The New TV – OTT
OTT television is a dumb name: “Over-the-top” followed by video or TV or digital or “place name here.” What it really should be called is “the New TV,” as this is where the viewers are going. Why wait around to see the program you want to see and sit through tons of irrelevant commercials when you can log in to an app and watch what you want to see now? That is what OTT is. Full-episode video viewing online through apps, Smart TV’s or other digital devices and service.
We are really excited this is finally breaking through. Traditional media has been losing its relevance quickly over the past few years without enough options for us to reach our best audiences. TV has always been the best medium for reaching a mass audience, building a brand and driving sales at the same time. Now, with the ability to run ads in online full-episode video players, we can reach the audience we want, when we want it, where we want it, with a near-guaranteed view of our videos. Sweet.
Young people are still watching videos. They just aren’t tuning in to ABC.
Every media sales rep you talk to will likely pitch you OTT video. Lots of people can buy and sell OTT. So here are answers to the questions of what OTT really is, who you should buy it from, how you can target, pricing, and pitfalls you should be wary of.
What is OTT Video?
OTT video is premium full-episode video viewing through a data provider, app or streaming service. This is not in-stream video that starts in the middle of an article just because you visit a web site. You didn’t ask to see that video, which is a key factor. The user for OTT video clicked somewhere to ask to watch a video, and your ad runs before that video or in the middle of the video, and is non-skippable. OTT video may run on Smart TV’s, through apps on TVs, computers, cell phones or tablets, through a Firestick, on Hulu, YouTube TV, a Roku, DirecTV Now, Sling TV, or a host of other video players. The user chooses to watch a video, has to sit through your un-skippable ad, then watches their video. It’s TV, but through a new delivery method. As an example, let’s say a viewer wants to watch Face Off on SyFy, but doesn’t subscribe to cable. Instead of having to watch it at 8pm on a Tuesday, they just log in to an app and watch the program. But first, they have to watch your 30-second non-skippable ad. That is OTT.
You don’t worry about your click through rates (CTR), because people usually don’t click on OTT as they want to see the video after your ad. Be concerned with your view through rate (VTR).
From whom can you buy OTT video?
Pretty much any media rep can sell you OTT video. Radio reps. TV reps. Print reps. Digital media reps. Everyone can buy it and re-sell it, and a lot of media that is hurting out there has created a company or way to do it. But you should consider from whom you should buy it. Why is a radio rep selling you digital video ads across the internet? Are they qualified to offer it? Do they even know what they are selling? Of course, most random media groups are not qualified to sell you OTT video. They don’t know what they are selling, why they are selling it, how to plan your schedule or determine where you will be running. Everyone buys from the same sources, but all OTT video is not created equal. A digital agency or digital media buying service that is a Digital Services Provider is the right group to plan and purchase OTT for your company. They have a seat at the exchange, aren’t going through other middle-men, and are likely charging much lower commission rates than traditional media firms for the same video. They’re probably going to be more in-tune with what they should buy, as well.
How does OTT target viewers?
OTT is the “New TV,” but with greatly enhanced targeting capabilities. On broadcast TV, you are usually looking for a large reach on a demographic, say 18-34 year olds, with those categories pre-determined by Nielsen. On cable TV, you’re able to target more by context…say targeting young people on Adult Swim on TOON. Also with cable, you can target down to the zone level, so maybe just your community instead of the entire DMA. Costs go up on a CPM (Cost per thousand) basis, but you are more targeted with less waste.
OTT is digital media, though, so you can greatly enhance your target viewer, and ONLY pay for those viewers. Geographically you can target down to the zip code level. The age target can be anything you want, say 16-28 years olds instead of 18-34 year olds. You can still target contextually, like running on SyFy’s app. But you can also target by the device someone is using, and by behavioral characteristics they have shown – interest in horror, science fiction, events. And if you have built a list of your own using mobile IDs, e-mails, etc, you can run your videos specifically to this audience, or to a look-alike audience created using your own first-party data.
TV, but only to the people you want to reach.
What does OTT cost?
OTT video is sold on a cost per thousand (CPM) impression basis. Costs will wildly vary based on what you’re buying, who you’re buying it from, the commissions charged, and based on the size of your target audience.
Generally, costs will range between $30 and $50 per thousand impressions. This is roughly the same as cable TV. If it is lower than that, you probably aren’t buying legitimate OTT. If it is more than that, you probably need to find a new provider. This price includes the media sellers fees and commissions.
The rate depends upon your targeting… the smaller the age bracket, geographic area, number of networks or services you’re running with, the higher the price.
OTT pitfalls to look out for…
There are a number of things to be leery of when purchasing OTT, and unfortunately, most of them are caused by people. Fraud is not just about bots clicking on ads. It is very often created in the name of higher profits for the sellers.
- Be wary of Conflicts of Interest. Some digital media firms also own web sites or channels. They might make a 30% commission/fee base overall, but if they run your ad on their site, they make 100%. Make sure you ask and the seller discloses if they own sites and run ads on those sites. If they do, you need to know what percentage of your ads are running on that site. Because maybe it’s a good site for your business, or maybe it’s not. It is always good for the one selling it.
- Be wary of pricing. Some firms charge 40%, 50%, even 80% commission rates. If you’re buying OTT from your radio station, think of how many people have to get paid before they even pay the service they’re buying the ads from. If they sell you a radio ad, they pay 10% commission to the rep. If they sell you OTT, they are paying their sales reps, their data managers, then paying for the video to another group. This can make the prices get really high.
- Be wary of your VTR (View Through Rates). This is the percentage of people that view all the way through your ads. We see rates easily over 90% VTR. Sometimes 98% or 99%. If you’re seeing numbers well below that, you probably aren’t getting 100% legitimate OTT. An easy way for firms to make a higher profit margin is to charge you $40 CPM, then mix in some $6 CPM pre-roll video to distort your numbers.
- Be wary of OTT prices that seem too low to be true. The second part of the point #3 above is that if a group is offering you $20 OTT, then that means they are not purchasing high-level OTT content, or at the least not exclusive that level of content. They are mixing in low-cost pre-roll video to bring down their prices.
At Fearworm, we’re very excited about OTT, the “New TV,” because now we can actually reach a younger haunt and event-going audience with a quality video message. If you’re interested in learning more about how Fearworm can provide OTT video for your event, give us a call or drop an email or message. We’d love to help. And be sure to visit us at Transworld in March, where we’ll be presenting a seminar focusing on the “New TV,” the “New Radio,” and the “New E-Mail” for the modern age, Saturday at 2pm. Even better, this seminar is free. Click here to RSVP.