OTT Is the Fastest-Growing Media Segment For Local Advertising
The local advertising marketplace will reach $167.4 billion in 2023.
Video advertising is the “third advertising wave” of the internet: the first wave began in 2000 when people discovered search engines such as Yahoo and Google to explore what the “net” offered. The second wave occurred with the rise of social media, as consumers were now able to find other people on the internet. The third wave is unfolding now, as consumers and small businesses have learned to become content providers themselves, posting videos and opening the door for advertisers to reach their followers.
Local OTT sales and marketing are booming, as a result of the surge of interest in purchasing local OTT advertising. Most small businesses are not highly sophisticated when it comes to producing ads and many are unsure where to start, so local media sales reps — from TV, radio, and newspapers — are evolving to become “local media sales consultants,” selling video production and video placement for local businesses.
It appears that broadcast, cable, outdoor, and print media are starting to turn to OTT as a sure bet for increased ad sales. In April 2022, more than one-third of 220 local media managers surveyed said OTT was their hottest-selling digital product. For 18% of them, it was already their number 1 revenue producer among all digital products, and half of all TV managers who responded said streaming video was their top revenue producer.
So where exactly are budgets for video streaming advertising coming from? Different sources, as it turns out. A third of the advertisers said they created a new budget for OTT ads in 2022. Half said they took money from another media budget. While you might assume that TV or cable represented the largest erosion in media budget, 28% of newspaper advertisers said they carved from their print budget to purchase OTT ads; and 17% of radio buyers said they decreased their radio spending.
Which verticals are embracing local OTT ads?
· Businesses in the large general services vertical (i.e., legal, plumbers and HVAC, utilities, funeral homes, and more) are the highest spenders.
· Automotive ranks second.
· Finally, restaurants, followed by health, and finance/insurance.
OTT is clearly on a roll, and it’s doubtful there’s any turning back. Larger advertisers with more money to experiment are leading the pack. Among more than 2,400 local OTT users surveyed, the total average annual ad budget was $370,173 — more than five times the annual ad budget of non-OTT users ($68,632). And smaller businesses willing to dip their toe in the OTT waters are likely to come out on the winning side of the ledger.
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