The rise of OTT has undoubtedly changed the ad targeting game. Driven by cord-cutting and consumer expectation for on-demand access to video content, OTT ad spend has reached an all-time high in recent years. According to TDG Research, it’s expected to be worth more than $40 billion by 2020, which is no surprise when you consider how IP-based content delivery offers a much more accurate way to target audiences down to the household level.

However, while current targeting efforts are a good foundation, and are infinitely better than what’s available with traditional linear TV, they’re capable of going much deeper. The introduction of new user engagement technologies and data analytics capabilities can act like rocket fuel for ad targeting. It’s a change that’s starting to take place across the industry and stands to benefit both OTT TV providers as well as the advertising partners they work with — and it’s an evolution that’s going to impact the way many streaming services operate too.

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Adding rocket fuel to ad targeting

A big driver behind this shift is how video delivery has altered in recent years. Modern streaming platforms operate an end-to-end content delivery model, which already helps to give better insights into individual consumers and how they’re engaging with the service across different devices. What’s changing, though, is more advanced players have started to introduce an intelligent layer of data analytics to these platforms.

Having more advanced data analytics baked into a streaming service like this is what’s helping to drive the fundamental shift in how OTT TV services are able to track and manage viewer engagement to a better degree. In turn, it’s uncovered the future for user-level advertising and is key to being able to target an individual viewer in a way that the industry has been talking about for decades — going beyond the household level to reach the engaged consumer behind the screen.

If OTT TV providers get this right, it’s possible to not only know who’s watching their content and when, but also who is watching and engaging with an ad when shown. The OTT industry is on the cusp of reaching the age of hyper-personalization as a result, giving advertisers the capability to ensure they’re targeting the right person with the right ad at all times, and the tools to identify distinct viewers based on a multi-faceted audience profile rather than simply the type of content they like to watch the most.

This change is creating more relevancy for consumers too. As research from Adlucent suggests 75% of consumers prefer to see fewer ads but ones that are closely aligned to their needs and interests, it’s set to become a win-win for all involved.

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The rise of AVOD

This transition couldn’t come at a better time as the common monetization models behind video streaming services are starting to shift. Traditionally, subscription and catch-up services have held the lion’s share of the video streaming market. Netflix is easily the best example of success in this regard, but that’s not to say it’s the be all and end all when it comes to how consumers engage with on-demand video. Ad-supported platforms (AVOD) are finding their way into our homes in what’s becoming a hugely profitable sustained revenue opportunity given the evolution that’s taking place in OTT TV.

A notable reason for this change is that new reports suggest consumers are starting to hit a cap on how many OTT services they’re willing to pay for. Basically, subscription fatigue has set in. But that’s not necessarily a bad thing. Although this sounds negative on the face of it, the adjustment in consumer perception around SVOD has created a new opportunity for AVOD to come into its own.

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The value of deeper data analytics

Of course, building a loyal audience is a double-edged sword that any streaming service, whether it’s ad-supported or subscription-based, lives and dies upon. However, it’s also an avenue where baking advanced data analytics into the heart of the streaming platform stands to offer a huge benefit.

By taking a deeper dive into user insights and what different types of consumers are engaging with, it’s possible to know much more about each viewer and their likes, dislikes, habits, and preferences. This is important from an advertising perspective, but it has a valuable role to play for marketing efforts too. It’s the key to creating highly engaging and tailored experiences to meet viewer needs and keep them using the service — thereby avoiding churn and pre-empting any issues before they arise.

As the industry shifts towards more AVOD offerings to meet consumer demand, the successful OTT TV providers will, therefore, be those that have a firm grasp on how they can uncover the information needed to not only keep their consumers engaged and coming back for more, but also serve them with advertising that’s targeted and relevant to their needs.

The future of OTT TV

By using more advanced data analytics to underpin future streaming services, behavioral habits can be turned into patterns, patterns into insights, and insights into intelligence that can be used to support the overall growth of the platform — from both an engagement and a bottom-line point of view. When you also consider that advertisers will go where their audience is, and consumer expectation is starting to increasingly move towards AVOD as a monetization medium, the importance of deeper user insight for OTT TV providers is no longer just nice to have — it’s become a necessity.

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