comes along with your
Super Bowl buy, for those people that may not be
watching it directly on the TV,” he added.
But brands are quick to point out that while digital
ad dollars are growing, traditional linear TV is still
the top platform for delivering marketing messages.
“Television is still an important part of the marketing
mix,” Aikman said. “This was one of the hottest years
in the television upfronts in a while.” l
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What Advertisers Are
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Programmatic, Social,
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An eBook from the editors of
Programmatic, Social, VR and the Future of OTT Advertising
By Tara Seals
As the OTT advertising market matures, many in the
space expect the service to more fully meld into the
wider marketing industry—and to collect a range of new
technologies and platforms along the way.
“Unified planning, buying, measurement and attribution
are still lacking, but as these data-driven systems mature
we will see investment across online video grow at
rapid clip,” said Ashish Chordia, CEO and co-founder
of Alphonso, a company that tracks what people are
watching on TV in real-time and sells mobile advertising
technology. “The OTT advertising market is truly an
extension of broadcast TV. We should think of OTT as
we think of network, cable and addressable TV ads. In
fact, thinking of OTT as a form of addressable TV ads
is a great lens to see what is in the future for TV ads. In
less than three years, i.e., by 2020, we will not be talking
about OTT, programmatic, addressable and linear TV as
different things.”
Indeed, it makes sense for digital video advertising to be
seen as a complement to linear TV investment. Research
firm eMarketer expects that U.S. digital video ad
spending will see double-digit growth annually through
2020. TV ad spending will grow much more modestly, at
rates ranging from 2% to 2.5%, but will remain dominant,
with total ad spending reaching $77.17 billion in 2020,
more than quadruple the $16.69 billion for digital video.
However, as Chordia indicates, there’s still work to do
when it comes to enabling cross-screen engagement—and
it’s here that ad platforms are working overtime to make it
happen.
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“Almost everyone recognizes the value of having a unified
video marketplace for building campaigns across video on
demand, OTT, mobile, social—but there’s a lot of inertia
in terms of creating standards for measurement across
those platforms,” said Jay Prasad, chief business officer at
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VideoAmp, another ad-tech company that sells software
to marketers for cross-platform advertising. Others in the
crowded space include TubeMogul and Marin Software.
“Right now, doing things cross-platform is an inefficient
process, because you have one system for TV, one for
mobile, one for social video—and there’s a lot of walled
garden stuff. Our goal is to make that all seamless.”
Ad-Tech Evolves
Part of the solution may be addressed by programmatic
(algorithm-determined) advertising, which is already
becoming the de facto digital standard. “Programmatic
ads have already taken over the space in OTT and
online advertising. All the major OTT and online video
providers do some form of programmatic—be it open,
private market or some other combination to manage
inventory, price, etc.,” Alphonso’s Chordia said.
Programmatic advertising will grow 31% to account for
58% of expenditures in 2017, faster than all other digital
channels, according to Zenith Research’s Programmatic
Marketing Forecasts. Zenith is an advertising agency
that is part of the multinational French Publicis Media
advertising and public relations company.
At first programmatic marketing was often used to reach
target audiences as cheaply as possible, with little regard
for the quality of the sites in which the ads appeared. It
is now being used in conjunction with data segments
to target individuals in intelligent and creative ways,
identifying those most likely to be receptive to a brand’s
messages and encouraging them along the path to
purchase, often in premium environments.
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Overall, programmatic ad spending grew from $5 billion
in 2012 to $39 billion in 2016, according to Zenith
Research, at an average rate of 71% a year. It’s also starting
to spread into the “traditional” media—some television,
radio and digital out-of-home platforms already offer
automated and data-driven trading of inventory.
“Programmatic ads have already
taken over the space in OTT and
online advertising.”
— ASHISH CHORDIA, CEO AND COFOUNDER, ALPHONSO
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“Programmatic buying of digital media has become the
norm in major markets, and is aggressively following
this path in smaller markets,” said Benoit Cacheux,
global head of digital and innovation at Zenith. “We
believe that the growth of programmatic will continue
to be fueled by improvements in the quality of media
available in programmatic environments—especially
private marketplaces—and the greater availability of
programmatic mobile media, as well as the sophistication
provided by ad tech solutions such as data management
platforms and connected ad tech stacks.”
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But programmatic advertising is just one piece of a larger
puzzle. For example, sales of virtual reality equipment are
poised to grow as the price point of headsets dip below
$100. More publishers are creating exclusive content
for the format, and brands are now realizing the value
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of developing these experiences. Overall, VR is moving
from a format owned by the gaming and entertainment
industry to one that holds promise for the automotive
industry, travel and tourism, consumer packaged goods
and retail.
“What VR has going for it is that it’s immersive,” Prasad
said, noting that the main VR metric is how long someone
is “gazing” at the ad—it’s called the gaze-through rate.
“Whether it’s a ball game or watching Shark Week, the ad
experience is immersive as well. This is a youthful, techoriented segment, they watch very little linear TV, and
they’ll appreciate an awesome VR creative in a game they
love.”
And, Prasad added, VR ads can be mixed with ads in
other formats: “You can create a bucket of those exposed
to a VR ad, and then can have a follow up—like offering
a store locator or call-to-action on mobile,” he said.
“It’s a potential great first touch point, and a doorway
to a potentially long engagement exposure. You can
sequentially serve the creative: Three VR ads, three
on desktop, four on mobile. You’re with them across
screens.”
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The opportunity is not lost on the social networks
themselves. “While YouTube is the largest provider in
the OTT space when it comes to video advertising, with
share up to 30-40%, Facebook is certainly not too far
behind. They have big plans to evolve by shifting their
focus from mobile-first to video-first,” said Anupam
Gupta, chief product officer at 4C Insights, another
company working to aid marketers with multi-screen
advertising products. “Combine that with Facebook’s
infrastructure, targeting (people-based marketing),
measurement and creative intelligence capabilities, and
they are making their way to becoming the most advanced
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Another hot space to watch going forward is social video.
Research from Brightcove, which provides online video
hosting and player technology, shows that three-quarters
(74%) of global consumers connect watching a video on
social media to their purchase decision-making process,
demonstrating why brands are so enthusiastic about
video on social platforms.
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video platform out there.”
The theory is that if the live video push within the social
media space continues to grow, as it is expected to,
opportunities around live ad formats will also come into
play. This is already starting: For instance, the only ad
format that Snapchat offers is video.
“More people viewed the VMAs on Snapchat than linear
television and the company recently announced a deal to
debut BBC’s Planet Earth II on its mobile platform,” said
4C Insights’ Gupta. “So, I view Facebook and Snapchat
as the next-gen video platforms that have a lot of growth
potential.”
And to keep up with the advertising momentum being
seen on social media, these platforms also will look to add
more long-form content.
“Take Disney, who is already catching on to this trend
by creating a Snapchat channel that will allow long-form
content tailored to their target audience to be seen by
Snapchat’s 150 million active daily users—where 60
percent of these users fall into Disney’s target audience,”
Gupta said.
Refocusing On The Audience
In all, brands, content owners and platforms are looking
to keep up with what YuMe executive Michael Hudes
calls “liquid audiences,” which are dynamic in nature,
moving fluidly throughout their day between different
devices and across multiple screens.
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“The ‘content first’ paradigm that has dominated the
content and marketing worlds has been massively
subverted over the last five years,” explained Hudes, who
is the chief revenue officer for YuMe, another ad-tech
company. “We now need to begin with thinking about the
‘audience first’—their unique characteristics, behaviors
and motivations—and build content and marketing
campaigns around these attributes. It’s not just the
prioritization of the audience that has shifted: audiences
today are more dynamic, fluid and ever-changing.”
He added: “The net effect is that if we align brands with
the specific and targeted audiences they want to reach,
we will continue to see online video ads that are more
personalized, targeted and optimized to meet key brand
objectives: engagement, consumer favorability and brand
recall metrics.”
To be clear, brands are seeing OTT video drive sales
today: A study YuMe did last September found that the
power of video is that it’s actionable. In fact, the study
found that 66% of digital video viewers took action after
seeing a digital video ad, either by sharing, engaging with
the brand or buying products. In addition, video ads were
shown to be nearly twice as effective in driving purchases
than image or text ads.
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Study: Hyundai’s ‘Skip’
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“All of this could be a renaissance for the creative
agencies,” VideoAmp’s Prasad said. “It’s not about
repurposing the creative over and over, and just resizing it. It’s saying, ‘I have 16 platforms, and I can plan
a sequential campaign across all of them.’ The thinking
process becomes, ‘what should I say and when?’” l
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