1.
OTT: What the Living Room Revolution
Means for Brands
September 19, 2014

2.
© 2013 IPG Media Lab. Proprietary & Confidential 2
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually, then
suddenly.”
— Ernest Hemingway,
The Sun Also Rises

3.
In 2013, for the first time since the advent of cable, there was a net loss of subscribers, while connected devices continue to grow.
© 2013 IPG Media Lab. Proprietary & Confidential 3
We’ve hit “Peak Cable"

4.
OTT is slowly but surely taking cable’s marketshare
Over-the-Top (OTT) services and hardware circumvent the traditional framework of pay
TV services like cable and satellite by delivering content to the television over
broadband Internet:
• Over-the-top platforms (e.g. Roku, Smart TVs) are expected to cause a small but
slowly growing cohort of cable/satellite TV subscribers to drop these services over
the next five years (in addition to Millennials coming of age having never subscribed
to traditional services in the first place, a la the decline of landlines).
• The 2014 footprint of OTT devices in the US expected to be 47 million, up 100% over
last year.
© 2013 IPG Media Lab. Proprietary & Confidential 4
Source: MAGNA GLOBAL’s Media Access Quarterly 2014

5.
© 2013 IPG Media Lab. Proprietary & Confidential 5
And it’s not just for tech-savvy
geeks
OTT has infiltrated the average living room through smart TVs, Blu-Ray
players, set-top boxes, and gaming consoles:
• Smart TV footprint in the US is expected to rise from 45 million today
to 78 million by 2018.
• By the end of 2014, the footprint of connected game consoles (e.g.
PS3/4, Xbox 360/ONE) is expected to be 88 million homes.
Source: MAGNA GLOBAL’s Media Access Quarterly 2014
An image from a consumer electronics retailer mailer; note that OTT
services such as Netflix and HuluPlus are clearly advertised

6.
OTT is fundamentally challenging decades-old assumptions
• Why are TV channels numbered?
• Why do viewers have to wait for the program they
want “to be on”?
• Why don’t we have precise targeting and analytics
for TV ads?
• Why is the call to action of most ads “remember
this now, buy later”?
© 2013 IPG Media Lab. Proprietary & Confidential 6

7.
© 2013 IPG Media Lab. Proprietary & Confidential 7
TV is starting to resemble the
content model found on mobile
devices
And it’s no accident: both user interfaces are designed for consuming
concept in the digital age. On OTT platforms, the artificial construct of
numbering content and browsing for “what’s on” melts away: content is
always on; bundles give way to micro-subscriptions.

8.
© 2013 IPG Media Lab. Proprietary & Confidential 8
Business models are evolving
Currently, networks act as intermediaries between
content and brands.
Adver'ser
2
tons
of
money
Network
A
ton
of
money
Content
Owner

9.
OTT delivers content directly to brands and consumers
New models will evolve out of users’ relationship with content
rather than distribution channels.
© 2013 IPG Media Lab. Proprietary & Confidential 9
Adver'ser
Ad
Revenue
Content
Owners
Subscrip'on
Fees
Audience

10.
The wide adoption of OTT viewing will force brands to reconsider everything from how
to buy airtime to how to achieve mass reach. Pre-, mid-, and post-rolls on videos will
continue to resemble the typical 30-second spot, but new tools will become available,
such as:
• Branded content channels
• Interactive, social shopping experiences
• Display ads within the device UX
• Sponsored interactive experiences with an overlay synced to other content
© 2013 IPG Media Lab. Proprietary & Confidential 10
What now for brands?

11.
Buying and measurement will be made for the digital world
Tools and workflow will feel like those used for the web:
• Measurement will resemble web analytics much more than Nielson scores.
• More ad inventory will be bought programmatically through mechanisms not unlike
© 2013 IPG Media Lab. Proprietary & Confidential 11
those found on the web.
• TV ads will be delivered in an addressable fashion, tailored for each household and
often bought in an RTB exchange.

12.
© 2013 IPG Media Lab. Proprietary & Confidential 12
Coming to a living room near you
OTT isn’t going to replace cable tomorrow, or even next year. But if you’re not paying
attention, one day soon you’ll suddenly find:
• Brands will target home viewers based on cross-device behavior and
demographics, down to the individual household level
• On-demand, a la carte programming is the norm
• Consumers will interact with ads using their mobile phones
• Social sharing endpoints will exist throughout entertainment programming,
branded or otherwise

13.
© 2013 IPG Media Lab. Proprietary & Confidential 13
IPG Media Lab releasing a white paper on OTT
The Lab has released an in-depth white paper on the OTT ecosystem and its implications for media
owners and brands, including:
• An analysis on what is delaying changes in viewing behaviors
• A sampling of innovative services and hardware that exemplify the potential for huge changes in
viewing behavior
• Case studies of how marketers are already active in the space
• How incumbent cable and satellite operators are reacting
• A vision for new forms of content and ad inventory in the future
• How this affects the move towards programmatic
Download the full paper here.

14.
© 2013 IPG Media Lab. Proprietary & Confidential 14
Thanks!
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