And just like that, 2019 is over. The past 12 months have been a wild ride for TV advertising, especially for ad-supported OTT. From privacy regulations and TV measurement upheaval, to election mania and fiery streaming wars, it’s no wonder TV has been top of mind for many in the advertising industry this year. And 2019’s spotlight on TV advertising — both linear and OTT — is not dimming any time soon.
Besides hundreds of streaming TV services including Disney+, Apple TV+, Hulu, HBO, Netflix, and many others, IPG’s Magna forecasted OTT ad spend will grow 39% this year to $3.8 billion, and another 31% growth to $5 billion by 2020. And more recently, eMarketer released estimates that marketers will allocate nearly $7 billion to the overall CTV market in 2019.
Fueled by rapid market growth, 2019 was clearly a red hot year for the streaming TV space. But what lies ahead? Here are some thoughts:
Linear TV Spending Will Continue To Drop
In addition to the big players in the space, traditional TV networks like ABC, CBS and NBC are launching streaming services to maintain relationships with shifting audiences due to the rise of cord-cutting. While traditional linear TV still claims the largest share of TV viewers, that lead is decreasing daily. A recent report from eMarketer shows the advertising dollars allocated to linear TV is also decreasing. Sure, linear is still a $70 billion industry, but we can expect a steady decline into the future.
The Rise Of Ad-Supported
With big players like Disney and Apple launching SVOD (subscription video on demand) services this year, the battle is heating up in the OTT ecosystem. Existing players like Netflix, HBO and others are now fighting for the market share against many more competitors. And with new services constantly popping up, many consumers are starting to experience what is known as “subscription fatigue”. The emergence of new SVOD services will only amplify subscription fatigue, and cord cutters will increasingly turn to AVOD (ad-supported video on demand) options to supplement their subscription viewing habits. With that in mind, we can expect AVOD platforms like Pluto TV, Roku and Plex to increase viewership in 2020.
The Slow (But Steady) Adoption of Impression-Based Measurement
Nielsen GRPs have long ruled the TV measurement landscape, with trillions of dollars transacted on the rating system based on a panel of less than 1% of the country’s TV-viewing households. But the rapid adoption of over-the-top TV (OTT) has resulted in not only more granular measurement capabilities, but also more precise targeting. This is enabling advertisers to precisely target individual households based on metrics that matter, as well as get impression-level data and view-through-rates for their campaigns. NBC and others have already started testing this out with local stations, and we can expect more networks to follow win the year ahead.
Privacy vs. Profitability
Ever since the Facebook / Cambridge Analytica scandal, consumer privacy has been a hot button issue — especially as it pertains to the advertising industry. With Apple and Mozilla rolling out cookie blockers, the ad tech universe has been trying to understand the future of data-driven marketing in a cookieless world. Not to mention impending privacy regulations like CCPA and other state laws that will take effect throughout 2020. It was beginning to look like privacy and profitability in digital media were becoming polar opposites.
To combat this, companies are experimenting with Federated Learning, a framework for AI model development that is distributed over millions of mobile devices, provides highly personalized models and does not compromise user privacy. When it comes to the future of consumer privacy, we can expect to see more machine-learned data segments. By using attribution to define data segments rather than focusing on the individual, we can create proxies that are not only privacy compliant, but are smart and improve with time. With new technologies and approaches, like federated learning and cryptography, advertising will emerge at the intersection of privacy and profitability.
2020 is lined up to be a marquee year for OTT.