Do you remember that song, “Video Killed the Radio Star”? I always think of this song whenever I talk to anyone about digital video.
Digital video has been the talk of marketing strategies for years, but it’s popularity is growing — and quickly paying dividends for advertisers. When I talk about digital video, I am talking about OTT/CTV, pre-roll and more. Video consumption is one of the best ways to get your company or product in front of the right people, at just the right time.
What does “cord cutting” mean?
At one point or another in the last few years, you’ve probably heard the term, “cord cutters.” It refers to people who decide they no longer want to pay for and receive a television subscription, like cable or satellite. This doesn't mean these people can’t be marketed to; it just means they are consuming video in different ways than traditional television.
According to eMarketer, more than six million households will cut cable and other paid-for TV subscriptions this year alone. They also predict that by 2024, 46 million more households will be cutting the cord as well which will have a huge impact on television advertising in the future. With the dwindling ability to reach households through television, advertisers are looking for new ways to market to their customers.
So where are people watching video content now, and how can they be reached?
What does OTT and CTV mean?
You may have heard about OTT or CTV the past few years. This stands for over-the-top or connected TV. This refers to content that can be streamed and viewed over the internet on devices such as Smart TVs, Amazon Fire Stick, Roku or Apple TV instead of cable or satellite.
Millions of people are turning to OTT to watch video content instead of traditional TV. Not only are they already paying for internet service, but this means they can eliminate their monthly cable or satellite bills and still watch many of their favorite shows. If you watch Hulu or Netflix (both OTTs) at home, you're already familiar with this option.
In 2019, Business Wire predicted that within five years, streaming viewers would exceed traditional pay TV viewers — and it certainly seems to be moving in that direction.
One of the biggest advantages of advertising on OTT is that it is highly targeted. Instead of casting a wide net approach like traditional cable, OTT gives advertisers the ability to target customers by geography, demographics and more.
Ad spending on OTT has been on the rise for years as more customers cut the cord from traditional pay TV. eMarketer predicts that in 2020 ad spending on OTT will top $151 billion. Especially during an election year where traditional TV buys are scarce, OTT gives advertisers the opportunity to buy TV, but in a new way.
What is pre-roll?
Besides OTT/CTV people are consuming digital video in other ways. YouTube, news websites or any other sites that stream video content will likely show 15 second advertisements before a video starts. This is called pre-roll (or post-roll if it's played after the video ends).
Digital video in this method gives advertisers a different way to reach customers.
YouTube has been the biggest congregate of digital video viewers over the years and sees more than two billion monthly viewers spending more than 250 million hours per month on the site.
Advertising via skippable pre-roll on YouTube is considered by marketers as the most effective format of advertising. Its system of pre-roll advertising bills on a Cost Per View (CPV) format instead of the standard Cost Per Thousand (CPM) most other digital marketing platform use. With CPV, a view is only counted if the viewer watches the ad the whole way through. So, if a viewer skips the ad or leaves the screen while the ad is playing, it is not counted against the advertiser. This gives the advertiser the ability to purchase YouTube pre-roll by views instead of impressions, which can help you maximize your ad budget.
What's more? YouTube ads can also be targeted by demographics, interests and geography. They also have the added benefit of being immediately trackable, so you can see your ad's success in real-time.
If digital video isn’t part of your marketing plan yet, it should be.
Whether it's through streaming or YouTube, people are consuming more video content than ever before. The viewership for both OTT/CTV and YouTube continue to rise, and advertisers now have the ability to target people in new, more cost-effective ways.
The one-size-fits-all approach of traditional cable just doesn't work anymore. If advertisers want to reach their audience, digital video is the way to go.