As Viewing on Smart TVs Increases, Advertisers Gain Interest

More Americans are watching TV on-demand and over-the-top. Although some services such as Netflix and Amazon Prime are ad-free, the number of OTT ads is growing. Pivotal Research reports that smart TV viewing skyrocketed 65 percent over the last year, accounting now for 8.1 percent of TV viewing for the 18-to-49 demographic. In line with that finding, Innovid, which serves ads to TV apps and web video outlets, says the share of ads now placed on connected TVs has quadrupled in the same time frame.

The Wall Street Journal reports that ad buyer Modi Media, which focuses on new forms of TV advertising within GroupM, says over 37 million U.S. households watched ad-supported shows on connected TVs over the past year. “There’s been a huge explosion of growth,” said Modi senior partner Seth Walters. “We’ve leaned into connected TV in a big way.”

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Although it’s still a nascent market, ad-supported smart TV can reach cord-cutters and others who don’t want live linear TV.

Not everyone agrees on the definition of connected TV, with some ad buyers excluding mobile viewing. But growth in the sector is expected to continue. NBCUniversal, for example, found that in Q3 of this year, “connected TV viewing of primetime shows accounted for 24 percent of the digital video viewing,” compared to just 4 percent two years ago.

Despite heavy Olympics viewing, NBCU executive Krishan Bhatia says that about 75 percent of the increased viewing is driven by primetime entertainment. But NBCU counts video-on-demand as connected TV, something others in the media business do not.

For advertisers, OTT views hit a “sweet spot,” combining “premium content and big audiences … with digital advertising’s precision targeting.”

“It allows advertisers to be more targeted in an environment that feels good,” said Arun Kumar, global president of IPG Mediabrands’ digital ad buying division Cadreon. “There is genuinely a lot of interest across all clients.” Kumar notes, however, that this kind of ad buying is still fragmented, with the ability to measure it “in its infancy.”

WSJ reports that, “right now, some OTT ad inventory is sold as part of big upfront TV packages alongside traditional cable and broadcast ad time,” whereas “some is sold by companies like Roku or ad tech middlemen,” and “in a few cases, these ads are purchased programmatically.”

Publicis-owned media company Mediavest/Spark executive Jonathan Bokor believes that, “the entire TV market will eventually all be OTT advertising,” and that “digital buyers would prefer to purchase these ads via software and hope to avoid paying primetime TV prices.”

“How connected TV ads get bought and sold over the long haul is subject to debate,” he says. “We want it to be programmatic. TV companies want to make it incremental to their Nielsen ratings for traditional TV, in order to remedy the decline in ratings.”