Over-the-top local ad spending is expected to exceed $2 billion in 2022, growing at a compound annual rate of 43% since 2020, according to a new report from BIA Advisory Services.
The huge increase makes OTT the fastest growing local advertising platform, according to the report, titled OTT – The Rising Star of Local Ad Spend: Regional and Business Vertical Trends.
“The growing volume of OTT impressions has elevated this channel from a complementary audience reach extension game targeting hard-to-reach audience segments in linear TV, to a full-fledged marketing channel capable of delivering scale ad impressions across demographics and market geographies,” the report states. “At this point, it’s fair to say that sheer number of impressions makes local OTT competitive, but also complementary, both with linear television and digital advertising.
BIA defines OTT ad spend as comprising ad spend targeting local viewers of long-form premium video content delivered via the Internet. He notes that OTT offers marketers some of the best features of traditional and digital media.
“First, as with linear TV, OTT buyers can select ad inventory in premium, brand-safe video environments with data-driven audience targeting joining first- and third-party data in direct commerce and programmatic,” the report said. “Second, digital campaign management tools for optimization and attribution further help marketers create, manage and evaluate campaigns to achieve both brand and activation KPIs.”
The BIA projects ad spend across all local ad media platforms to grow from $138 billion in 2020 to $167 billion in 2022, a compound annual growth rate of 10%. He notes that spending is shifting from traditional media to digital media, which is expected to capture 47.5% of spending in 2022, up from 41.7% in 2020. Behind OTT in terms of growth are digital radio, mobile, magazines and advertisements for PCs and laptops.
Top advertiser categories by OTT spend in 2022 are General Services at $337.2 million, Automotive at $273.2 million, Restaurants at $202 million, Healthcare at 202.8 million and finance and insurance at $182 million.
BIA also expects political campaigns to spend more on OTT.
“The growth and volume of OTT impressions has transformed the local OTT channel from a complementary audience reach extension game into a marketing channel in its own right,” said Rick Ducey, BIA’s Managing Director and author. of the report. “Now, OTT is recognized as a channel capable of delivering large-scale local ad impressions across market demographics and geographies, making it a highly competitive channel across all media.”
The report was sponsored by Vevo, the music video service.
“The data and insights provided by BIA in the report show the effectiveness of local OTT as a competitive and powerful marketing channel,” said Liz Baxter, local advertising manager at Vevo. “As OTT continues to present itself as a win-win solution for advertisers, brands and agencies looking to target local audiences have a valuable new media channel to add to their advertising mix.” Rusun