Ad spends on advertising-led over-the-top (OTT) platforms are steadily increasing as the audience base expands on the back of higher investments in original programming.

While live sports continues to be the driver of ad spends growth on OTT, media companies are also stepping up investments in entertainment content. One of the key focus areas for OTT platforms has been to launch high-impact shows which bring in audiences as well as moolah.

Even as the advertising industry faced inflationary headwinds, the ad revenue for most OTT platforms remained buoyant in the first half of 2022, say experts. They also add that the impact of a cut-back in advertising spends by new-age brands was negated due to a step up in spending by traditional advertisers.

Having experienced steady growth in H1, the OTT platforms are now geared up for H2 which is expected to witness higher spending from brands due to the presence of the festive season. The OTT platforms have lined up an expansive content slate to attract both audiences and advertisers.

ZEE5 India Chief Business officer Manish Kalra asserted that AVOD platforms are seeing significant growth due to the increase in the user and viewer base. According to him, H1 saw good growth and H2 will see an even bigger bump in ad revenue.

"On the AVOD side, growth is picking up with traffic increasing month on month, H1 was good. Advertisers follow the eyeballs and with the scale-up of traffic on AVOD OTT, ad spends have increased. With the festive period around the corner and fresh content releasing directly on the AVOD OTT platforms, there is a higher growth rate expected in H2,” Kalra said.

He noted that the composition of advertisers on the platform has undergone a change due to several external events. “Crypto and edtech pulled back on their ad spend in H1, however, the deficit was covered by other categories, such as e-commerce; that dialed up their advertising during this period.  We see a good festive period with several categories, including sectors like automobiles and consumer durables increasing their spend on AVOD OTT Platforms."

SonyLIV SVP and Head of Ad Revenue Ranjana Mangla said sports + entertainment content is a solid combo on OTT. She also stated OTT has become a regular feature in the media plans of most brands due to its scale and targeting options.

“Today, it has become a mandate for brands to park some part of their budgets for OTT advertising because the audience base has increased exponentially. However, platforms that have sports have done far better as compared to platforms that may not necessarily have sports. A lot of growth in OTT has come from sports, particularly for SonyLIV,” she averred.

Besides live sports, brands are also betting big on high-impact entertainment properties on digital. SonyLIV has non-fiction properties like Kaun Banega Crorepati (KBC), Indian Idol, The Kapil Sharma Show, and Shark Tank 2 lined up in H2.

“We have some of the largest IPs in entertainment on our platform. As a result of that, we are doing exceptionally well when it comes to entertainment. We have just launched season 14 of KBC with close to seven to eight sponsors and we have got sponsors from across the board. Apart from KBC, we also have new seasons of Indian Idol and The Kapil Sharma Show. We have already started to see great traction around both these properties. It has been a phenomenal journey for us with Shark Tank India. It's almost turning out to be a digital-first property with eight sponsors closed already for the next season of the property,” she said.

Despite the challenges faced by the media sector, Mangla asserted that the OTT industry, in general, and SonyLIV in particular, have seen good growth in H1. According to Mangla, the ad spends on OTT AVOD platforms is expected to grow by 30-40% in H2.

“A lot of brands who are not active in H1 get active in H2 due to positive sentiments around the festive season. We will see a 30-40% rise in AdEx in H2. We are not seeing any impact and this might be unique to the OTT industry compared to other media publishers. OTT advertising is at an all-time high,” Mangla said.

MX Media SVP - Revenue | OTT AVOD Dina D'Souza said MX Player has seen steady growth in its ad revenues from the start of 2022. She added that the platform witnessed a 35% quarter-on-quarter growth in its ad business in H1’22 led by categories like gaming, media & entertainment, F&B, fintech, and social apps categories.

According to her, the launch of Aashram S3 helped MX Player to register an exponential revenue growth in the month of June as the show garnered five sponsors from the F&B and Consumer durables categories. Aashram, she noted, helped MX Player activate multiple clients from the Tier 2 & 3 markets who invested in video ads to connect with the platform’s binge watchers.

“H1 2022 saw MX Player grow in terms of its ad revenues and also increase its base of advertisers, who sampled the platform for the first time through our ad & content offerings,” D'Souza said.

Speaking about the challenges, D'Souza said categories such as online betting & gaming, crypto exchanges, fintech & edtech startups which were the highest contributors to digital spends at the start of the year cut down their spends drastically in the second quarter of the year.

MX Player, she said, is very bullish about the second half of the year and is geared up to increase the festive enthusiasm with its back-to-back Originals release. “We are expecting the consumer sentiment to be upbeat in this festive season. While consumers spend more time on video & OTT platforms, it has become imperative for advertisers to make their products & brands more visible and discoverable amongst the new & young netizens on digital videos platforms.”

The revenue head of a leading OTT platform said that the H1 has seen a fair amount of growth compared to last year despite the fact that advertising investments from new-age companies had dried up. “Branding monies have gone down specifically. Whatever money they are spending is hardcore performance money so that a sale or a conversion can be attributed to it. That's what their major focus is right now,” the executive said.

He stated that consumer packaged goods (CPG) companies are spending heavily on OTT. CPG brands are also big spenders during the festive season. “Given the number of brands that CPG has, it continues to rule the roost. It had taken a backseat because there was a lot of money flowing in from the edtech, crypto, and gaming industries.”

Dentsu-owned Amplifi’s Chief Investment Officer Sujata Dwibedy said these are interesting times as advertisers understand screen-agnostic planning. Advertisers, she said, are willing to divert money from niche and other smaller genres of TV or Print/Radio to OTT to further build incremental reach.

“India is skewed towards the AVOD audience, and the growth is estimated to be anywhere between 25% and 30% in H1. This may be on similar lines even in H2 mainly because of the festivals, and all impact properties over and above cricket events. It is extremely interesting to see that some of the big impact properties on the regional entertainment platforms have now started launching on OTT first, clearly implying the behavioral shift of audiences,” she added.

Dwibedy expects advertising growth in H2 to be in the region of 20% to 30%. She noted that ecommerce, durables, retail, pharma, BFSI, and beverages, in addition to D2C platforms, will remain key advertising categories.

DDB Mudra Group Country Head & Managing Partner – Integrated Media Rammohan Sundaram said AVOD is growing on the back of original content. “Apart from IPL, which happened in H1, the original content will help keep pace on funds getting diverted to OTT platforms. Pricing is so different across platforms that advertisers will find a lot more benefit with AVOD associations, which is reflective of the way digital advertising will overtake spends on traditional advertising by the end of this year.”

Sundaram predicted that Rs 250 crore worth of ad monies will shift from TV to AVOD in H2. “There is no reason why it won’t be good, 2022 should be fine for AVOD OTT platforms too and while I can’t put a figure to it, my guess is that around 250 crores will move from TV to AVOD OTT platforms in H2 of 2022.”

Madison World Chief Buying Officer Vinay Hegde said the AVOD platform had a great run in H1 on the back of impact properties like cricket & other sports events. “Our estimates are in the range of 30-35% revenue growth over the previous year on an overall basis. Categories such as cryptocurrency, social commerce, short video ads, CPG & auto have shown promising investments,” he said.

He also said that the impact of the decline in ad spends by startups will play out in the coming months. That said, he believes that other categories like CPG, auto, BFSI & other digital-first businesses will more than compensate for that loss. He expects higher AdEx growth for AVOD platforms in H2 over H1.

Performics India Managing Partner Gurpreet Singh said that the growth rate for ad-supported streaming services has doubled in recent times due to the shift of OTT platforms towards an ad-supported, lower-cost subscription model in order to retain subscribers. “OTT platform streaming has increased by 115% in H1 alone. The ad revenue has increased by 20% compared to last year and is expected to reach $1.3 billion by end of 2022 in terms of revenue,” he said.

Singh said the OTT ad revenue is projected to grow between 20% to 30% during the festive quarter. “Every year, Onam marks the onset of the festive season in India, and advertising spends are highest between October and November. Categories like FMCG, consumer durables, jewelry, automobile, mobile handsets, media & entertainment are expected to invest heavily on AVOD platforms this year.”