TVN Focus On Advertising | Local OTT Ad Sales Gaining Traction
Over-the-top advertising budgets are growing as local advertisers become savvier about the highly targeted nature of OTT ads.
Advertisers, particularly at a local level, may be unaware of the reach and strengths of the various content viewing platforms, and the problem is complicated by the fact that different sales teams may use conflicting language in talking about it with advertisers.
With content existing on multiple platforms, sales teams are creating bundled advertising programs that better allow advertisers to reach the desired viewer demographics on their preferred devices. They’re also finding sponsored content is another way to drive OTT revenue.
As advertisers buy into the OTT space, station groups are expecting 2020 to deliver significant growth over 2019 OTT ad sales levels without cannibalizing ad dollars from other platforms.
At the same time, the OTT platform has some growing pains, including a lack of standards for things like formats and evolving ad-serving technology that can damage user experience.
A Common Sales Language
At first, local teams weren’t succeeding with selling OTT ads because “they didn’t understand it,” says Maggie Drake, senior director of OTT revenue for local media at the E.W. Scripps Co. Part of the problem was language.
“There was some uncertainty. When you said ‘OTT,’ they said, ‘O-T-what?’ They didn’t understand what it is,” Drake says.
Yet, she adds, many of those same potential ad buyers were actually using OTT services like Netflix and didn’t realize it.
Erin Overstreet, the senior director for digital sales at Gray Television, says it’s vital to ensure the local sales forces understand at a basic level what OTT is.
“There are a million definitions out there, and clients have their own understanding,” Overstreet says.
The lack of a standard language around OTT can cause confusion for buyers.
As Alan Blackburn, director of sales for KSL-TV Salt Lake City, puts it, an ad seller may not clarify the difference between OTT ads and ads on connected TV (CTV), merely calling them all “OTT.” As a result, a buyer may be offered a blend of OTT and CTV ads from a competitor at a low CPM but think they’re buying only CTV ads, which typically carry a higher CPM, he says.
Figuring out how to educate potential advertisers on the OTT offerings is crucial to ad sales success, according to Overstreet.
She says KCRG Cedar Rapids, Iowa, owner Gray Television has “really figured out” how to sell its core owned and operated OTT offering in conjunction with inventory that is not Gray’s but that is targeted to the audience.
“They’re the ones that have taken the time to figure out what that sales pitch sounds like,” Overstreet says. “They’ve really jumped on board early to understand the educational piece, explain that to the client, and that translates to sales.”
Drake says getting the “pillars in the station, the people the team looks up to” trained in OTT ad sales as early adopters helps the OTT sales program get better traction. “With one or two dedicated people on board, the others follow suit.”
The Right Content Volume
Streaming expert Dan Rayburn notes that while the ad market has historically been about quantity over quality, advertisers are learning that OTT ads can help them better reach a specific demographic. At the same time, he says, stations are still trying to figure out how many hours of content per day and per week they need to push to OTT services to keep viewers engaged.
Lauren Crane, SVP of multiplatform sales at CBS Television Stations, says the group is investing a lot of time ensuring plenty of content is flowing. In late 2018, CBS launched its first local, direct-to-consumer extension of its CBSN streaming news channel, starting with New York; in late 2019, CBS launched the fifth of 13 planned local news streaming channels.
The combination of a national brand with local content gives “breadth and scale” to advertisers so “it’s super-competitive,” Crane says.
The local streaming channels give viewers “the same experience they would get when watching local news on television,” Crane adds.
As Drake puts it, OTT ads can be part of a bundled package, not just an add-on, to help advertisers reach their targets more frequently and even home in on niche demographics. The ability to serve OTT ads based on geolocation has opened up some new doors for ad sales, she adds, such as allowing a local orthodontist to hit households with children in a specific area.
“A lot of times, OTT is paired with broadcast, and that’s just natural,” Overstreet observes. “It helps them put their message in front of eyes, no matter the device or where.”
Blackburn says ad proposal packages should include OTT advertising. “You have to remember to include that in your package, not have OTT be optional.”
Sponsored Content Opportunities
While bundling is a strategy that makes a lot of sense for OTT ad sales, what excites Blackburn is sponsored content for its ability to drive revenue. KSL has put together multiple programs along these lines, including a six-part series called Ski Lessons with Andy Phillips, a local Olympian skier. The program was sponsored by Ski Utah, Rocky Mountain Chevy Dealers and Solitude Ski resort.
Blackburn says that when KSL produces content such as the Ski Lessons series, the station builds the cost of production into the package, and the clients pay for it. KSL then promotes these videos via OTT, the web and social media as well as including snippets in newscasts, and makes the content available to the client for their use, he says.
“If we provide video they can use and share on their social media, their websites, in their offices, then that tends to give more value to it,” Blackburn says. “I think that’s the future of OTT, more client-driven content that the viewers want to see.”
No Cannibalism Worries
Drake believes that there will be double-digit growth year-over-year across the OTT ecosystem. In the early days of OTT, she says, some in the industry feared that advertisers would “pull money out of TV left and right.”
They didn’t, she says, adding advertisers tend to view OTT as a complement to the broadcast spend.
But OTT is definitely claiming more ad dollars than before. Blackburn says KSL has doubled its OTT ad sales budget from 2019 levels.
Jon Accarrino, the executive director of business development for Bonneville Salt Lake City, which owns KSL, attributes some of that to the “Olympic halo.” Blackburn expects the station to produce a lot of Olympics stories as well as “sponsorable” athlete profiles.
To maximize KSL’s revenue from digital products and pre-roll inventory, the group follows a three-tiered system, Accarrino says. Local buyers get first priority, followed by national buyers, which typically buy larger packages at lower rates, he says. The final tier — about 15-20% of KSL’s OTT sales — is remnant programmatic.
The strategy is working, Blackburn says, because KSL is making a profit on OTT sales. “We are happy with where the net comes out to and would be even happier if we could grow the usage,” he says.
According to Rayburn, however, while companies say they are bringing in money on OTT ad sales, it’s unclear how many are profitable.
“We haven’t seen many examples talked about publically,” Rayburn says. “Some companies say they’re getting close or feel like they can in the next couple of years.”
And even if companies do talk about CPMs, Rayburn says, there are so many variables such as types of ad, the targeting and whether it’s live or on demand that it’s impossible to make true comparisons.
Not only is there a lot of confusion about what terms like OTT mean and how different metrics like CPMs stack up, but OTT is an ecosystem without standards, Rayburn says. In the broadcast world, for instance, high-definition is a well-defined standard.
“On the internet, we don’t have a standard definition of high definition or 4K,” Rayburn says. “We don’t even have a definition of how to determine quality on the internet, and on top of that, we don’t have any definition of standards for ads.”
For example, he says, a nine-second feature clip might be preceded by 15 seconds of pre-roll.
“That doesn’t make any sense from a consumer engagement perspective,” Rayburn says.
And ad technology problems can further affect the user experience.
“Ad vendors like to talk about how great their platforms are” in terms of target and scale, Rayburn says. “The fact is, they don’t work as advertised a lot of the time.”
Common problems include dishing up the wrong ad, not triggering the ad in time, cutting the ad off, delivering the ad in a wrong window size and brand burnout caused by showing the same pre-roll ad way too many times to one viewer, he says.
“There are a lot of technology problems when it comes to the ad stack for OTT,” Rayburn says. “We’ve had these problems a long time, and companies are trying to solve them.”