I attended last week's Future TV Advertising Forum in Manchester, where the speakers were, unsurprisingly, optimistic about the topic. It's true: TV certainly isn't going anywhere anytime soon. Linear TV continues to dwarf spend on TV's closest digital equivalent – in-stream video advertising that plays before, during, or after content in a video player (OTT AVOD) – even in advanced OTT video markets such as the UK. However, Ovum forecasts that OTT AVOD will add more than three times as much revenue to the UK industry than linear TV ads over the next five years. Google's YouTube, which dominates the UK OTT AVOD market, and Facebook will take the lion's share of this growth.
Figure 1: YouTube and Facebook will take almost half of UK TV-like video ad revenue growth over the next five years
Source: Ovum's Online Video Advertising Forecast: 2018–23 and Global TV Advertising Forecasts, 2005–23
It's not all doom and gloom for broadcasters, whose overall video ad revenues will continue to eclipse those of OTT players for the next five years. However, broadcasters need to act now to avoid becoming a squeezed middle in the fast-growing OTT AVOD segment. Here's why (and how):
It's true that many consumers remain committed to good old linear TV, but younger viewers are shifting their attention toward OTT video. They can, of course, be reached through OTT broadcaster AVOD platforms across multiple devices: PC, mobile, and – most importantly – connected TVs. Ovum expects the latter to account for the majority of global broadcaster AVOD revenue to 2023. But, while broadcaster AVOD services are certainly popular, they still lack the scale and granularity of YouTube's and Facebook's audience data – even if the quality of such has recently been brought into question. Joined-up approaches to measurement, including data-sharing partnerships between broadcasters and audited measurement initiatives such as BARB's Project Dovetail in the UK, will enable broadcasters to compete favorably with Google and Facebook in terms of quality, scale, and trust.
The immediacy of digital advertising has driven more advertisers to prioritize ad campaigns that deliver short-term results such as driving sales or click-through rates. Many industry watchers are rightly skeptical about the long-term efficiency and effectiveness of this strategy, and linear TV will remain crucial to advertisers looking to harness its mass simultaneous reach while maximizing return on investment. But it would be a mistake to underestimate the importance of digital's ability to deliver short-term results through campaigns that can be easily bought, measured, and attributed. Amazon, which fulfills all stages of the customer journey, has become a major threat to both traditional and digital ad players for exactly this reason. The advent of programmatic TV-ad-buying platforms and addressable TV technology will go some way toward giving TV advertisers the same kind of buying flexibility and targeting options offered by digital incumbents. While linear TV ads are not likely to become directly "shoppable" like Amazon anytime soon, there are significant opportunities for such formats on OTT platforms – something the digital giants are not just exploring but prioritizing. To capture more digital growth, broadcasters must be open to innovating beyond traditional, non-interactive video formats to make their platforms and ads more engaging, interactive, and attributable.
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