The XFronts Were A Resounding Success, From Every Perspective

I delayed my blog this month until after the XFronts, as I knew the OTT.X conference would give me a lot to write about. First off, it was an incredible production, and Los Angeles' Skirball Cultural Center was an incredible venue. Second, the combination of a content track and a media & advertising track was brilliant, as it gave conference attendees a more holistic view of the Connected TV market.

If there were two general takeaways from the event for me, personally, they would have to be that brands are going to more-closely align their media spend with content moving forward, and that marketers consider Connected TV to be as much of a performance vehicle as a branding vehicle. These are two very positive outcomes.

In the space below, I have placed the first 600 words of my Keynote address. I hope you find them interesting and provocative. To access the entire Keynote, it will be available On-Demand at the OTT.X website, if it is not already.

First 600 words...

The world began to change for television advertisers the day we figured out how to connect the Internet to a television screen… and, as a result, add more science to the art of TV advertising. Advanced TV, in its various forms, already reaches most US television households. Almost nine in 10 US TV households own at least one OTT device. Either an integrated smart TV that connects directly to the Internet, or one of the many OTT devices: A Roku, Apple TV, Amazon Fire Stick, Xumo Stream Box, PlayStation, Xbox, or an Internet-connected Blu-ray player. And how Vizio is going to be morphed, with the pending Walmart acquisition remains to be seen? But that’s another matter, for another day.

Those devices have decisively changed how Americans watch TV. By the beginning of 2022, almost 240 million Americans, roughly 70 percent of the population, used one or more streaming video services through individual or family subscriptions. By comparison, at the same point, the traditional US pay TV market — made up of cable and satellite TV users — fell to an estimated 150 million viewers. That was down from 175 million just two years earlier. So streaming is growing at leaps and bounds — while the pay TV market is finding it impossible to maintain its footing.

So how are we watching TV nowadays? The Top Five answers are on the board. All of these different, viewing opportunities are part of the larger Advanced TV offering. So before we get in the weeds… let’s settle on the fact that today’s discussion will center almost entirely around Connected TV. Connected TV is a device that supports video streaming platforms, and is embedded in a Smart TV or connected to a television. Connected TV is often confused, or used interchangeably, with OTT (or Over-The-Top Television), which refers to the method of streaming video content. For clarity sake, today, we will not be talking about Data-Driven Digital Television, Addressable Television, Converged Television or Video On Demand.

The shift to streaming is reflected in what Americans watch, as well as how they watch. In 2021, streaming video service providers produced more new TV shows than all cable TV networks combined, according to entertainment newspaper, Variety. That came just two years after the streaming-service sector passed broadcast TV in total TV viewership. I would bet most everyone in this room, today, watched the Emmys this past January, where Netflix and Apple TV+ combined for a whopping 88 nominations and 26 wins. If you factor in Disney+, Prime Video, and The Roku Channel, you see how much content is being produced, today, by streaming companies.

These OTT devices are connecting companies and brands with the single most-valuable demographic group on the planet: American Millennials. The most recent data shows some 60 million Millennials use OTT devices and that audience is expected to grow to more than 62 million by 2025… One can never accuse the advertising community of ignoring a golden opportunity.

The total U.S. ad spend devoted to Connected TV users more than doubled in the two years from 2020 to 2022, from an estimated $9 billion to approximately $19 billion, according to the market research company, Insider Intelligence. The researcher is forecasting that the number is likely to approach $30 billion by the end of this year and over $40 billion in 2027.  In just under 5 years we’ve seen more than a 300% increase in ad spending here. That ad spend growth will be fueled in the years ahead by both a larger streaming audience and by rising CPMs.