OTT ads give the industry the greatest opportunity but they also provide its biggest challenge

Over-the-top (OTT) advertising offers marketers a chance to rewrite how television advertising works. And therein lies the industry’s greatest opportunity — and its biggest challenge.

For starters, most agree that the rapid emergence of ad-supported OTT offers media companies and brands a much desired clean slate when it comes to ad formats. After all, why would you want to run the same old 30-second spots, and the same unwieldy ad loads in a medium that is increasingly on demand, right?

If anything, as streaming continues to surge, consumer tolerance for interruptive ads continues to plummet. A generation raised on Netflix may be able to handle some ads, but they hardly have the stomach for 20-plus minutes of non-skippable breaks in a given hour. So, OTT advertising needs to be more respectful of peoples’ time, while taking into account their need for control.

Leading OTT purveyors like Hulu inherently grasp this. The company has been a leader in testing new advertising units, such as ad pods that let users choose what brands they want to hear from, to “pause ads” and longer binge ads. Plus, Hulu counts down how many seconds are left during each commercial break, and caps each break at 90 seconds.

Others in OTT are experimenting as well. Media companies like NBCUniversal are rolling out interactive ads in OTT. Networks like Fox are running very short ad pods. And Netflix, too, sees the value in interactive content, with last year’s “Bandersnatch,” choose-your-own adventure experience for Black Mirror.

This is all great, right? Well…The problem is that advertisers historically always say they want “unique and custom” solutions, but they often don’t want to take the time and energy and money to follow through. It can be costly to create creative for these new, mostly untested formats. And while media companies can tout their “proprietary” ad placements — they also want ads they can sell in big numbers to everybody.

And that’s why the 30 works. Every form of media needs standards.

The industry saw this same dynamic play out a decade or so ago as web video came to prominence. Everyone screamed for customized ads made for the medium, plus some “interactive” video ads. But they ended up with 30s and 15s, for years.

You’re seeing history repeat itself with OTT. Brands are drawn to the idea of new ad units, but given OTT’s current audience size, most have a hard time justifying making OTT-only ads that vary from platform to platform. Especially when they are already spending millions on those 30 second TV ads. Plus, they are drawn to the medium because for many of them, it’s a TV replacement.

That speaks to the other problem facing OTT ad formatting. Even as consumption and user interest soars, the medium can only hold so much. Fundamentally, that means that OTT will have fewer ad breaks and way fewer total ad minutes. How do you shove a $70 billion linear TV ad market built on volume into a smaller pie? You can’t.

That is, unless you can charge more for targeted ads. Or you can prove that custom OTT ads work better and drive higher ROI. That all takes data, and attribution, and sophisticated models. Which after all, is the promise of OTT.

So, what do we do now? It all comes down to leveraging the new, forward-thinking technologies we have access to today, to build a solid infrastructure and framework for OTT advertising that can provide evidence of audiences and ad delivery. Technologies like cryptography, AI and ACR enable the verification and validation of ad delivery to specific audiences, while eliminating suspicious or fraudulent inventory requests. And this paired with the proper pipes to deliver innovative, engaging ad formats will undoubtedly lead to a better value proposition for advertisers, publishers and consumers alike.