With over 20 million Connected TV households and a wide range of video content, India is one of the world's fastest-growing advertising markets. The growth in CTVs has attracted the brands so much that they have started investing heavily in them. The OTT platforms have also started selling their ad space aggressively on CTVs.
According to a FICCI-EY report, smart CTVs will exceed 40 million by 2025, thereby ending the monopoly of broadcasters on the large screen and leading to around 30% of content consumed on large screens to be social, gaming, digital, etc.
This will lead to availability of more CTV ad inventory for automated auctions. But the question is, should brands deal directly with content platforms or should they take the programmatic route for advertising? The pros and cons of both approaches are yet to be determined.
Salil Kumar, CEO, India Today Group - Digital, said, “Buoyed by connected TV advertising, AajTak was the first one to launch a connected devices feed. We are witnessing a very healthy standalone revenue start for the feed and now AT2 is well on its way to strengthen our offering."
According to Siddharth Dabhade, Managing Director at MiQ, it depends on the goal of the brand. When a brand targets a specific type of content, or targets the relevant audience, then it can engage directly with OTT platforms.
However, if the brand is looking to reach a wider set of audience, an audience targeting methodology can be utilised which will take into account OTTs. This can be achieved with data-driven programmatic advertising, as per Dabhade.
Achyuth Chirravuri, Group Head – Strategy, Carat India, said that the decision usually depends on a range of factors including the size of the client, budget, and objective of the campaign.
He said, programmatic is a good approach when the objective is audience-first rather than platform/content first, as it allows advertisers to run ads on a TG across platforms at a lower CPM. However, premium content (such as sports and shows like KBC and Koffee with Karan) is not available through programmatic and would require direct deals with the publisher.
Rajiv Bakshi, COO - Revenue, ZEE Entertainment Enterprises, India, said, programmatic advertising would comprise about 50% of the ad business on OTT. As per him, Zee5 being one of the earliest proponents of programmatic advertising is the reason behind the biggest advertisers in India preferring it as their go-to platform.
Programmatic advertising on OTT provides higher transparency aiding brands to monitor performance and also allows them to conduct real-time evaluation and modification. It also enables the brands to deliver their messages and access audience cohorts more effectively and efficiently, according to Bakshi.
Nikhil Gandhi, COO, Mx Media, said, “Programmatic advertising allows brands to use automation, buy inventory, target their audience and optimise in real time. With the supply on CTV still growing, the depth of audience understanding, data and insights is still evolving and the inventory is monetised through direct publisher teams at the moment.”
“Brands understand the power of the reach that MX brings with its large base of 200 million users. They have found tremendous success over the years and we now have established deals with many brands. We also get many clients who reach out to us through programmatic buys and our self-serve platform.”
As per Mordon Intelligence, The Indian smart TV and OTT market is expected to register a CAGR of 5% between 2021 and 2026.
With the growing penetration of CTVs in Indian households and the growing number of viewers, advertisers have a pool of active buyers with high purchasing power to target.
Bakshi shared that advertising on CTV will exponentially augment the OTT monetisation capabilities in the years to come. He said, “At Zee5, we have already started witnessing a growing trend of clients apportioning their budget for the CTV audience.”
Marketers and brand custodians have realised this, and once the CTV base reaches a critical mass, it will be one of the most attractive advertising avenues. The ads are delivered through the same exchange as for the mobile, Bakshi added.
Pros and cons of programmatic advertising through OTT and CTV
Digital programmatic advertising through OTT and CTV ads comes with its own set of pros and cons.
Listing the pros of programmatic advertising on OTT, Chirravuri said, it provides audience-first approach with nuanced targeting options (using DMP), it has a lower CPM rate across platforms, and lower budget is required in this, while automated reporting is done on the dashboard, provides access to multiple OTT platforms at once and maintains frequency cap across platforms and avoids audience duplication.
A lot of ad fraud can be done through programmatic advertising which is a major disadvantage. Explaining how MIQ takes care of this, Dabhade explained that first party data has become very critical now. The biggest thing brands need to be doing now is to strengthen their first-party data. A cleanroom technology can help them enrich their first-party data and it has great potential to help brands boost their campaigns.
However, the cons of programmatic OTT includes that it has no access to premium ad units (roadblocks, etc.), premium content, and it involves higher execution time and workload.
According to Bakshi, Zee5 is committed to programmatic advertising as it allows a higher degree of transparency, addressability and precise targeting. They have an ad tech team that guides the new set of marketers.
How does ad revenue sharing happen between OEM and OTT platforms?
OEM deals with OTT platforms are mostly based on the pull of the platform, vis-a-vis the delivery scale that the OEM brings to the table.
Commenting on the ad revenue sharing model between OEM and OTT, Gandhi explained, “Deals range from minimum guarantee arrangements to cost per unit and in some cases, revenue share. MX enjoys a great relationship with most OEMs who understand the value that we bring to the table and so we structure win-win deals with them.”
On the other hand, giving an example of Google TV 360, Dabhade explained the revenue share method. He said that Google TV 360 has various OTTs, connected TVs, inventories and suppliers available through Google TV 360 DSP. From the amount spent on the platform a percentage is shared among the OTTs and connected TV, which is attached to Google's DSP. Hence the revenue sharing takes place between Google, OTTs and CTV inventory players.
Benefits of Programmatic advertising
There are a few factors according to Chirravuri that determine the decision of brands choosing between advertising directly on a particular OTT platform or opting for the programmatic route.
He said that the size of the budget plays an important role, a smaller budget would gain more efficiency on programmatic. Moreover, the audience-first or platform-first method should be followed, the objective is to reach the audience or be present alongside a type of content or ad unit to gain relevance.
Meanwhile, according to Dabhade, programmatic is different from the earlier way of buying the display slot on various websites which used to have an issue of ad overlap. Due to this, brands choose the programmatic way to target their audiences better.
Dabhade added that the process is automated and more efficient. There is a supply exchange and an ad exchange. This helps the brands to reach their maximum audience for a given frequency and can get the best ROI.
Samsung CTV is emerging as a key competitor for OTT-led CTV inventories, as per experts.
MIQ has partnered with Samsung and has complete access to Samsung’s DSP in India. According to Dabhade, Samsung helps them to reach out to the most premium audiences in India. MIQ has access to the ACR data (automatic content recognition data) by which they can help brands target a particular audience through Samsung TV, and IP addresses.
Dabhade went on to add that MIQ and Samsung assist brands in connecting with cord-cutters. For instance, if a brand is running a linear TV campaign that targets 2 million Samsung device users, MIQ will tell the brand how many cord-cutting households they have missed. As a result, they assist brands in focusing on those cord-cutters using Samsung TV.