Back to the basics: ad creative formats holding back the future of OTT monetization
Thursday, July 21, 2016
An edited version of this article first appeared in Exchangewire.
As outlined by eMarketer, The Diffusion Group reports that the weekly average time spent watching OTT TV with US internet users will rise 425% by 2022, from 3.6 hours to 18.9 hours.
To say the least, this represents a rapid migration to OTT - via Apple TV, Roku, smart TVs, and apps on mobile devices. They also project that OTT ad spend will follow suit, jumping from $8.4 billion in 2015 to $31.5 billion by 2018. In APAC, analysts say the OTT market is set to explode, with OTT ad revenues forecasted to more than triple, reaching $8.7 billion by 2021, up from $2.6 billion in 2015. Which, makes sense -- after all, it’s the closest TV-like experience that digital-minded advertisers can buy.
Not to mention the mobile opportunity for OTT in APAC is enormous. Data from Ooyala’s recent Global Video Index shows 43% of all video viewing is on mobile devices across APAC, with specific countries more mobile-savvy than others. In particular, Singapore leads APAC with 55% of all video viewing occurring on mobile devices, Australia is second at 53%, then Japan at 50%, Indonesia is 49% and South Korea iss 47%.
Though, while the demand and forecasts may tell a strong tale, there’s a fundamental lack of infrastructure and standardization holding the industry back from capitalizing on the projected opportunity.
As with many issues in the ad tech ecosystem, the explanation for this phenomena is multifaceted. At the most basic level, OTT is still a relatively new medium and is competing with linear TV, which still has a significant hold on the market. Then, too, it’s experiencing issues that are common to digital advertising, such as concerns around viewability, fraud, standardization and certainly measurement. But at a more basic level, there are disparities in advertising creative formats between buyers, sellers and third parties.
The disparities in ad creatives have come about because the ecosystem is trying to treat OTT environments like the Web, as if the two are interchangeable, passing along the same ad formats and file types. However, nothing could be further from the truth: serving video advertising for OTT viewing is not a one-size-fits-all process. For example, some streaming devices have stringent protocols (e.g., all content and ads must be HD in MP4 format), while others take walled-garden approaches. The issue grows ever more complex as additional screens, apps and protocols and multiple campaigns are added to the mix.
Since much of OTT viewing is done on a large screen, publishers have a deep interest in curating a high-level experience in high definition. In fact, data from Ooyala’s customer base in APAC showed viewers on connected TVs spend more than 90% of their time with content longer than 10 minutes. Yet, with thousands of buyers producing ad video for dozens of environments, and no agreed upon standards or protocols, at the moment it’s seemingly inevitable that mismatches will occur between what the advertiser sends and what the publisher wants or can manage. Frankly, any mismatched ad in an OTT environment is one too many, and are glaringly problematic for the user experience. Yet with no standard, or checks-and-balances system for matching creative between buyers and publishers, there is nothing to prevent buyers from sending sub-optimal assets.
Current Approaches are Hit or Miss
The industry currently has a piecemeal approach to sync the right creative to the proper use case. On the buy side, advertisers are partial to VPAIDs because it gives them greater control and support for interactive ads. Yet in OTT environments, VPAIDs are less than an ideal approach -- they’re linked to failed ad serving and unfilled inventory, and interactive support simply doesn’t make sense for OTT. When was the last time you interacted with an ad on your Smart TV? Or cared to? It’s the wrong ad for the wrong environment. Furthermore, devices like AppleTVs, XBoxes and Rokus don’t support interactive ads at all, which complicates the situation further.
In an effort to iron out issues with VPAIDs in OTT, the IAB has recommended a shift to VAST 4.0, which allows the buyer to send through several creatives: a mezzanine, a standard mp4, and a VPAID, allowing the publisher to then select which to use. This approach allows the publisher's ad server or player to consume the right ad on the fly for the right format for the device or application. Still, though, environments that run native code, like Apple TV, Xbox etc. aren’t able to run VAST 4.0.
The question comes down to who is ultimately responsible for the quality control for all OTT content - ads and videos alike - between the parties? Is it the connected devices, buyers or publishers?
It largely comes down to the carrot or the stick. Connected devices each have their own proprietary protocols and native languages, and no pressure or incentive to change. For buyers, as long as they’re reaching the right audience and impression goals, they, too, have no incentive or pressure to change. So, perhaps the publisher does have the responsibility to keep the buy side honest, over communicating and providing the guidance needed to ensure the right format is sent to the right device. After all, at the end of the day, it’s the publisher’s audience and they own the experience. Yet, still, who’s stopping the buyers from sending sub-optimal assets in the first place? The short answer is no one.
Clearly, VAST4.0, VPAID, and the IAB’s efforts therein address some of the issues around monetizing OTT, but many challenges still remain. The bottom line is that publishers need a mechanism to help them increase demand, yet still exercise some control over creative assets, while advertisers want control over creative decision making. Publishers need to make inventory available across third party platforms, and DSPs need to make it easy for advertisers to meet publisher’s needs. The bottom line: if the industry wants TV-like monetization for OTT to truly take off, it has to end this game of responsibility-hot-potato -- that is replete with misplaced fault and a lack of accountability -- and create a cohesive solution to ad format discrepancies.