It is safe to say, we are living in the golden age of content. OTT platforms have become a staple in our content consumption diet, with a third (34%) of Southeast Asian viewers now streaming content on OTT, according to the new  Future of TV Southeast Asia study  by Kantar and The Trade Desk.

Modern day consumers want to be in control of their consumption choices at their convenience, which has led to the Southeast Asia region welcoming 20 million new OTT viewers in the past year alone. With 200 million users, streaming 9.7 billion hours’ worth of OTT content per month, the region has seen an increase of 22% in OTT consumption over the past year.

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But what exactly is driving this demand? According to the study, one key reason is the availability of consumers’ favourite programmes. Around 56% of viewers across the region said their favourite programmes are on OTT, compared with 41% on traditional TV.

This trend is even more pronounced in markets such as Singapore, where just 36% say their favourite shows are on traditional TV. Despite its small size, the Lion City logged the highest OTT penetration in the region, with one in two users now streaming OTT. Meanwhile, Indonesian logged the highest OTT consumption in Southeast Asia with a robust growth of 40% growth; nearly 1 in 3 Indonesians now stream OTT, consuming 3.5 billion hours every month. 

“Today’s consumers are moving towards a new model of TV consumption, one where they can watch their favourite shows anytime, anywhere, and on any device,” said Mitch Waters, senior vice-president for Southeast Asia, India, Australia and New Zealand, The Trade Desk.

Waters added that broadcasters and advertisers must move quickly so they can pivot to where the eyeballs are moving. As it is, many traditional broadcasters are investing heavily in their own OTT offerings. And advertisers will have to develop new strategies to reach this fast-growing OTT audience.

Why advertisers should jump on board

While global subscription-based streaming brands such as Netflix and Disney+ may command mindshare, they too are now mulling ad-supported functions. Earlier this year, Disney+ said it will make available a reduced price version of its streaming service, which is ad-supported. The service will launch in the US later this year and will be rolled out to more markets in 2023.

Meanwhile just yesterday, Netflix said it is now “open” to offering lower-priced tiers with ads, according to co-CEO Reed Hastings. Hastings, who has long opposed adding commercials to the platform, said in an earnings conference that it made “a lot of sense” to have a cheaper option for customers.

While it might be easy to think consumers want an ad-free experience, the study found that viewers in Southeast Asia have embraced ad-funded content, and an overwhelming majority of these viewers are ad tolerant. Around nine in 10 (89%) of these viewers are willing to watch two or more ads in exchange for an hour of free content.

In Singapore, ad-supported viewership is rising fast as more than half of OTT viewers (52%) are using ad-supported platforms.

With millions relying on ad-funded content, OTT is proving to be a valuable channel for brands competing for the limited attention of consumers. These statistics highlight a fast-emerging channel that represents an enormous untapped opportunity for marketers.

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Nonetheless with so many platforms available, understandably, it can be hard for marketers to decide where to really park their marketing budgets.

Waters said that marketers must also remember that most viewers are on more than one OTT platform. As such, much like with linear TV (as well as other digital formats), it’s important that advertisers keep frequency capping in mind. That can be a challenge given the number of players in SEA.

“This is where programmatic OTT buys can help,” he said.

“Programmatic OTT can access dozens of players from within one platform, which allows you to manage ad frequency and de-dupe as brands build reach across platforms. This ensures efficient spend, while preserving goodwill among your consumers.”

Moreover, when brands buy programmatically, they are also insulated from turbulence because they can pause and move budgets to other platforms/channels in real-time.

When it comes to the target audience, unsurprisingly, Millennials and Gen Z are also the key demographics pushing the shift to OTT. Across the region, 44% of the OTT viewers are Millennials and Gen Z, aged 16 to 34.

Indonesia, the Philippines and Malaysia recorded the youngest audiences, with more than half (51%) of OTT viewers in these three markets under the age of 34. These younger viewers are not just early adopters but also tend to be trendsetters for all age groups. They are wildly coveted by advertisers since they are at a stage in life where they are starting to build long-term brand loyalties. Overall, they are also more likely to be heavy users, consuming more than 4 hours of OTT content per day.

When it comes to the type of content that resonates best, Korean content is leading the pack, stealing the spotlight from the Western fare. The study found the popularity of Korean content rose by 21% across the region, and Western content saw an 11% drop in popularity from the prior year.

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Regionally, K-drama content is now the most popular genre on OTT with 60% of women ranking it as their top genre, and 62% of Gen Z viewers voting it their top genre. Specifically in Singapore, Korean content saw an increase of 25%.

So, what’s holding advertisers back?

According to Waters, over the past year brands and agencies have really gotten up to speed with OTT advertising. Most of them now understand the basic principles and benefits of OTT advertising, and many more brands are testing and experimenting with OTT advertising.

And, it is vital for brand advertisers, whose bread and butter is to build their brands via TV, to figure out how to shape streaming TV/OTT into their playbook.

“When we first started this report two years ago, there was low awareness as OTT was a fragmented market. There was lots of confusion about terminology and technology among brands and agencies,” he said.

Nonetheless, while things are undoubtedly looking up, OTT is still a relatively new channel, evolving fast, and there’s no standard “playbook”, which can make getting started daunting.

“While there has been greater awareness on what OTT ads can do, we are investing time in educating brands and agencies on the intricacies behind OTT ad creatives, execution and measurement,” he added.

“What we see is that UGC and OTT are fundamentally different mediums. The way viewers consume UGC with typically short-form content, often very goal-directed, looks very different than how they behave on OTT, which is professionally produced, immersive long-form content much more comparable to TV,” he added.

As such, Waters said premium OTT content delivers higher engagement and a less intrusive advertising experience than UGC.

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“Compared to YouTube, OTT viewers are less likely to multitask and less likely to skip ads. We’re also beginning to see data that OTT is very good at delivering brand impact and articulating brand trust much more effectively (and cost-effectively) than UGC,” he said.

He added that over the past year, brand recall on OTT has improved significantly. That being said, he said there is a place for both UGC and OTT in a media plan.

“Advertisers must follow the eyeballs. Like TV,  OTT provides a compelling, immersive brand-safe alternative that enables advertisers to drive real impact for their brand.”

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What to consider with OTT advertising

Here’s a high-level framework for those considering OTT advertising:

  1. Begin with a clear understanding of who your target consumers are and where they are spending majority of their time consuming media. As an example, OTT is effective in targeting Millennials and Gen Z as they are likely to be heavy OTT users.
  2. Leverage strengths of each channel by including OTT, TV and UGC in your media plans to maximise impact of your campaign.
  3. Consider using a programmatic approach to optimise reach and frequency across the fragmented OTT landscape.

Advertising effectiveness on OTT is just like with any other platform – know the audience you are reaching out to, understand what is relevant or engaging for this audience segment, and build an effective brand message that is right for the platform you are advertising on.

This article was created in collaboration with The Trade Desk. To find out more about OTT viewers and their consumption habits, click here for Southeast Asia report. You may also download the Singapore study here and the Indonesia study here .

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