Programmatic: The OTT Advertising Evolution
‘Will 2020 become the year that OTT advertising matures?’
Consumers’ appetite for convenience and personalised experiences are growing and OTT services are offering companies a platform to target audiences with tailored ad content. So how does this work and how is ad technology evolving to keep pace with the demand?
Fortunately, the transaction between OTT service and advertiser can be handled in several ways. The OTT service can sell directly to the advertiser; or the advertiser can buy programmatically through an automated process, with the latter making inroads. A recent eMarketer report highlights that programmatic advertising is driving rapid growth in mobile video. In the US, mobile video ads sold programmatically generated $19.93bn in revenues in 2019 and will generate $24.87bn in 2020. At this point, we also need to acknowledge that programmatic offers far more than just bidding in a blind auction process.
To put it simply, the term programmatic refers to the automated buying and selling of data-driven advertising via real–time bidding using a supply-side platform (SSP) connected to a demand-side platform (DSP). Traditionally an OTT service would use a primary ad-server, as technology has evolved, SSP and DSP platforms have been utilised. So, what’s the difference? An ad server, which can be used by advertisers for creative delivery (third-party) or by publishers for managing inventory and campaigns (first party), has been relied on as the go to ad platform technology for many years. However, SSPs were originally created to solve the challenge of selling as many ads as possible, in doing so this provided numerous additional capabilities such as programmatic trading.
In the OTT market, using the direct buying approach OTT services began to realise that there is more supply than demand. In this scenario an OTT service may only sell 80 per cent of their ad slots, leaving 20 percent unsold, even more in some cases. Supply-side platform providers pledged that they would make that 20 per cent available and accessible for more buyers, creating a marketplace where buyers can bid on that inventory.
And so programmatic advertising began to take shape, moulding with the traditional waterfall monetisation flow, where the priority of the advertiser determines in which order access is given to ad inventor. One of the most common issues here is that the OTT service does not get the best available price for their inventory. The amount of inventory that a publisher sells directly has significantly decreased because people want to create efficiencies within their business by automating the buying process. They also want to drive the buying process with data, which programmatic advertising supports. Programmatic therefore supports targeted advertising opportunities: a supply-side platform can offer and a demand-side platform can buy based on location, behaviour, interests for example. This means that ad targeting is more sophisticated, granular and accurate.
We can see that the supply-side and demand-side server platforms have provided sophisticated capabilities but the primary ad server is still a relevant tool to manage inventory and be the primary platform in the monetisation process. It’s important that users decide the best-fit solution for their business, more and more we are seeing OTT services opt for the use of an SSP only or even go down the path of Header Bidding where the auction process is democratised.
Switch Media’s Dynamic Ad Insertion (DAI) technology can integrate with any primary ad server and directly to a supply–side platform via the IAB’s VAST protocol. Our DAI technology offers API support to deliver interoperability with identity management systems, data management platforms and other systems to support more data-driven ad opportunities for advertisers. The market is in a state of flux and we understand that each and every business case has its unique aspects that we work to accommodate.