CHANTILLY, Va.—As if local broadcasters don’t have enough to worry about with cordcutting and increased competition from streaming services, now a new report from BIA Advisory Services reveals that over-the-top (OTT) is one of the fastest growing channels for local media and increased at a rate of 43% compound annual growth from 2020 to 2022.
Sponsored by Vevio, the report, OTT – The Rising Star in Local Ad Spending: Regional and Business Vertical Trends, shows that BIA forecasts just over $2 billion in OTT advertising in 2022, up from just over $1 billion in 2020. This substantial growth now gives OTT the distinction of being the fastest growing local advertising platform, according to the research firm. BIA defines OTT ad spend as comprising ad spending targeting local viewers of long form premium video content delivered via the Internet.
“The sheer growth and volume of OTT impressions has taken the local OTT channel from a fill-in audience reach extension play to a full-fledged marketing channel,” said Rick Ducey, Managing Director and report author, BIA Advisory Services. “Now, OTT is recognized as a channel capable of delivering local ad impressions at scale across demographics and market geographies, making it a highly competitive channel across all media.”
OTT’s rapid growth in local advertising can be attributed to what BIA calls “the valuable and unique characteristics of both highly engaging premium videos within a brand safe environment that is combined with the data-driven marketing capabilities of digital advertising. This blend also includes the ability to define and activate audience segments with first and third-party data and to target, optimize and measure performance of campaigns.”
Localism has long been the vanguard of broadcasters, but with OTT being able to match and even exceed the ability of streaming services to target specific audiences in specific geographic regions, broadcasters’ best hope to compete with OTT in local advertising is with the adoption of ATSC 3.0, which brings many of the advantages of OTT ad personalization to broadcasting.
And despite recently lowering its 2022 U.S. Local Advertising Forecast estimate to $167.4 billion—a decline from its original estimate of $173.3 billion issued in December 2021—BIA is still predicting hefty growth for TV over-the-air (OTA) spending, which is set to see a +30.3% pop in 2022. and TV digital, which is set to grow 18.3%.
BIA organized its local OTT forecast data in five geographic U.S. regions. Each region has demonstrated high growth rates since 2020, and offers three key takeaways:
- The mid-Atlantic region has the highest growth rate for local OTT ad spend at 53 percent CAGR;
- Northeast has the second highest growth rate at 47 percent CAGR, and
- Pacific Southwest and Pacific Southeast regions show growth just below the overall average of 42.7 percent
The top spending business category in local OTT advertising is the General Services vertical (i.e., legal, plumbers and HVAC, utilities, funeral homes and more), with expected revenues to reach $337.2 million across all U.S. regions in 2022. General Services businesses in the Southeast region will spend the most ($105.7 million) on local OTT. The report also details spending in the automotive, restaurant, health, and finance/insurance verticals.
“The data and insights that BIA provides in the report show the efficacy of local OTT as a competitive and powerful marketing channel,” said Liz Baxter, Director of Local Advertising, Vevo. “As OTT continues to show itself as a win-win for advertisers, brands and agencies that want to target local audiences have a valuable new media channel to add to their advertising mix.”
“OTT – The Rising Star in Local Ad Spending: Regional and Business Vertical Trends,” a BIA Sponsored Research report, sponsored by Vevo, is available for free download here.
