Streaming TV has hit saturation, with the vast majority of TV households now watching at least one over-the-top streaming service (OTT). Encompassing OTT, connected TV and YouTube, this segment continues to grow and present opportunities for advertisers, even amid an economic downturn.
However, despite streaming TV’s advertising potential, major hurdles remain for advertisers regarding media planning, execution and measurement. We recently sat down with Eric Schmitt, Senior Director Analyst in the Gartner Marketing practice, to discuss key questions that will help declutter this evolving advertising landscape within this medium.
Members of the media who would like to speak with Eric regarding this topic can contact Matt.LoDolce@Gartner.com to schedule an interview.
Q: The streaming TV ad seller landscape is crowded, fragmented and confusing. How can marketing leaders take advantage of streaming TV advertising opportunities?
A: Growth in viewership makes streaming an essential component of many media plans, especially B2C and B2C brands. However, down in the execution trenches, the supply-side market for ad inventory is chaotic. The last few years of streaming TV have been a roller coaster of mergers, acquisitions and new streaming service launches and shutdowns. The market is bumping through adolescence, as various streaming services cycle from launch through consolidation — and, in some cases, failure.
To reap the benefits of streaming TV ads, marketing leaders must navigate a fragmented landscape of media options and capabilities with the following in mind:
- Establish key objectives. Streaming TV advertising is most often used to (1) talk to viewers who can’t be reached elsewhere, (2) complement linear TV campaigns and (3) drive direct-response performance advertising.
- Apply integrated video advertising principles. Streaming video advertising on OTT is one segment of a broader advanced TV ad market that includes optimized linear and addressable TV, but audiences are pivoting in large numbers to alternatives. To reset the role of linear TV advertising, digital marketing leaders should downsize wisely and accelerate the integration of TV, streaming TV, and digital and social video.
- Manage streaming TV oversight closely. Marketing leaders need to stay abreast of streaming-related developments in consumer behavior, competitive media tracking and new inventory pools. They must also approve media plans and oversee campaign execution and measurement. Much of this work, from strategy to media buying, is a natural fit for agencies.
Q: Where does streaming TV fit into the marketing organization and budget?
A: Streaming TV advertising still has a prominent place within paid media budgets despite the economic challenges that CMOs currently face, and rightfully so. Keep in mind that streaming TV now accounts for at least two-thirds of TV time spent viewing among 18- to 43-year-olds. That is too valuable a cohort for CMOs not to invest heavily in, no matter what the current economic outlook is.
When it comes to how an organization is formatted to amplify streaming TV advertising, many marketing leaders have distinct TV and digital organizations, internal teams and agencies, with varying media budgeting, planning, buying and measurement practices. A growing number of brands are applying their analytics and data science teams to help break down measurement and planning barriers.
Meanwhile, agencies are pursuing digital-TV cross-pollination, and larger agencies have taken some steps to centralize planning and buying. The nature of streaming TV invites a hybrid approach that draws on both TV and digital skill sets and budgets.
The larger the total paid media budget, the greater the opportunity to use streaming TV for better results and competitive advantage. Unfortunately, more streaming TV spend does not correlate with simpler media planning and budgeting — nor with easy measurement.
Q: What’s the right approach to streaming TV ad targeting and measurement?
A: Streaming TV measurement — like ad measurement in general — is a perennial challenge. Midfunnel and lower-funnel response and conversion measurement of ad campaigns is possible, with plenty of caveats and constraints.
For example, linking connected TV ad impressions to a digital website visit via smartphone is challenging at best. Tying hard impression data to first- or third-party purchase data is feasible, and offerings from third-party measurement vendors in this category are maturing, although privacy constraints loom.
When planning for streaming TV measurement, marketing leaders should expect a patchwork set of imperfect metrics, minimize reliance on the ad seller for measurement and reassess after every campaign.
Regarding targeting, a testing strategy could be applied to learn which streaming services delivered the highest return on ad spend. Of course, some scenarios inherently call for narrow audience targeting.
Targeting capabilities vary by seller, but channel bundler and ad tech providers tend to have the most sophisticated capabilities. For example, some partner with identity and device graph providers to bridge digital audience targeting and measurement to OTT, although these methods may become increasingly less-viable as privacy regulations and consent-based advertising norms evolve.
Gartner clients can read more in “How to Put Streaming TV Advertising to Work” and “Streaming TV Advertising Landscape and Opportunities.”
If you are a member of the media who would like to speak further on these topics with Eric, please contact Matt.LoDolce@Gartner.com. Members of the media can reference this material in their articles with proper attribution to Gartner.