We've reached the inflection point with OTT adoption and things are likely to get even wackier in television buying. Forecasting for traditional television will have close to no accuracy this fall given the change in viewership behavior and programming challenges. There will be a huge opportunity in the scatter market for the savvy buyer.
As advertisers continue to scramble with media spend in the face of the pandemic, I’ll spare you the “unprecedented times” bit and cut right to the chase: we are living in downright wild times for media buying. Current events have accelerated the adoption of OTT viewership and brought it to equal footing with linear television viewing in record time. According to our data, linear TV saw a significant increase in late March, since leveling off, while OTT spiked twice as much in the same period and remains at a 15% increase as we dive into summer.
Only a few months ago, media agencies saw this share shift as a fairly distant future state. Many had just started thinking about how to organize and reposition for this type of change in audience behavior. Cut to summer 2020 and this radical change has taken full effect -- whether agencies, publishers or advertisers were ready for it or not.
While many things are still unclear, one thing is apparent: the most reliable and impactful reach medium we have ever seen in television is moving to OTT environments, where ad load is relatively restricted compared to traditional linear television. It’s also clear that this is happening faster than we, as an industry, are prepared for. It’s a lot to digest, but it’s not all doom and gloom. Let’s explore what this means for the industry and how forward-looking teams can actually take advantage.
Guarantees based on audience are the future
Media companies and publishers that can offer guaranteed audiences on OTT will win share of wallet. What’s the value of a guarantee in 2020? Close to nothing in linear given how much the TV schedule can change on a dime. Take live events and sports for example, we’re already seeing there are no promises in the comeback of sports as the MLB season, and other leagues, get off to a rocky start. Smart advertisers should already be looking to OTT live, OTT AVOD and digital online video (OLV) as their guaranteed reach channel. Leveraging linear will come in as a way to drive additional reach performance via cost-effective CPMs. Guarantees based on audiences make more sense in digital and OTT where there is sustained viewership behavior and the flexibility to deliver ads where the viewers are.
Focus on cross-screen is key
We’re already seeing OTT CPM rates exceed effective CPM rates on linear. According to our data, average linear CPMs are down 17% from last summer. Because we have hit this inflection point earlier than the industry was prepared for, there is a huge opportunity for advertisers who have already embraced cross-screen capabilities, along with aligning their agency teams accordingly. These teams are likely to outperform all others this fall as scatter buying in linear becomes the most effective way to gain reach and performance for campaign delivery. While we have historically looked to digital for incremental reach, this fall, we’ll be looking to linear for that same objective. Upfront guarantees have become more rare and viewership behavior, or in buying terms, “ratings points,” will be unpredictable. For the moment, there is no incentive to buy on a linear guarantee unless the rates drop significantly -- which may actually already be happening.
Opportunity comes to those who wait
Scatter buying on linear will inevitably be where all the action is. Advertisers and media agencies that have turned to solutions like OpenAP will benefit in the wild west that awaits as the summer days dwindle. The ability for advertisers to execute scatter buys without the typical negotiation time frames for linear will be vital to taking advertising dollars off the table for broadcast publishers. Broadcasters that have engaged or invested early in technology to do this are in a great position. The supply side is definitely faced with opportunity, but resource constraints are something to consider as automation in linear is lacking. This fall will be a time when flexibility and automation are most vital to linear buys, a change in the industry that players need to adapt to in order to survive.
I’ll say it again, it is not all doom and gloom. For teams that embrace the future, these coming months could mean a lot of new opportunity and success in their strategies and investments. There’s no turning back now, though, TV viewership will likely never look as it once did -- which is admittedly both exciting and a bit scary. Question is, are you ready?
VideoAmp is a software and data platform that specializes in the measurement and optimization of media investments across linear TV, OTT, digital and walled gardens.
