OTT Will Transform How Local Businesses Connect with Their Customers
In the world of TV advertising, 2019 will be remembered as the tipping point between linear broadcast and OTT streaming for TV viewing. Disney+ and Apple TV+ ushered in new conversations about subscription-based streaming TV. Viacom’s acquisition of PlutoTV at the beginning of the year, followed by its subsequent merger with CBS at the end of the year, changed the game of ad-supported streaming. Additionally, the announced launches of NBC’s Peacock and Quibi are laying the groundwork for a very different future for TV viewing.
When looking out into 2020 through a local media lens, advertisers trying to reach hyper-local audiences will continue to lean in and adopt more digital and over-the-top practices. No longer will businesses consider OTT an add-on to their media plans; rather, it will become the centerpiece to reach local audiences who are turning to free streaming services and apps to watch news and entertainment.
Here are our four top predictions for 2020.
M&A will provide both scale and simplification to the local media experience.
M&A activity is only going to increase in 2020. Instead of content acquisitions, consolidation will continue with purchases of local TV, radio, and media companies to increase buying leverage and better economies of scale. In turn, this offers the ability for corporations to better control and manage their media buying margin off of their O&O properties. In Q4, we saw several local stations change hands. Fox acquired three stations in November. Byron Allen purchased 11 local stations in October. Private equity players will also continue to look for roll-up opportunities.
These larger local media companies will look to reduce their digital/adtech vendor count and thereby simplify processes, workflow, invoicing, and reporting. The result? Improved ability to holistically manage campaigns and generate more efficient results, all while reducing the overall ad-tech tax paid.
Local advertisers will use more OTT.
The future of local advertising is digital and programmatic. With traditional pay-TV households dropping 4% and OTT households increasing 10% in 2020 (eMarketer), local advertisers must adapt and accelerate their transition from traditional media to OTT advertising. In order to meet this demand, local advertisers will have to increase their access to OTT inventory and leverage their local media company’s first-party data to reach transitioning and new audiences to supplement their linear campaigns.
In 2019, ZypMedia saw local advertisers increase their OTT media buying 127% compared to 2018, across nearly every category.
Development of new technology and products aimed to support local advertisers.
In 2020, we’ll see a continued effort from local media companies to develop and roll out new products for their existing salesforce to sell. Consumers love free local content, and in order to stay engaged and competitive in the face of increasing pressure from the likes of Google, Facebook, and even Amazon, local media companies should consider rolling out local-focused OTT apps to make their unique content accessible to local viewers, especially around news and sports.
For example, Sinclair Broadcasting Corp has developed NewsOn, a free, hyper-local news app that is one of the top most-viewed free apps on Roku (NoCable). However, this is just the beginning. As free streaming content gains market share, there will be even more opportunities for local advertisers to find, target, and generate connections with the cord-shavers and cord-cutters that still want their local content.
In fact, ZypMedia conducted a poll with The Harris Poll, and when it comes to consumers that watch free, or ad-supported streaming TV, 62% of consumers that have a preference between watching local or national commercials prefer local ads. That number is slightly more, at 68% for consumers that watch local streaming services. This is particularly true for millennials (defined as ages 18-34) who watch free or ad-supported OTT streaming services. They prefer local ads more than consumers ages 55+.
Increase the efficiency of spend with campaign analytics.
Since local ad budgets are often smaller, local advertisers are more sensitive to waste—whether that be frequency of the same ads or reaching undesirable audiences—and their reach is often targeted to consumers near their locations. Utilizing mid or inflight campaign analytics provides insights for advertisers to make adjustments and improvements of effectiveness and spend on campaigns. For most local advertisers, measurement and attribution on desired outcomes, such as how many consumers visit my location after seeing the ad, is the most important campaign result and in 2020 they will be looking for more accuracy across both.
The new year presents opportunities to do things a little differently than the year before. As ad-supported streaming services and apps continue to grow in popularity and businesses begin to realize the benefits of local OTT targeting, new opportunities will be unlocked.
Ramandeep Ahuja is CTO and co-founder of ZypMedia.