- A growing number of ad-tech companies are moving into over-the-top advertising as ad dollars shift from TV to streaming video.
- While ad-tech companies are clamoring to get a share of the OTT ad market that’s coming from the $70 billion in TV advertising, not allad-tech companies will actually be able to deliver.
- Business Insider polled a handful of ad buyers and compiled a list of 13 ad-tech companies that are at the forefront of shaping the future of OTT advertising.
More people are cutting the cord and advertisers are clamoring to use data to target and measure video campaigns. Still, the $70 billion TV advertising industry has operated the same way it has for decades.
Ad-tech firms say it’s ripe for disruption, and a cottage industry of companies has sprung up to grab a piece of the revenue flowing to OTT advertising.
They’re responding with everything from software firms that help brands analyze which programs they should advertise in to programmatic players that help publishers make money from OTT apps.
Like the sprawling number of ad-tech companies that rose to power ads on publishers’ websites and mobile apps earlier, the rise in OTT ad tech companies specializing in OTT is one more challenge for marketers to navigate.
Read more: Ad-tech companies and networks are pinning hopes on streaming TV, but OTT is full of headaches for marketers
“If you had aLumascape around OTT, it’s endless in terms of the number of partners who have access to the inventory and the ad-tech that sits behind it,” said Mike Law, executive vice president and managing director of US media investment at Dentsu Aegis Network.
One of ad buyers’ biggest frustrations is that each ad-tech firm controls a small amount of the OTT ecosystem, making it hard to find the same scale of TV in OTT apps.
“We’re very bullish on OTT overall, and we’re looking for a couple of other additional scaled players to come to the market to be able to continue to move dollars in that direction,” said David Cohen, president of North America at Magna Global. “One of the challenges with OTT is that it doesn’t exist in a vacuum — you want to understand the trade-offs in moving from OTT to YouTube and Facebook. Trying to get someone that can create an apples-to-apples comparison is important.”
Agencies often end up using multiple companies to tackle the same problem. For example, an agency may work with two or three tech firms to measure the impact of their ad spending because each firm’s capabilities are different.
“The reality is that across all of these partners, it’s a little bit of a patchwork quilt,” said Lisa Giacosa, EVP and global managing director, head of data technology, analytics and insights at Spark Foundry.
Picking the top OTT ad-tech players
Business Insider talked to a handful of ad buyers to figure out which ad-tech companies are furthest ahead with OTT. We also talked to the companies themselves and looked at factors including their clients, reputation, and how much of their business is related to OTT.
It’s a sign of OTT’s infancy that several companies on this list work with both publishers and advertisers, which is unlike online advertising. The same company that helps publishers monetize their content might also find an advertiser to fill the ad space. That’s because publishers and advertisers are still figuring out OTT, and the rules are still taking shape.
Roku and Hulu are known as platforms for distributing content but are on the list because they’ve each built their own ad-tech tools and stacks specifically for OTT.
There are also a few notable companies that we didn’t include. Despite their massive clout in linear TV, Nielsen and Comscore are not on this list because digital measurement companies can gauge viewership at a more granular level than Nielsen and Comscore can, said an agency source.
Also missing is AT&T’s advertising and analytics firmXandr, which has bold ambitions to change TV and digital advertising but is too new to be considered a formidable player. The company powers OTT advertising for AT&T’s DirecTV Now and WatchTV, and Xandr reportedly plans to launch a marketplace for buyers this year.
Below are the 13 ad-tech companies that stand to win the most in OTT, listed alphabetically.
Data Plus Math: Wants TV measurement to work like Facebook
Marketers love to talk about how well Facebook and Google ads perform, but Data Plus Math thinks TV deserves more credit.
The 3-year-old firm helps advertisers track attribution, a measurement of real-world stats like how many people visit a website or go to a store after seeing an ad. Networks like ABC Disney andNBCUniversal have been pushing advertisers to buy more data-driven campaigns and use Data Plus Math to prove that OTT and linear TV ads are effective for more than brand building. The firm also works with advertisers with a similar pitch.
Here’s how it works: Data Plus Math pulls data from smart TVs, set-top boxes, and OTT apps. Advertisers then tag ads and websites that track people who visited a website after seeing the advertiser’s video ad. The firm also works with location-based ad-tech companies to tell if someone visited a store or location after seeing an ad.
In theory, the method can prove the TV industry’s long-held claim that commercials cause consumers to buy products.
“The sellers of TV are under-credited and undervalued because they’re only measuring audience delivery, not outcomes,” said John Hoctor, co-founder and CEO of Data Plus Math. “Attribution is being brought up in the beginning of buys, so there will be networks who are aggressively pushing it as part of their upfront conversations.”
In June, LiveRampacquired the firm in a cash-and-stock deal valued at $150 million.
FreeWheel: Wants to build a marketplace for OTT
Media giant Comcast is betting big on OTT, and it’s doing that with FreeWheel.
There are three arms to FreeWheel’s business: Publishers, Advertisers and Markets.
FreeWheel’s ad server powers most of the publishers’ OTT apps that don’t work with Google, including Dish’s Sling TV. It also provides tools for publishers to manage advertising deals, pricing and the ability to swap out creative in real-time using a technique calleddynamic ad insertion.
FreeWheel historically worked with publishers but is making inroads with advertisers, too. It recently formed a unit called FreeWheel Media that helps marketers plan, buy, and measure cross-screen commercials.
Through a deal with smart TV manufacturer Vizio’s analytics arm Inscape, advertisers can use viewing data from 10 million smart TVs to create ad-targeting audiences. Freewheel also works with 20 measurement firms, including Data Plus Math, to analyze attribution and measurement for advertisers.
“We’re trying to solve fragmentation that hits a bunch of dimensions [such as] measurement and attribution so that advertisers can get scale,” said Neil Smith, general manager of FreeWheel Markets.
Comcast is looking to acquire ad-tech companies DataXu and Cadent that would beef up its offerings for advertisers,AdExchanger reported. DataXu and Cadent have platforms for brands to buy targeted TV and OTT ads. FreeWheel declined to comment on possible acquisitions.
Google: Wants to dominate ad serving
Along with Comcast’s FreeWheel, Google is the other main option for serving ads in streaming TV apps. Google is focused on becoming publishers’ad server of choice through Google Ad Manager, its technology that in part manages ads for more than 30 publishers including AMC, A&E Networks and CBS’ All Access.
According to Google, it doubled the number of ad impressions it served to connected TVs through Google Ad Manager in 2018 from the prior year.
Google gota big credibility boost in November when Disney ditched FreeWheel and moved all of its business, including ABC, ESPN, Marvel and Star Wars, to Google Ad Manager.
Expect Google to do more deals with networks as buyers ask for data to connect separate ad buys.
“One of the things that’s clouding the space a little bit is you buy inventory from lots of different partners,” said Dentsu Aegis Network’s Law. “It’s very difficult to manage the frequency of that within a platform. You might have three different buys in a show, but all the consumer sees is one set of ads.”
Hulu: Wants to serve digital ads in live channels
Hulu controls some of the most sought-after OTT ad space because of its streaming rights with major broadcasters. The company reported $1.5 billion in ad revenue in 2018, a 45% year-over-year increase.
Most of Hulu’s ad inventory is sold through direct deals with advertisers, but the company is beginning to sell some inventory programmatically, which uses bidding to set ad prices.
Hulu works with a handful of ad-tech companies to power its programmatic pipes and builds some of its tech in-house, including its own ad server. Hulu’s ad server only powers its on-demand product, but the company is working to extend it to Hulu Live — its big bet on”skinny bundles” that are a lower-cost alternative to cable. Hulu handles ad sales for more than 10% of the 60 Live channels including CNN, A&E and TNT.
“Delivering viewers the premium ad experience they expect from OTT requires a different approach to ad serving from that of web video,” said Jeremy Helfand, VP and head of advertising platforms at Hulu. “Our ad server is a vital part of what it takes for Hulu to deliver a high-quality, effective experience to advertisers and viewers.”
Neustar: Wants to track OTT ads with sales data
Analytics company Neustar cut its teeth in helping marketers measure ads on Facebook, Google and Snap, and is one of a handful of companies trying to apply granular data to OTT.
Many ad-tech companies are vying to own a piece of OTT measurement, but Neustar’s approach sets itself apart because it uses a technique called multi-touch attribution (or MTA) that marketers have leaned on for years in digital. The method analyzes all of a brand’s advertising and matches it with sale logs to see which channel was most effective. Agency sources said Neustar helps marketers understand the performance of OTT ads as they try to figure out how to divvy up their ad dollars across TV and OTT.
For example, a consumer-packaged goods brand running mobile, desktop, TV and OTT ads works with Neustar to see which format resulted in the biggest sales lift, using data from retailers’ loyalty programs.
The firm also works with marketers to build audience segments for targeting.
“A year ago, there was no capability to incorporate attribution, and now we’re including all the major players and marketers are looking to incorporate it,” said Michael Schoen, general manager of marketing solutions at Neustar.
Roku: Wants to build its own ad-tech
Roku is one of the best-known OTT companies because of its hardware that lets cord-cutters stream video on connected TVs, but the company is alsoaggressively building a big advertising business.
As more people ditch traditional TV, Roku pitches advertisers on its base of 27 million accounts as an alternative to TV.
Roku sells ads in its standalone app and in other publishers’ apps for a reported 30% cut of publishers’ revenue. It runs video and takeover ads on its home page. Roku also provides its own ID software and first-party data to power ad targeting and frequency capping.
Lots of big ad-tech companies like FreeWheel, Google, Innovid and Brightline plug into Roku’s platform to target, serve and measure ads. Using Roku’s first-party data, advertisers can target ads to hundreds of specific audiences like “cord cutters” or “light TV viewers.”
“Why would you spend more money to reach fewer people instead of paying for incremental reach?” said Matthew Anderson, Roku’s chief marketing officer. “If 30% of all TV is OTT, you can’t have 3% of the budgets going to OTT.”
Samba TV: Wants to fix frequency capping with TV data
Analytics company Samba TV was one of the first companies to get its ad-tech hooks into smart TVs in 2008, and its business has grown as more consumers buy connected TVs.
Samba has viewership-tracking technology that’s built into TVs from 14 manufacturers including Sony and Toshiba. Consumers opt-in to share their viewing habits and that information is matched with data from cable boxes and OTT apps. Brands pay to use the data to target ads.
The company also tags OTT, TV and digital ads with an anonymous ID that can be matched with third-party data to measure which ads drove sales. CEO Ashwin Navin said the company is also working to cap frequency of OTT ads to prevent the same ad from being repeatedly shown to viewers.
“It’s a huge problem,” he said. “The entire ad-tech ecosystem completely failed on this because there’s no way to manage frequency across platforms.”
Samba has been in a legal battle with analytics company Alphonso for several years, showing how competitive the connected TV space is for advertising firms. Privacy advocates allege that consumers do not opt-in to share information collected by both ad-tech companies, raising privacy questions.
Regardless, Samba has deals with holding companies and has raised $45 million from investors including Interpublic Group and MDC Ventures.
SpotX: Wants to help OTT ads scale
Networks typically sell OTT inventory by including it in bigger ad TV and web video ad deals, which takes premium ad inventory off the table for advertisers who just want to buy it digitally.
“A lot of digital buyers don’t understand that when you’re buying from pure-play OTT providers, you’re actually buying out of a different bucket of content than when you buy linear television,” said Jonathan Steuer, chief research officer at Omnicom Media Group.
But a growing number of digital publishers like Vudu and FuboTV are creating content specifically for connected devices. SpotX helps publishers like Walmart’s Vudu and FuboTV sell their OTT ads by rolling up ad space into packages so that advertisers can run ads in multiple apps at the same time.
SpotX provides similar technology for web and mobile publishers, but OTT accounted for 60% of advertiser spend on SpotX’s platform in December. Connected-TV spend on SpotX overall grew 426% year-over-year in 2018.
“With the growth of these OTT services, it’s created so much inventory for programmers to sell,” said Mike Laband, SVP of platform at SpotX. “Owned-and-operated apps tend to be some of the first content that gets sold but virtual MVPDs have created a lot more [ad space].” MVPDs are services like DirecTV Now, FuboTV and YouTube Live that distribute content but don’t control costs or packages.
SpotX also helps publishers organize their OTT inventory intoprogrammatic guaranteed deals and private marketplaces so that advertisers can target and buy a publishers’ ads without having to go direct.
Telaria: Wants to power publishers’ OTT pipes
Doug Campbell, chief strategy officer at Telaria, said his firm solves a major issue that publishers aren’t prepared for when expanding from web to OTT advertising: Ad pods, commercial breaks that typically contain two or three ads.
Telaria helps publishers manage their ad pods and can fill ad slots or change their order through dynamic ad insertion.
“It’s not like display where you have one ad space where you throw in an ad and move on — this gets very complicated,” Campbell said. “In ad pods, you have different sets of ads and things like competitive separation, brand safety and frequency capping.”
Campbell said his firm helps publishers without large sales teams sell ads against the increasing amount of OTT content they’re cranking out. Publishers including Hulu and Cheddar pay Telaria a percentage of their ad revenue to sell their ad space programmatically. In this way, OTT advertising has gone from 2% of Telaria’s revenue to one third in the past year and a half.
The company recently inked a deal with ZypMedia to helplocal publishers like Sinclair Broadcast Group that historically have less resources than big publishers to sell OTT ads.
The Trade Desk: Wants to buy TV ads programmatically
After Google, The Trade Desk is the biggest ad-tech company that helps advertisers buy programmatic ads.
Increasingly, those ads they’re buying are OTT. During itsfourth-quarter earnings call, the company reported that spending on connected TVs using its software increased 525% year-over-year and that OTT inventory from publishers where it buys ads increased sixfold in 2018.
The Trade Desk helps media buyers buy OTT ads in networks’ apps like A+E Networks, CBS, Hulu and in live TV services including Sling TV. More than 160 advertisers spent more than $100,000 on OTT ads using The Trade Desk’s technology during the fourth-quarter.
Tim Sims, SVP of inventory partnerships at The Trade Desk, said that the majority of brands buying OTT ads also buy display and mobile ads with The Trade Desk, suggesting that budgets are coming from digital rather than TV budgets that are still dominated by big brands.
TruOptik: Wants to track how many houses see OTT ads
Tru Optik wants to prove that OTT ads can be targeted just like display ads.
The 6-year-old firm acts as a “household graph” that can tell how many times a member of a household saw an ad on a specific OTT device. Tru Optik pulls together census data and scripts that track billions of ad impressions served in 80 million homes to help advertisers target ads in apps like Xumo and Pluto TV.
In this way, advertisers can zero in on people who are, say, in the market for a pick-up truck or make more than $100,000 a year.
“Television is usually sold at the household level, and there’s multiple individuals that can see an ad on a single TV,” said Tru Optik CEO Andre Swanston. “You may pay twice as much to advertise on a 55-inch smart TV than you would on a five-inch smartphone.”
Most recently, Tru Optik has started working with advertisers to track attribution and measurement after a campaign runs to ensure that ads run where they are supposed to.
TVision: Wants to track eye movement on ads
Think of TVision as the TV version of digital analytics companies Moat or Integral Ad Sciencethat track viewability.
The company collects viewing data from a panel of 5,000 households that agree to share their TV habits by installing a device the size of a Roku stick next to their TVs at home. In exchange, panelists receive a small amount of money each month, similar to a market research study.
A study between IPG Media Lab and TVision showed that 71% of TV ads that aired during the last six months of 2018 were deemed viewable compared to 69% of digital video ads. The study covered 5,388 people who watched nearly 3 million ads.
The TVision devices use computer-vision technology to measure when the TV is on and how many people are in the room. It can then track which OTT apps, channels and ads people are watching. Luke McGuinness, president of TVision, said facial-recognition technology can detect if someone is looking at their phone while a commercial airs. As for privacy concerns, he said the data is anonymized and that TVision doesn’t hold on to the data.
Brands use this data to adjust the time and length of ad campaigns. An advertiser could chop a commercial from 30 to 15 seconds if people only pay attention to the first half of an ad, for example. McGuinness wouldn’t name TVision’s advertiser clients but said that a recent Super Bowl advertiser has used the technology.
Networks like AMC Networks, meanwhile, use TVision to see how many people watch programming on its channel and competitors at a specific time. They can then tweak schedules and find the best programs and time of day for advertisers to run ads.
VideoAmp: Wants to bring together TV and digital buyers
One of buyers’ biggest frustrations with OTT is that it sits between traditional TV buyers who have bought ads the same way for decades and digital buyers who don’t understand the TV marketplace, making it unclear which group is responsible for buying OTT advertising.
Similar to other measurement companies, VideoAmp collects anonymous data from smart TV manufacturers, set-top boxes and digital data to see what shows people watch and create audience segments for ad targeting.
Agencies say what sets VideoAmp apart is that it has a self-service platform, whichagencies like Omnicom use to plan and measure their digital and TV media spending. Pricing is based on a software-as-a-service model where advertisers pay a fee to access the platform, then pay extra to access a data segment or measurement function. Having TV and OTT data on the same platform makes it easier for traditional TV buyers to compare the two, said VideoAmp chief strategy officer Jay Prasad.
After making inroads with agencies, VideoAmp is also working to give networks like clients like NBCUniversal access to its platform. Prasad said networks use the platform to better understand viewership on competing networks and look at data to see how many people tune-in for TVs.
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