COMMENTARY

Local OTT/CTV Ad Sales: Spending Grows, But Not For Every Marketer

• by Wayne Friedman , Staff Writer, July 16, 2021

Rising efforts around local TV stations streaming/OTT businesses continue at a steady pace -- but still far less than local advertisers invest when it comes to social media spending.

Borrell Associates says this year overall percentage of local businesses using local streaming video/OTT/CTV is at 45% -- up slightly from 43% last year. This compares to 90% that use social media.

Perhaps those nasty “ad tech/agency fees” are an issue.

Of the $45,358 per average individual spend on local OTT/CTV, according to Borrell, marketers also spend $14,013 “service” charges, extra digital-related stuff clients increasingly want, including attribution, targeting, business outcomes, guarantees and other measures.

Estimates are these ad-tech costs would amount to a massive 31% of overall marketing costs. That can’t be good.

Still, other marketers are finding some savings.

For example, there are local advertisers that have someone on staff handing production/advertising -- versus other marketers who make the extra expenditure of employing third-party companies. Including these cost-saving marketers, the overall average expenditure of those who bought OTT/CTV locally was $31,316.

Big TV station groups can sell much of this national/local OTT/CTV advertising, packaging inventory from scores of platforms/apps with their traditional TV ad inventory. All to increase declining traditional TV reach and scale.

It’s a growing business. A BIA Advisory Service estimate says locally targeted OTT ad spending will total $1.13 billion this year.

“While penetration seems to be leveling, spending continues rising,” write the authors of the Borrell report. “In fact, online video marketing showed the highest rate of increase planned for 2021 among all types of marketing expenditures.” It didn’t go into details.

All that tends to suggest those that have tried OTT/CTV for their local TV marketing are seeing good results -- this despite high ad-tech costs that keep local TV marketers grumbling.

But that high cost of ad-tech may not be the only reason. Think OTT/CTV fraud.

Many operations have taken great pains to address how they have big protections against bad actors. For example, Tegna’s longtime Premion business touts the message of Trustworthy Accountability Group’s ‘TAG Certified Against Ad Fraud’ on its site.

But is that enough? Growing overall revenues for TV stations OTT/CTV efforts from a limited pool of early marketer adopters are making a strong case that it is -- at this moment. Will more marketers bite?