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The evolution of OTT advertising logic

群邑智库 · 公众号 · · 2021-04-21 18:00

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OTT has been commercialized for many years, and user behavior of OTT is changing in the post-pandemic period. Hence, how exactly the user behavior changes and how the OTT advertising logic evolves? In the issue of Media Express, GroupM Knowledge will present you with OTT consumer and market analysis.

Key takeaways are as below:

Not only a big screen, but also a bigger pad/phone, the usage of OTT becomes more personal: As the interactive function of OTT device gets enhanced and OTT application gets enriched, more and more consumers take an OTT device as a bigger pad or bigger cellphone.

The efficiency of OTT advertising increases: The monthly reach, click-through rate and credibility of OTT ads increased notably in the past few years.

The impression of OTT system-level ads gets elevated: In 2020, more consumers were impressed by ads showed in the system level after OTT starting-ups than the year before, especially in Tier 2, 3 and 4 cities. As consumers spend more time on OTT and stay longer in the system level, they are less impressed by OTT starting-up ads.

The synergy between OTT usage scenario and performance-driven platform/social platform is being strengthened: Consumers are becoming even more distracted, as they would either make purchases or search information on their cell phones while they watch OTT. As for advertising coverage, OTT contributes to the unduplicated ad reach towards social media and e-commerce consumers.

Domestic smart TV brands exceed foreign brands in terms of coverage, and there is roughly no difference between domestic and foreign brand consumers’ monthly household income: As domestic smart TV brands upgrade themselves at a rather fast speed, they get chosen by higher-income families. According to GroupM Shan Hai Jin study, the household income of domestic brand consumers has caught up with foreign brand consumers in the past 3 years.

Three serving logic path for OTT advertising: As user behavior changes and OTT advertising resource and technology get further developed, there are currently 3 ad serving logic path for OTT: Reach-oriented, Synergy-oriented, as well as Consensus-oriented.

Consumers

The scale of activated device

According to 3-rd party data, the increasing amount of activated OTT devices (Smart TV+OTT box) has reached 295 million, doubling the number of DTV users.

The ratio of smart TV and OTT box

As for consumer’s most-often used OTT device, the ratio of Smart TV to OTT box was 6:4 in 2018, and changed to 7:3 in 2020, indicating increasing Smart TV’s share.

Not only a big screen, but also a bigger pad/phone, the usage of OTT becomes more personal

Consumers no longer consider OTT just as a big screen. Approximately 20% of consumers take OTT as a device where they can surf on internet. And over 70% of consumers claim that they are the main OTT user in the house. In addition, the percentage of watching VOD on OTT has increased from 30% in 2017 to 50% in 2020. These imply that OTT has become an interactive device in consumers’ mind, instead of a screen that merely take in messages passively. OTT itself also evolve from weak interaction to strong interaction, playing an important role in home appliances and embracing more new applications.

The efficiency of OTT advertising increases

The monthly reach, CTR and credibility of OTT ads rose notably in the past few years. The increasing usage of OTT promoted the ad reach of OTT. And when comparing the growth speed of OTT device with OTT ad reach, it can be found that there are lots of room for advertisements. Moreover, the increasing CTR was boosted by the changing user behavior that OTT are being taken as a bigger pad/phone. As for increasing OTT ad credibility, it’s empowered by leading brands joining and higher quality of OTT content.

The impression of OTT system-level ads get elevated

Comparing 2020 with 2019, more consumers were impressed by ads showed in the system level after OTT starting-ups, especially in lower-tier cities. As consumers spend more time on OTT and stay longer in the system level to interact with it, they are less impressed by OTT-starting-up ads. Instead, ads that come together with content caught more attention.

The synergy between OTT and performance-driven/social platform is being strengthened

Consumers becomes even more distracted, as they use more than one screen (big screen + small screen) at the same time. The percentage of consumers who have searched related information on their cell phones while watch OTT increased in the past 3 years. Other than that, OTT contributes to the unduplicated ad reach towards social media and e-commerce consumers.

Income of domestic brand users has increased significantly

According to GroupM Shan Hai Jin, domestic smart TV brands enjoyed much higher owning rate than foreign brands. In recent years, domestic brands have produced high-end models and more higher-income families then choose domestic brands. In terms of brand consumers’ income, SHARP users have the highest average household income. In terms of city tiers, there is roughly no difference between this two brand consumer groups’ household income in tier 2, 3 & 4.

The evolution of OTT advertising logic

The OTT advertising logic evolves as OTT user behavior changes. As a matter of fact, the popularization of OTT devices took place earlier than user behavior changed. In the early stage, most consumers watched OTT in the same way as they watched traditional TV. Under such circumstance, OTT advertising was a complement to TV/OTV advertising, and the serving logic here was reach-oriented, calculating the mix reach of TV/OTV and OTT. And then, as OTT advertising resource involves programmatic buying, this reach-oriented logic advance to audience-oriented.

When consumers starts to take OTT as a bigger pad/phone, the serving logic evolves into another stage. At this stage, the logic is close to that of digital apps. And as OTT’s system level gets further developed, the digital app-like serving logic are enhanced and new marketing methods turn up. In the foreseeable future, what comes together with popularized OTT is the synergy between OTT platforms and e-commerce/social platforms as ads can be served on these platforms in combinations.

Last but not the least, what always makes OTT unique is its family scenario and has a gathering effect. In other words, the logic here is to reduce the cognitive cost among a certain amount of people. Hence categories that require family decisions, such as car, education, house properties and travels, are suitable in such family scenarios. Moreover, categories that requires consensus, such as luxury, gifts, hotels, gourmet restaurant, are also suitable, because hit dramas/shows/competitions can offer them gathering effect and spread influence in an efficient way. The logic here is so-called consensus-oriented.

GroupM’s ad serving data also verifies the trends mentioned above. Among clients that put emphasis on ad reach and TV/OTV, the percentage of clients who also had OTT ad serving increased from 13% in 2016 to 50% in 2020. From 2018, clients that focus on performance and impact also accelerated their investment on OTT.

Data source:

OTT data-AVC, DTV data-Guideline Research (2020Q1), GroupM Shan Hai Jin

The evolution of OTT advertising logic

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