The online advertising market has become good—scary good—at matching your browsing habits, interests and demographic data with relevant advertisements. Thanks to pervasive data collection and tracking, online ad services know a lot about individual consumers. Using artificial intelligence and real-time bidding networks, marketers are able to quickly customize highly-targeted ads that seemingly follow you around the internet.
It’s no surprise, then, that online advertising has been siphoning up a huge share of advertising dollars, eclipsing TV despite the fact that Americans spend a jaw-dropping amount of time glued to the tube. Indeed, while the online ad industry is expected to continue growing, TV advertising is seen as flatlining.
But while online advertising spending has eclipsed TV, the latter still commands over $70 billion a year in marketing spend. With the rise of OTT services and internet-delivered skinny bundles, TV players have a chance to create the same kinds of data-driven, real-time ad networks that have propelled online advertising to such great heights.
An excellent example is DISH’s recent partnership with Adobe. DISH is putting Sling’s ad inventory into Adobe’s Advertising Cloud platform. Marketers can then bid on ad slots for VOD and livestreaming content and target users based on demographics, content and network. Like online ad marketplaces, this bidding is done via software, not humans (so-called programmatic advertising). Other platforms, including TruOptiks, LightCast and others, offer a similar set of features.
Programmatic advertising is more efficient than human-to-human ad purchasing (the kind that often gets those local car dealerships flooding your cable channels), but it’s not without its pitfalls. When computers and software are arbitrating what ads go where, some brands may find themselves positioned next to unsavory content (a problem that has bedeviled YouTube recently). Even still, marketers are only increasing the share of money they’re devoting to programmatic ad spending.
As the Interactive Advertising Bureau has observed, OTT has many of the same attributes that have made online advertising so attractive to marketers (specifically precision targeting and automated ad buys), even if the infrastructure for such advertising is still in its infancy. There’s even early evidence of the effectiveness of OTT advertising. A full 98 percent of users consuming advertising on an OTT device sat through the entire ad vs. 84 percent of desktop users, according to a study from FreeWheel. The same study also found that OTT demographics were quite attractive: users were 23 percent younger and earned $10,000 more a year than traditional TV households.