One of our most frequently asked questions from clients is "what's a good CPM for OTT?"
My answer is usually diplomatic.
But, the correct answer is, "you're asking the wrong first question about OTT."
If you are comparing OTT vendors, the most important metric isn't a number like CPM. It's inventory quality, followed by audience quality.
Recently, we reviewed our inventory against a leading OTT vendor and here is a snapshot of how things stacked up:
Here's a deeper dive into that graphic:
VENDOR XYZ:
FAST Inventory: At least 45% of the inventory was from FAST channels like Pluto, Tubi and Crackle.
LEFT HAND AGENCY:
FAST Inventory: 16.75%
Premium Inventory (non FAST) like Peacock, Paramount, Spectrum, Max and DirecTV were in our top 10 list.
VENDOR XYZ:
Audience: Demo only
LEFT HAND AGENCY:
A variety of audiences designed to maximize delivery to the most likely converting audience. Our audiences are custom made for each advertiser and campaign.
VENDOR XYZ:
Fixed CPM
LEFT HAND AGENCY:
Dynamic CPM with an estimate provided
Now, there is nothing wrong with some FAST channel inventory, but it should not account for half of your inventory.
FAST (Free Ad-Supported Streaming TV) inventory offers wide reach and low cost but has several drawbacks.
Content quality is often lower, leading to less viewer engagement. Targeting options are limited, reducing precision. Ad fatigue can occur due to repeated exposure, and brand safety risks are higher with fewer controls in place. Additionally, reporting and analytics are often less robust, making it harder to measure impact.
And, FAST channels have way more ad breaks than AVOD (Ad supported Video On Demand) apps.
That means your share of voice against other advertisers is significantly smaller. FAST platforms have up to 10 minutes of ad inventory an hour!
On the flip side, AVODs have fewer ad breaks so your ad may be one of only a handful per hour. AVOD platform breaks are typically shorter as well. On average, AVODs have 4-6 minutes of ads per hour.
Also, many AVODs frequency cap by advertiser so you won't run over and over per hour or day.
Additionally, AVODs may have a more premium customer. If they are willing to spend more on their TV entertainment, it stands to reason they may be more likely to spend in other places.
Disposable income is the holy grail for most advertisers!
AVOD apps usually have a higher CPM than a FAST channel and that's why many major OTT vendors choose to put their inventory there vs. a more balanced approach.
After all, if all you are focused on is the CPM then it sure looks better on paper to go with a company quoting a lower CPM.
Many companies say they don't buy on the open exchange as an indication of quality, but this is misleading. You can buy FAST channel inventory through programmatic supply partners and it doesn't mean it's better inventory.
Another major difference that can impact OTT campaign quality is dayparting. Many leading OTT vendors will not allow dayparting or charge a premium on the CPM for dayparted inventory.
But, the likelihood of your ad being remembered at 4am is much lower than 8pm. We do not charge a premium for dayparted ad schedules.
Lastly, many vendors will give you a fixed price CPM which incentivizes them to purchase your ad impressions at the lowest cost to them.
This is exceptionally common in digital advertising and we don't believe it's the right way to be doing business. If we buy media at a lower cost, it's the advertiser who benefits.
We chase results, not CPMs and we know that better inventory, better audience targeting, and better dayparting means better results for our clients!
Long story short: quality over quantity is what makes a good OTT campaign in our eyes.
For a balanced OTT strategy, mixing FAST with premium platforms can achieve broader reach while maintaining brand integrity and campaign effectiveness.
So, next time you want to compare an OTT vendor the questions you should ask are:
1. What is your mix of FAST channel inventory and how will you keep it to a minimum?
2. Do you charge a premium for dayparting?
3. How are you managing your inventory to ensure that premium content apps are in the top 10 of my inventory mix?
If your vendor tells you they won't promise any of those things, let's chat!