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Why The OTT TV Threat Isn’t As Big As You Think

by | 3 minute read

As consumers spend more time viewing OTT TV, are marketers following? If you’re selling TV media, it’s reasonable to wonder just how much ad money is going to be funneled to the new services and channels that keep popping up. An in-depth look at the industry should make media sellers rest a little easier.

Who’s Watching?

There’s no doubt that OTT TV is growing rapidly in terms of viewership and in terms of collecting ad money. Last summer, Tru Optik estimated that OTT services like Hulu and Sling TV scooped up about $3.3 billion in ad money. And PwC’s most recent Entertainment & Media Outlook report projects that OTT will amount to $5.7 billion or 7.6% of total TV ad revenue in 2021. For the most part, marketers that buy ads on these services are trying to reach millennials and cord cutters.  Interestingly, while consumers may be cutting the cord, they’re dishing out a total of $2.1 billion to access this content. On average, the five million SVOD consumers have three on-demand services to choose from.

Where’s the Money Coming From?

At least one industry player Beachfront sees marketer ad money shifting from mobile to OTT. In other cases, marketers are using their ‘experimental’ funds to see the kinds of returns they’ll get from OTT. One of the biggest selling factors is that the technology allows for media companies to determine which ad to deliver to viewers, based on demographics, etc.

What Does the Future Look Like?

The OTT TV ecosystem is starting to look a little like the wild west. With over 200 operators now in the mix, a shakeout could be looming. JP Morgan analysts believe the business model needs to ‘evolve.’ The services that can’t command high enough subscription fees will need more ad money to survive. However, many of these channels appeal to niche audiences. And marketers have a hard time figuring out how to buy ads on these services. JP Morgan analysts say,“Advertisers, we think, prefer to deal with a single point of contact, but it’s unclear in many cases who is supposed to take the leading role in serving them. While this seems like it should be an insignificant problem, we think internal politics remain a real roadblock in getting advertisers to shift dollars from incumbent allocations.”

If you’re selling traditional TV spots, now is the time to remind your clients that consumers still watch your programming. In addition, your clients can be sure their ads will run as guaranteed.  You can also educate clients about the OTT audience by sharing insights from the AudienceSCAN report published by AdMall. Show them the experience you bring to the market, ramp up your customer service, and they’ll be willing to sign up with you again.

 

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.

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