An OTT Reality Check

There’s little debate that OTT will be a big part of our business going forward. As money follows eyeballs, having those solutions will likely be one of the keys to the long-term future of our business. We are the video experts, after all, and OTT is the perfect extension of our heritage and the relationships we have with clients in our markets.

But, there’s one fact that makes OTT different than our current TV business—clients are not going to have 5 OTT relationships in the market. They are quickly figuring out that except for our owned content and inventory, most OTT providers have access to much of the same inventory. Sure, each provider has some differences, but there’s a relatively limited amount of OTT inventory, especially now.

So, unlike our current model, where some stations might get 30% of a buy and a competitor only 12%, with OTT there’ll be more of a “winner take all” mentality. Or, there might be 2 winners with a client. The competition isn’t just the other TV stations, either. Hulu is selling directly to businesses. Cable operators are aggressively in this space. And, in one smaller market I was in recently, iHeartRadio might currently be the leading seller of OTT products. That’s inexcusable. (An aside, last week iHeart had significant layoffs of on-air talent, especially in medium and smaller markets. I read that they have more radio stations in Syracuse than on-air talent in Syracuse. Ironic!)

If you agree with the premise that an agency or client won’t have more than a couple of OTT vendors, then I think that should drive some discussions about how we go to market.

We’re faced with a classic “chicken and egg” dilemma. OTT is a small slice of our business right now, so most stations are using existing sellers and managers to go after that business. I think we have to ask ourselves if that’s the right staffing level, if we really do believe that: a) OTT is going to be a big part of our business, and b) clients won’t be using more than 1-2 OTT vendors.

It’s the Kodak problem. Kodak invented digital photography, however, a full commitment by Kodak to digital would have increased the disruption of the existing film business. So, they held out. It’s incredibly difficult to disrupt our existing higher margin business, but it could be that an incremental approach might also be the wrong approach.

Another concern we should have is how exactly we can differentiate our OTT product from our competitors’ product. Here’s the stark reality. Unless our sellers can present a clear and distinct value proposition about our OTT product, we’ll be commoditized. That’s exactly what happened as programmatic digital had more supply than demand. If we aren’t careful, that could happen to us.

My final area of nervousness is that we still see way too many sellers who really have no idea how to correctly sell OTT, set up campaigns, and manage expectations. I guess that shouldn’t surprise any of us. We still have sellers who can’t do those things with digital, and we’ve been in that space for 15 years. I think we need to continue to get better at simplifying the OTT sale and practicing it with role-playing. And, since you can’t teach what you don’t know… that starts with leaders.

My greatest area of concern? I believe we’re approaching OTT the same way we approach our spot business—competing for share. But OTT is different. It’s simply eyeballs, rather than messages, on our strong brands. That should drive a change in our sales philosophy, as OTT becomes a bigger and bigger part of our business.

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