Streaming Success: OTT platforms see better than expected ad growth in festive season
As per market estimates, the OTT platforms may grow their ad revenue anywhere between 20% and 30% during the festive quarter
The 2021 festive season has turned out to be better than expected for over the top (OTT) platforms like Disney+ Hotstar, ZEE5, and MX Player, thanks to the presence of tent pole sports and entertainment properties complemented by aggressive spends by brands and marketers.
OTT industry executives say that the October-November-December (OND) period is looking to be a record-breaking quarter for the category in terms of ad growth. While October saw peak advertising, brands continued to spend aggressively throughout November and are expected to shell out ad monies in December as well. As per market estimates, the OTT platforms are expected to grow their ad revenue anywhere between 20% and 30% during the festive quarter.
DDB Mudra Group SVP – Account Management Chirag Bhatia said that the ad spends on OTT platforms during the festive period 2021 is pegged at Rs 1200-1300 crore. "Yes the OTT phenomenon certainly did happen this festive season with more brands than ever lapping on to the online video upsurge trend, specially post the pandemic which got people hungry for new content when TV had almost run out of the same, with these platforms bringing a whole array of new global content leading to people getting hooked," he stated.
Bhatia noted that brands were very quick to follow their consumers leading to ad spends getting diverted to OTTs which was further propelled by events like T20 World Cup overlapping with the festive period. "OTT platforms will benefit hugely by this trend as they could now not only accelerate the pace of content development but also invest more on developing their platform to give viewers a truly state-of-the-art multiscreen personalised viewing experience."
According to him, FMCG, Media & Entertainment, Telecom & Consumer Durables invested heavily in OTTs. “IPL was a saviour in 2020 when the consumer sentiment was still a bit weak due to pandemic. This year we came back with a bang with a much stronger sentiment and an estimated 32-34% growth in OTT’s AdEx," he averred.
Sujata Dwibedy, Group Trading Director, Amplifi, the media investment division of Dentsu International, said that almost 30-40% of the digital AdEx comes from online videos, and the festive quarter contributes to about 30-32% of the annual online video AdEx.
"In 2020, during the festive time, we had seen a 25-30% growth. However, this year, the growth is expected to be even more at about 30-35%. Major reason being that IPL as well as World Cup were aired in festive period starting September. Also, many reality shows are being aired in the last quarter. Most importantly, we have seen a huge surge in new advertisers and non-traditional categories. To top it up, brands which had not been advertising earlier this year are back in full swing. Overall positive sentiments in consumers & advertisers is leading to positive revenue for the OTT players," she stated.
According to a senior ad sales executive with a top OTT platform, the advertisers this time have continued to spend even in November, which was not the case earlier. "Every year, advertising sees a peak till Diwali, following which the advertisers take a step back at least till the first week of December. The advertisers used to go off-air for 15 to 20 days, but that is not happening this time. This time, the month of November has been at par with October which typically doesn't happen. In the OND quarter, October is the biggest month for advertising followed by December. The ICC T20 World Cup coincided with Diwali followed by the India-New Zealand series. The fact that advertising didn't see a lull during November shows that there is appetite in the market," the senior executive elaborated.
He further stated that the base of the advertisers on OTT remains the same, however, the existing advertisers are pumping in more money. He noted that the skew of advertising categories is changing very rapidly on digital. "Before pandemic, traditional categories like FMCG, auto, and handsets were the big spenders on digital. In the last 18 months, it's mostly the new-age categories that are spending big on digital. These advertisers are spending in a big way on digital than on traditional platforms. In the case of new-age brands, the seasonality factor is not that big as they are in a growth phase. These companies have also raised huge amount of capital. A large part of the funding goes into acquiring new customers through advertising."
The executive expects the OTT ad growth to be in the region of 25-30%. "We are experiencing a 25-30% increase over last year. Last year also, we came out of the first Covid-19 wave and every one was on a high. This year, we are able to beat that base by almost a quarter."
The revenue head of another leading OTT platform said that brand building on the back of video has always been a flavour. He added that there are multiple factors that contributed to the AdEx growth on OTT during this festive season.
"The first key factor is that OTTs are a lot more affordable compared to TV. The second key factor is the power of digital with its targeting capabilities and minimal wastage as compared to TV. The third factor is that there are smaller companies who can do targeted messaging on the back of digital and still use video since video production is not very expensive. Over and above that, there is a massive consumer sentiment especially the millenials. This segment is watching more of OTT and less of TV. Any marketer who wants to reach out to them has to do so through the right medium," he elucidated.
The revenue head also said that the month of October witnessed a very large number of advertisers compared to any normal given month. "We typically saw a 50-60% increase in the number of advertisers and a similar increase in the number of campaigns as well. A lot of companies launch a lot of campaigns during Diwali as well. Everyone from auto to handsets to FMCG were there. What we also saw was a very buoyant BFSI since the stock market is doing well and a lot of new companies have come into the ecosystem. We saw a good mix of advertisers."
Zenith India CEO Jai Lala said that OTT is seeing a natural growth due to shift in audience to digital and hence the advertisers. Lala said that this phenomenon got amplified during the festive season where OTTs are expected to log a 20-25% growth.
"For OTT, there is a natural growth which is happening. There is a transition of viewers and advertisers to OTTs. OTT advertising will grow in excess of 20-25%. Obviously, the festive season saw a huge spurt because brands were spending a lot. This is one of the best festive seasons we have seen in a long time. The benefit of that went to OTT also. The presence of IPL and T20 WC also led to incremental growth for OTT as a category. Categories like fintech, edutech, and digital-first brands spent big on OTT because their customer and viewer is already there on these platforms," he said.
Viraj Jit Singh, Senior VP & Head Revenue - MX Player and MX TakaTak, said that September-October period has been better than expected in terms of AdEx growth for OTT platforms. He noted that November is also looking good while December is expected to see a substantial AdEx growth. Buoyed by the growth during the festive quarter, MX Player has already started planning for the next year. "We have started planning for the next year. It's given us confidence what we are going to do next year. The growth is coming from the entry of new clients on OTT as well as increase in budget of existing clients."
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