Streaming services are taking the TV marketplace by storm — recent market data found that in 2020, the over-the-top (OTT) content market was worth $45.1 billion and is on track to break $120 billion by 2028.
As the market diversifies, however, effective monetization becomes critical. While subscription-based approaches offer a solid starting point, advertisements remain the real bread-and-butter of OTT revenue. The challenge? Serving up ads that viewers want to see. Traditional TV advertising models, which saw sets of “burned in” ads played at regular intervals during shows, helped brand awareness but didn’t always convince viewers to take action. It makes sense: while demographic research informed the general composition of these ad breaks, all viewers and households saw the same things at the same time.
Today, however, personalization is the path to advertising success. With 71% of consumers saying they’re frustrated if shopping experiences aren’t personal, and targeted ads generating a 38% bump in product revenue, it’s clear that giving viewers the ad content they want is essential for OTT operations.
Achieving this goal, however, requires the right approach: Dynamic ad insertion (DAI). In this piece, we’ll break down the basics of DAI and offer four best practices for streaming services to make the most of dynamic ads.
What is DAI, and How Does it Work?
Dynamic ad insertion technologies allow companies to insert the ads of their choice into digital video streams. Instead of relying on ads burned into actual feeds, advertisers can pick and choose the ads they want to show within OTT offerings to ensure they’re relevant to both the time and the viewer.
In practice, this means that content doesn’t determine the type of ads displayed. Instead, DAI uses first- and third-party data to create viewer profiles which are then used to inform ad delivery and serve more targeted and personalized ads. In other words, the relationship between content and ads becomes fluid rather than static. Unlike the “burned-in” ads of broadcast television, advertisements can be hyper-targeted based on user viewing behavior and historical trends to help increase the chance of user engagement and action.
Four Best Practices for Content Providers
So how do OTT providers make the most of DAI solutions? While the marketplace for this technology is expanding, it’s not enough to simply bring a DAI tool on board and hope for the best. Instead, streaming services need the right strategy in place to generate DAI ROI.
Here are four best practices to help get started with DAI.
Understand the Options
There’s no one-size-fits-all solution for DAI. The most common approach to DAI uses what’s known as server-side ad insertion (SSAI). When video streams are initiated by viewers, the SSAI solution will send out ad requests, typically to multiple ad decision services to get the highest bidding and most relevant ad decisions. These ad decisions are returned to the SSAI provider and “stitched” together with the original content before the OTT service delivers the content to the viewer. This process, known as manifest manipulation, results in a single, linear stream that contains embedded advertisements. From a viewer’s perspective, the transition between content and ad to back again is seamless, TV-like experience. OTT services get the added benefit of avoiding ad blockers when using SSAI.
Prior to the popularization of SSAI, OTT providers typically used client-side ad insertion (CSAI). In CSAI, targeted ads are still inserted into the stream, but instead of the ads being stitched into the stream before delivery, the client (or streaming device) initiates the ad request to the ad decision services itself and manages the switch from content to ad. Depending on network bandwidth and connection stability, however, CSAI may introduce viewing latency or rebuffering.
Pinpoint Personalization Sources
Streaming service providers must also pinpoint potential sources of personalized viewer information to ensure that DAI-delivered advertisements align with user interests.
The most basic type of information available comes from devices used by viewers. By collecting data about the type of devices being used — such as iPhones, Androids, or smart TVs — along with geographic and IP information, providers can start to zero in on user preferences.
Next is first-party data collected by streaming services such as viewing history: What did viewers most recently watch? How long did they spend watching? Based on this data, providers can serve up ads for other relevant content on the service.
Third-party information from consumer data collection companies, like LiveRamp or Experian, can help OTT providers narrow their focus even further and show users ads that are relevant to their current financial and functional situation. In-depth analysis of this information can also provide intent data — the likelihood that viewers are actively considering or looking to purchase products.
Find the Right Partner
One of the biggest challenges for streaming services is understanding how to effectively put together all the pieces and vendor solutions that make up their OTT and DAI platforms. Companies need to understand how to best collect, analyze, and use their first-party data to drive ad decisions that use higher CPMs, and how to properly integrate with DAI providers to provide the most relevant ad experience. As a result, it’s critical to find a development and consulting partner that understands both the technology and the business sides of DAI to help you implement the best-fit solution.
Look to the Future
As the streaming services market continues to expand with more free ad-supported TV (FAST) and ad-based video on demand (AVOD) in addition to subscription-based services, the nature of DAI will change as well.
This started with the shift from traditional ad buying that requires substantial time, effort, and human interaction to programmatic ad buying. This approach makes it possible for advertisers to buy ad space across multiple services at scale, and OTT services to access more advertisers and realize the highest possible CPMs.
DAI is also expanding beyond streaming environments and back to traditional broadcasters with the use of “ad pods” — ready-to-stitch advertisements they can insert directly into their content. There’s also a need for streaming services to consider the continuing push toward cookie depreciation, which will phase out the use of cookies and significantly reduce the volume of third-party data available. Similarly, privacy laws like the California Consumer Privacy Act (CCPA) will give viewers more power to restrict data collection and usage. For content providers to ensure they can deliver targeted, relevant ad insertions, their priority must shift to creating reciprocal, privacy-friendly first-party relationships with customers willing to share their data.
Fincons Group: Delivering on Dynamic Potential
The right DAI platform needs great technology infrastructure bolstered by a framework that helps OTT providers to streamline their revenue generation.
Fincons Group is on the cutting edge of dynamic ad services. Consider one of our recent projects which makes it possible for streaming devices to share dynamic ad revenue with content providers. The result? On-demand ad insertion that offers increased ad inventory and improved ad targeting. With experience in both the technology and business sides of DAI, our teams make it possible for companies to implement the most effective solution while maintaining optimal user experience.
Discover how Fincons Group can help your service deliver on dynamic potential. Let’s talk.
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