Unlocking the True Potential of OTT Starts With Assuring Advertising Revenue
Consumer adoption of over-the-top streaming services grew dramatically in 2020, largely fueled by the outbreak of COVID-19 and people looking for safe and healthy alternatives to public activities. That looks to continue this year.
Research findings from Parks Associates released in February reveal that 45 percent of U.S. broadband households subscribe to three or more over-the-top (OTT) services, and that many consumers are looking to add new services to their OTT stack.
The consumer love affair with OTT extends to ad-supported services, such as Pluto TV, Peacock, and Crackle. According to Parks Associates’ research findings from December 2020, 20 percent of U.S. broadband households use ad-supported OTT services.
In general, this points to a bright future for OTT services. However, there is a cloud on the horizon in the form of ad-related problems that left unaddressed could threaten the business viability of OTT services. Low fill rates and ad failures not only jeopardize billing, but also degrade viewer Quality of Experience, driving many away.
Conviva’s “State of Streaming Q4 2020” reports that 40 percent of streaming ads are not delivered as intended. Delays in ads starting are particularly harmful. Twenty percent of the audience will leave if the wait for an ad to start exceeds 5 seconds, says the Conviva report.
Quality, too, is a major factor. Buffering and picture quality, while improving, remain factors that often push viewers away, the report adds.
Improving quality and reducing ad failures protect audience aggregation by minimizing the incidence of viewer frustration over failed ad starts and poor video quality that leads people to tune elsewhere. Further, fewer failures and better quality make it easier for OTT services to maximize revenue.
The Value of Ad Verification
There is a bit of a gold rush happening in ad-supported OTT. Globally, online TV and movie revenues are expected to grow from $83 billion to $167 billion between 2019 and 2025, a 101% increase, according to a projection from Digital TV Research as reported by MediaPost. Of the global total, subscription revenue is anticipated to climb from $48.2 billion to $97.5 billion for the period, a 103% increase. Over the same timeframe, ad-supported revenue will increase 120%, from $24.3 billion to $53.5 billion, according to the report.
A major reason for the ad revenue growth is the desire for advertisers and their agencies to have targeted ad messages delivered to specific audiences. Dynamic Ad Insertion (DAI) technology gives OTT advertisers the access to specific audience demographics. In turn, OTT advertising can demand higher prices.
However, doing so depends on actually delivering the targeted ad as promised to the audience the advertiser seeks. Failure to do so defeats this business model and prevents OTT services from fully cashing in on the opportunity at hand.
Without ad verification, service providers and advertisers run the risk of entering a seemingly endless loop of back and forth over whether or not an OTT ad was delivered as promised. Ad verification becomes the linchpin upon which this entire OTT advertising business model depends. But verifying ads inserted dynamically into programming is no simple task given the added complexity of the DAI processes involved in placing the right ad into the right ad break for the right audience.
Where Errors Can Occur
An ad appearing on screen is the result of a lengthy chain of processes. When something goes wrong anywhere along the way, the consequence could be missed ad opportunities, an incorrect ad appearing, or visual impairments that tend to drive viewers away. Identifying the nature of an error and where it occurred is requisite to reducing ad failures and protecting ad revenue. Achieving that goal requires having visibility of the entire DAI workflow — from content preparation through delivery. Refer to the diagram below.
Along the way, several steps are taken to insert ads dynamically into OTT streaming content. Starting with the content preparation with SCTE-35 markers for ad opportunities, the process moves to transcoders and packagers that coordinate with Placement Opportunity Information Services (POIS) to add, delete or modify ad opportunities.
The transcoder adds EBP markers into the stream for the packager to
use create segments for ad breaks. The packager then decorates the manifest with SCTE-35 syntax to delineate ad boundaries.
From here, the ad-conditioned manifests are stored on the origin server until requested by client streams. At this stage, a manifest manipulator gets the targeted ad content to the personalized client manifest.
At every step along the way, an error can occur that results in an ad failure. Without a comprehensive view of ad propagation, it is cumbersome, if not impossible, to understand the quality of ads and fill rate, how many ad failures occur, the types of failures happening, and the root causes. Worse yet, there is no way to know how many ad failures do not generate any ad impression at all.
When an advertiser calls to ask why a specific ad did not run as promised, tracking down the reason can be difficult because of the sheer amount of information that must be gathered and evaluated.
To find where the failure occurred, some OTT services have cobbled together a set of homegrown and commercially available tools. Whoever searches for the answer as to why a particular ad failed must go from system to system, essentially searching for a needle in a haystack. This process is time-consuming and literally can take all day.
The best approach is to rely on a monitoring solution that offers visibility into each process to make it fast and easy to identify the source of an error. The solution should collect data from monitoring probes to correlate ad-insert data among source, origin, and CDN locations.
It should also monitor manifests, audio, and video quality across all bit rates and identify issues, present all monitoring data in a simple-to-use interface and assist in operations to resolve issues.
Missed ad opportunities directly impact revenue. Failure to deliver the right ad as promised chips away at the business. Left unaddressed, these ad-failures over time can begin to threaten the very economic viability of an OTT service.
The promise of DAI to advertisers is that ads can be far better targeted using this technology, which increases the value of OTT ads. However, to realize that value as revenue, OTT streaming providers need a clear view into each step in the DAI ad fulfillment process.
The danger for those who rely on homegrown monitoring tools is that the process of delivering a certain ad to a specific household is dynamic. The system changes as more people watch. More viewers can mean more network congestion, more hits to origin servers, and more requests made to ad servers—all of which would require a homegrown monitoring tool to adapt on the fly.
Telestream’s iQ Dynamic Ad-Insertion monitoring solution offers visibility into this ever-changing network and the ad fulfillment process, offering comprehensive ad monitoring information from a single screen. It isolates video, audio, and streaming metrics for ad breaks, visually validates ad breaks with thumbnails, and effectively closes the information gap between a service provider and an ad buyer who believes there was a failure to fill.
Having a comprehensive quality assurance solution for DAI makes it easy to identify and mitigate issues protecting Ad revenue to unlock the true potential of OTT streaming video.
- 20% of U.S. broadband households watch ad-supported OTT services.
- OTT revenue worldwide is expected to reach $167 billion by 2025; in the U.S. it will grow to $68 billion.
- The ability to target desired audience demographics with ads makes OTT attractive to advertisers.
- Fully realizing potential revenue opportunities depends upon OTT service providers having visibility into the ad fulfillment process.
- The process of filling OTT ad breaks with targeted advertising is complex, with many possible points of failure.
- Comprehensive monitoring of ad-insertions in this dynamic process is required for OTT operators to achieve their full revenue potential.
- Homegrown ad-insertion monitoring solutions generally lack consistent updates to ensure they remain relevant as network dynamics change parameters and processes.
- Telestream’s iQ ad-insertion monitoring quickly identifies whether and where a problem has occurred so corrective steps can be expedited.