Five of the largest U.S. pay-TV providers posted subscriber losses during the second quarter as younger viewers increasingly cut the cord.

Fortune.com

The Increase In Cord Cutting

What is Over-The-Top (OTT)?

Over-The-Top Viewing is the use of internet-based viewing services to watch long-form, episodic content. You’ve probably heard or used some of these services. Netflix, Hulu, HBOGo, and Crackle are just a few examples of OTT providers. These allow subscribers to view programs they love with the convenience of watching when they want to and not just when they air. The cost to subscribe to these services is much cheaper than a cable subscription.

I haven’t had a cable subscription for over 10 years now. Do I miss it? Honestly, no I do not. When I want to watch a TV show, I turn on my TV, use my Amazon FireStick, and find the program I want to watch. It’s extremely easy and I don’t find myself flipping through hundreds of channels to try to find a program to watch… ultimately settling on a channel I’m not REALLY interested in watching.

If you don’t have a FireStick like me, that’s okay. Over the top viewing can occur on any of these devices:

1. SmartTV
2. Playstation
3. Xbox
4. Wii
5. Chromecast
6. Computer
7. Mobile Phone
8. Tablet
9. Roku

The list is endless!

Because consumers can use devices they already have, OTT viewing is convenient. It satisfies the “I want it now” need our culture has. Being able to view TV shows you want, when you want them is a massive draw.

It’s also cost efficient. Cable bills can range between $100-$150 per month, sometimes closer to $300! That’s EXPENSIVE. With Over-The-Top viewing, you can subscribe to Hulu, HBO Go, and Netflix all combined for less than $36 per month. Don’t forget about all of the free apps you can download to watch an endless amount of content (ABC, Food Network, HGTV, Spike, to name a few).

You might be thinking, “Isn’t this primarily for the younger, more tech-savvy generation since they know how to use these devices?” But you’re wrong! The average age of OTT viewers in the Norfolk DMA is 41. With 32% of the OTT population being 50 years or older.

Side note: One day I can home from college and found my mom watching Netflix. I asked her how she did that and she replied, “I found it on my phone and used the Chromecast to put it up on the TV.” I was shocked, but later realized that she wants the same things I do: convenient, budget friendly, immediate “TV” viewing.

In the Norfolk DMA alone, there are over 900,000 Viewers of Over-The-Top Viewing (Scarborough Prime Lingo 2016 Release 2).

Why is this important to our advertisers?

Most of these OTT services have commercial breaks. Since there aren’t as many commercials per break, consumers are more willing to watch these commercials. The viewers picked the content and are interested in what happens, so they won’t change the channel when a commercial comes on. Furthermore, some advertisers (ex: Hulu) allow the viewers to customize their own advertising preferences, which makes the ad even more relevant to the individual consumer and prompts more conscious engagement with the ads. The benefit for our clients? Their commercials aren’t surrounded by 5-6 commercials per break, but rather 2-3 per break, depending on the OTT service. This increases ad recall and makes your commercial more effective. Plus, the likelihood of your commercial being skipped is highly unlikely.

As an agency, buying TV commercials in certain areas and for certain demographics can be expensive! For example, buying commercials in Washington DC is much more costly than buying in the Norfolk/Virginia Beach/Newport News area. With OTT, you can target any area for the same price!

Unlike general TV, you can target based on demographics and behaviors to ensure we put your commercial in front of the right consumer. As an example, for our clients in education (universities), we can target adults 18-34 who have a high school degree but are interested in higher education. For a client who is a pediatrician, we can target moms or soon-to-be moms.

Consumers’ behaviors are evolving, and so our marketing methods follow. As cable subscriptions decrease every month, over-the-top viewing becomes increasingly prevalent. Buying ads on OTT services allows you to target your consumer in a cost effective and traceable way, while staying on top of marketing trends.

*Read our next blog post on OTT Tracking and Targeting

Contact us today to learn how we can utilize this medium in your marketing. It costs nothing to ask.