OTT platforms and the changing dynamics of ad inventory pricing

Leading over the top (OTT) platforms like Disney+ Hotstar, SonyLIV, ZEE5 and Voot are wooing advertisers with a plethora of advertising options at competitive rates which are based on cost per mille (CPM) or cost per 1000 views and Cost-Per-Completed-View (CPCV).

According to advertising rates of leading OTT platforms sourced by exchange4media from digital media agencies, brands can reach out to their potential audiences through video ads for as low as Rs 75 CPM for a six-second video ad. The ad rates go up depending on the duration of the ads and the target audience. The CPM and CPCV rates are the highest for connected TV (CTV) devices due to the premium profile of the viewers.

The OTT platforms allow audience targeting based on age, gender, geography, genre, language, carrier, device price, data usage, and CTV. Brands can also target audience on the basis of cohorts like music or sports lovers, fitness, gaming or fashion enthusiasts, and high networth individuals (HNIs), among others. Some platforms like Disney+ Hotstar also allow brands to collaborate with influencers on the platform to create original content.

"OTT advertising has evolved drastically in the last five years. The biggest shift is that it has shifted from contextual or content-based advertising to more behavioural adverting. Also, a lot of big-ticket IPs have got a plethora of integration opportunities. Sports has moved from spot buying to impression-based buying and now, to targeted impression-based buying in the last five years. Also, in the last couple of years, a few OTT platforms have started monetising and advertising content behind the paywall as well," said Rubeena Singh, CEO, iProspect India.

She noted that the OTT ad inventory pricing has remained unchanged in the last two years. "A lot of it has to do with the Covid situation in the world and also because the platforms have seen a huge growth in the last two years and the demand has not increased in the same ratio."

The iProspect India CEO also said that most OTT platforms are averse to discounting but platforms cannot shy away from it due to the nature of business in India. "Discounting for a client has various factors linked to it. Size of business and agency on the account are the two main factors for an OTT to offer any discount. Large agencies do have special rates with them and if a particular client has very large spends, these rates can go down further."

According to digital media experts, the ad rates on OTT might normalise in the near term as the scale and size of the video streaming business continues to increase. The ad rates of OTT inventory has not seen an upward movement in the last two years as the ad volumes have gone up.

“Prices have not increased for the last two years, in fact, prices are decreasing each year as scale increases. To ensure that OTT can fight off TV, they also need to ensure that the cost per reach also gets in line with TV. Digital is small compared to TV, but the prices are a bit high as it offers measurability. Digital offers incremental reach and works in tandem with TV,” a senior executive with a leading digital media agency said on condition of anonymity.

She also said that the OTT platforms have been negotiating hard with clients to avoid downward revision of prices. They do give discounts, but it differs from agency to agency. “OTT platforms will give certain share of discounts to agencies and clients because of the forward buying that one does. Discount also depends on the commitment that a client is making. So if someone buys inventory worth xyz crores, that's when they offer a slab of discount,” the executive said.

Whether a client buys inventory based on CPM pricing or CPCV pricing depends on the objectives. “For some clients, the objective will be mass reach where they don't care about a creative being watched entirely because they must have already attained that exposure. For them, CPM works well. For some brands, narrating a story is more important, and they don't want to bombard ads to people just to create a brand recall but to pass a message on. CPCV becomes a better option for these kinds of clients because completion rate is what they are aiming for,” the executive, quoted above, said.

According to a senior revenue head with a leading OTT platform, there is no fixed pricing in OTT, as the ad rates are negotiable. “The rates are variable for the same product. It can be sold at X or 2X. It applies to everybody except cricket. The variability in cricket is not much due to limited inventory. Entertainment inventory is replaceable inventory as there are lots of options,” the person said.

The revenue head also said that the broadcaster owned OTT platforms have better control over ad rates as they sell the inventory directly. “Till the time there is direct sales channel, there will be control on pricing even if one is driven by the market. What this means is that the same product will have 4X difference in pricing. There can be a 3X or 4X jump in pricing for the same product.”

Commenting on the stabilisation of OTT ad rates, the revenue head noted that the pricing of any technology- oriented business which is scaling up fast will always go through a process of hitting a peak and then stabilising. “So OTT is in a stabilisation stage. Even today, YouTube and Facebook rates are lower than OTT platforms. Volume is more, but rates are low due to demand-supply equation. OTT pricing will normalise and go down because volumes are going up. However, the pricing of premium inventory like cricket and reality shows will not decline.”

According to the media planning and buying head with a leading digital agency, YouTube is the first choice for digital advertisers, followed by platforms like Disney+ Hotstar which has high-impact cricket properties like Indian Premier League (IPL).

“For every Rs 100 worth of ad spends on media, big brands ideally spends Rs 20 to Rs 30+ on digital, whereas smaller brands will be spending about 10% of their budget on digital at least. When there is a campaign whose hero content is a video, YouTube is the first port of call for advertisers due to its pre-eminent position in the video streaming ecosystem. OTT platforms be the ideal second option, depending on budgets and objective. However, this scenario changes completely if there is a cricketing event. OTT is a no-brainer. OTT becomes the primary channel and YouTube becomes the ideal no. 2 for video,” the source mentioned above said on condition of anonymity.

Pricing of OTT platforms

As per Disney+ Hotstar's entertainment rate card, the platform offers targeting options like Run of Site (ROS), 1 Level Basic, 2 Levels Basic, 3 Levels Basic or 1 Advanced only, VIP Audience, and Connected TV. A 6-second ad on the platform has a CPM rate of Rs 75 for all six targeting options.

The video ads are available in various durations like Bumpers (up to 6 sec), 10 second Preroll, 10 second Midrolls, 15 second Midrolls, 20 second Midrolls, 30 second Midrolls, 45 second Midrolls, 60 second Midrolls, and 60-180 second Midrolls. The connected TV rates are between Rs 200 CPM for 10 second prerolls/midrolls to Rs 1200 CPM for 60 second midrolls. The CPM rates for ROS audience range from Rs 75 for 6 second ads to Rs 450 for 60-180 second midrolls.

For a 10-second video preroll/midroll ad, advertisers have to fork out between Rs 75 and 200 depending on the targeting option. A 15-second ad carries a pricing of Rs 113 to Rs 300. The price of a 60-second ad is Rs 450 to 1200 across targeting options.

In terms of CPCV pricing, the ad rates vary from Rs 88 for 6 second bumpers across the six targeting categories to Rs 1412 for a 60-second CTV ad. A 10-second preroll/midroll ad is priced between Rs 88 and Rs 235. The CPCV pricing for 15 second ads ranges from Rs 132 to 353. For ROS targeting, the CPCV pricing is Rs 88 for 10 second prerolls/midrolls to Rs 529 per 10 second midrolls.

ZEE5 has nine targeting parameters like ROS, Filter 1, Filter 2, Filter 3, Filter 4, Filter 5, Frequency, Female, and IP sponsorship. The video ads are available in six durations like 5-6 second, 7-10 second, 11-15 second, 16-20 second, 21-15 second, and 26-30 second.

The CPM pricing for ROS targeting ranges from Rs 162 for 6 seconds to 450 seconds. The costliest targeting option on the platform is Filter 5 which is priced between Rs 396 and Rs 1098. Frequency video ads have CPM pricing of Rs 324 for 5-6 seconds and Rs 900 for 26-30 seconds. The CPM rate for IP sponsorship inventory is Rs 261 for 5-6 seconds and Rs 720 for 26-30 seconds.

The CPCV pricing for ROS targeting option Rs 0.18 for six second ads and Rs 0.50 for 26-30 second ads. The Filter 1 option is available at Rs 0.25 to Rs 0.7 for the lowest and the highest durations. The Filter 5 inventory has a CPCV pricing of Rs 0.44 to Rs 1.22.

Industry sources say that the CPM rates on SonyLIV ranges from Rs 144 for 10 second ads to Rs 504 for 60 second ads. A 15-second ad is available for Rs 216 followed by 20 second ads at Rs 288 and 30 second ads at Rs 396. The CPM price for banner ads is Rs 75.

SonyLIV offers ad units like Video ads, Companion ads, Spotlight/Roadblock, and Display Cards besides Video screenshots and spotlight masthead roadblock, according to the platform's sales deck. The platform has targeting options like geography, interest, demographic, genre, and carrier/data usage.

Based on Voot's sales deck, the platform offers inventory as well as non-inventory solutions. The inventory solutions allow brands to reach new audiences and build brand awareness, while non-inventory solutions help build interest and consideration with audiences. Voot Studio, the branded content wing of Voot, offers non-inventory solutions to clients.

According to industry sources, the CPM rate on Voot is Rs 111 for a 6-second ad followed by Rs 221 (10 second), Rs 323 (15 to 20 second), Rs 417 (30 second), and Midroll Rs 723 (45 second). The banner ads have a CPM rate of Rs 85-90. The price of masthead banners on the platform is Rs 8 lakh.