What is OTT Advertising?
Over-the-top (OTT) advertising is a form of digital marketing that delivers ads to viewers over the internet through streaming video services or devices, bypassing traditional cable or satellite TV platforms. This type of advertising has gained significant traction as more consumers shift from traditional TV to streaming platforms.
The rise of OTT platforms can be attributed to several factors, including the increasing availability of high-speed internet, the proliferation of smart devices, and the growing demand for on-demand content. Platforms like Netflix, Hulu, Amazon Prime Video, and Disney+ have seen exponential growth, offering viewers a plethora of content choices at their convenience.
The Rise of OTT Platforms
The rise of OTT platforms has been nothing short of phenomenal, with several platforms leading the charge in this new era of content consumption. Here's a closer look at some of the key players:
Netflix Netflix is arguably the most well-known OTT platform. It started as a DVD rental service but quickly pivoted to streaming, becoming a pioneer in the OTT space. Netflix offers a vast library of movies, TV shows, documentaries, and original content available for streaming on various devices.
Amazon Prime Video Amazon Prime Video is another major player in the OTT space. As part of Amazon's Prime subscription, it offers a wide range of content, including movies, TV shows, and critically acclaimed original series. Amazon Prime Video also provides the option to rent or buy movies and TV episodes.
Hulu Hulu is unique in that it offers both an on-demand streaming library and an option for live TV. It's known for hosting current and past episodes of many popular TV shows, and it also produces its own original content. Hulu's live TV option includes channels like ABC, CBS, FOX, and NBC, as well as cable networks like ESPN, FX, and CNN.
Disney+ Disney+ is the OTT platform from the Walt Disney Company. It offers content from Disney's vast library, including Disney classics, Pixar movies, Marvel films, Star Wars, and National Geographic content. Disney+ also produces original series and movies exclusively for the platform.
HBO Max HBO Max is the streaming platform from WarnerMedia, offering content from HBO, DC, Warner Bros., and more. It includes all the programming of HBO, along with a range of expanded content such as original series, past seasons of select series from WarnerMedia's brands, and movies.
Apple TV+ Apple TV+ is Apple's entry into the OTT space. It offers a growing library of original content, including movies, documentaries, and series, produced by some of the world's most talented storytellers.
These platforms have not only changed the way we consume content but also how advertisers reach audiences, paving the way for the growth of OTT advertising.
Importance of OTT Advertising
TT advertising is crucial in today's digital age as it allows advertisers to reach a growing audience that traditional TV can't. With advanced targeting capabilities and measurable results, OTT advertising provides a more efficient and effective way for brands to connect with their target audience.
Understanding OTT Advertising
OTT stands for "over-the-top," referring to the delivery of content over the internet without the need for traditional broadcast, cable, or satellite TV systems. OTT advertising, therefore, is the practice of serving ads via these OTT content platforms.
Definition and Concept of OTT
Over-the-top (OTT) is a term used to describe content providers that distribute streaming media directly to viewers over the internet, bypassing traditional cable, broadcast, and satellite television platforms that traditionally control or distribute such content. The term "over-the-top" implies that a content provider is going over the top of existing internet services, referring to the delivery of film and TV content via the internet, without requiring users to subscribe to a traditional cable or satellite pay-TV service.
OTT services are accessed via websites on personal computers, as well as via apps on mobile devices (such as smartphones and tablets), digital media players (including video game consoles), or TVs with integrated smart TV platforms.
Types of OTT Services
OTT services can be broadly categorized into three types:
OTT Video Services: These are the most commonly recognized OTT services and include platforms like Netflix, Amazon Prime Video, Hulu, and Disney+. They deliver film and television content over the internet.
OTT Messaging Services: These services offer alternatives to text messaging (SMS) over cellular networks. Examples include WhatsApp, Facebook Messenger, and Viber.
OTT Voice Calling Services: These services provide alternatives to traditional voice calling on cellular and landline networks. Examples include Skype, Google Duo, and WhatsApp voice calls.
The OTT Business Model
OTT services typically monetize through one of three primary business models:
Subscription Video on Demand (SVOD): Users pay a monthly fee for unlimited access to a wide range of content. Netflix and Amazon Prime Video operate under this model.
Transactional Video on Demand (TVOD): Users pay for each piece of content. This is common on platforms like iTunes, where users pay to rent or buy movies and TV episodes.
Advertising-Based Video on Demand (AVOD): Users access content for free, but the content is ad-supported. YouTube is the most prominent example of this model.
OTT has revolutionized the way people consume entertainment and has paved the way for a new form of advertising - OTT advertising.
How OTT Advertising Differs from Traditional Advertising
Unlike traditional TV advertising, which broadly broadcasts ads to all viewers, OTT advertising allows for targeted advertising based on viewer data. This means ads can be personalized to the viewer's interests, behaviors, and demographics, increasing the likelihood of engagement.
Over-the-top (OTT) advertising and traditional advertising, while sharing the common goal of reaching audiences to promote products or services, differ significantly in their approach, capabilities, and impact. Here's a closer look at how they differ.
Delivery Method for OTT Campaigns
Traditional advertising is delivered through conventional media channels like television, radio, newspapers, and billboards. OTT advertising, on the other hand, is delivered over the internet through streaming media platforms.
Targeting Capabilities of OTT Campaigns
Traditional advertising typically uses a broad approach, targeting large groups based on general demographic data. OTT advertising, however, allows for precise targeting based on a variety of factors, including viewer behavior, interests, and geographic location. This granular targeting capability allows advertisers to reach specific audience segments with personalized ads, increasing the likelihood of engagement and conversion.
Measurability of OTT campaigns
One of the significant advantages of OTT advertising over traditional advertising is its measurability. Advertisers can track a variety of metrics, including impressions, clicks, conversions, and video completion rates, to assess the performance of their OTT ads. This data-driven approach allows for real-time optimization and a clear understanding of ROI. In contrast, the impact of traditional advertising is often harder to measure accurately.
Flexibility
OTT advertising offers greater flexibility compared to traditional advertising. Advertisers can quickly adjust their OTT ad campaigns based on performance data, changing market conditions, or new business objectives. Traditional advertising campaigns, once launched, are generally less flexible, particularly in mediums like print or broadcast TV.
Cost of OTT Campaigns
Traditional advertising, especially on popular channels like prime-time TV, can be expensive and often requires a significant upfront investment. In contrast, OTT advertising can be more cost-effective, with pricing models like cost per impression (CPM) allowing advertisers to pay only for the actual reach of their ads.
The differences are clear, while traditional advertising still has its place, the rise of OTT advertising reflects the shift towards more targeted, interactive, measurable, and cost-effective advertising strategies.
Benefits of OTT Advertising
OTT advertising offers several benefits, including precise targeting, personalized ads, real-time analytics, and a broad reach. It allows advertisers to connect with cord-cutters and cord-nevers who aren't reachable through traditional TV advertising.
Here are some of the key benefits in more detail:
1. Precise Targeting
One of the most significant benefits of OTT advertising is its ability to target ads precisely. Unlike traditional TV advertising, which generally targets a broad demographic, OTT advertising can target specific audiences based on a variety of factors, including age, gender, location, interests, and viewing habits. This allows advertisers to deliver more relevant ads, which can lead to higher engagement and conversion rates.
OTT advertising allows for granular targeting that goes far beyond the capabilities of traditional TV advertising. Here's how:
Demographic Targeting: Demographic targeting in OTT advertising allows advertisers to reach specific segments of the population based on characteristics such as age, gender, income level, and education. This is made possible by the rich user data that OTT platforms collect, which often goes beyond the data available from traditional TV viewership. For example, an advertiser promoting luxury goods might target viewers with a high income level, while a university might target viewers who are in the age range of prospective students. This precise demographic targeting allows advertisers to tailor their messages to the specific needs, interests, and circumstances of their target audience, increasing the likelihood of engagement and conversion.
Behavioral Targeting: Behavioral targeting in OTT advertising involves serving ads based on a viewer's past behavior. This can include their viewing habits (such as the types of shows or movies they watch), their online activity (such as websites visited or searches made), and even their purchase history. For instance, a viewer who frequently watches travel shows might be served ads for airline tickets or hotel bookings, while a viewer who has recently searched for home improvement tips might see ads for home improvement stores or services. By aligning ad content with viewer behavior, advertisers can deliver more relevant and personalized ads, which can lead to higher engagement rates.
Geographic Targeting: While traditional TV allows for geographic targeting at the DMA (Designated Market Area) level, OTT advertising can target users at a much more granular level, even down to specific zip codes. For example, a local restaurant might use geolocation targeting to reach viewers within a certain radius of their location, while a national brand might target viewers in specific markets where they want to increase their presence. Geolocation targeting can also be used in conjunction with other targeting methods to deliver highly tailored ads.
Interest-based Targeting: OTT platforms can infer user interests based on their viewing habits and other online behavior. This allows advertisers to target users based on specific interests, hobbies, or lifestyle characteristics. For example, a viewer who frequently watches fitness-related content might be served ads for gym memberships or fitness equipment, while a viewer who often visits fashion websites might see ads for clothing or beauty products. By aligning ad content with viewer interests, advertisers can deliver ads that are more likely to resonate with viewers and prompt engagement.
Contextual Targeting: Contextual targeting in OTT advertising involves placing ads in a context that matches the ad content. This means serving ads that are relevant to the content the viewer is currently watching. For instance, an ad for a cooking product might appear during a cooking show, or an ad for a new sci-fi movie might appear while a viewer is watching a sci-fi series. Contextual targeting can increase the relevance of the ad for the viewer, making it more likely that they will engage with the ad. It also provides a more seamless viewing experience, as the ad content naturally fits with the content of the show or movie.
Device Targeting: OTT advertising allows advertisers to target users based on the device they're using, such as a smart TV, mobile device, or gaming console. This can be useful for advertisers promoting device-specific products or services.
2. Greater Reach of OTT Advertising
OTT advertising allows advertisers to reach cord-cutters and cord-nevers, who are typically hard to reach through traditional TV advertising. As the number of people using OTT platforms continues to grow, so too does the reach of OTT advertising.
Reaching Cord-Cutters and Cord-Nevers: Traditional TV advertising is losing ground as more and more viewers cut the cord or never subscribe to cable in the first place. OTT advertising allows advertisers to reach these viewers who are otherwise hard to reach.
Global Reach: Unlike traditional TV, which is often limited by regional broadcasting restrictions, OTT platforms can be accessed by users around the world. This allows advertisers to reach a global audience.
Reaching a Younger Demographic: OTT platforms tend to be popular among younger viewers, who are often hard to reach through traditional TV. OTT advertising allows advertisers to reach this desirable demographic.
The advanced targeting and broad reach offered by OTT advertising represent a significant shift in how advertisers can connect with audiences. As the number of OTT viewers continues to grow, these advantages will become increasingly important.
3. High Engagement
OTT viewers are typically highly engaged. They have chosen to stream specific content, and as a result, they are more likely to pay attention to the ads that are shown. This high level of engagement can lead to better ad recall and higher conversion rates.
4. Rich Media and Interactivity
OTT advertising supports rich media and interactive ads, providing opportunities for creativity and engagement that are not possible with traditional TV ads. For example, an OTT ad could include interactive elements, such as a clickable call to action, that can lead directly to a purchase or sign-up page.
5. Real-Time Analytics and Reporting
OTT advertising platforms provide real-time analytics and reporting, allowing advertisers to track the performance of their ads in real-time. This includes metrics like impressions, clicks, video completion rates, and conversions. These insights can be used to optimize campaigns, improve targeting, and measure return on investment (ROI).
6. Cost-Effective
OTT campaigns can be more cost-effective than traditional TV advertising. With OTT advertising, advertisers typically pay for actual impressions rather than potential impressions, as is often the case with traditional TV advertising. Additionally, the ability to target ads more precisely can result in less wasted spend and a higher ROI.
OTT advertising offers a powerful combination of precise targeting, greater reach, high engagement, rich media capabilities, real-time analytics, and cost-effectiveness, making it an increasingly popular choice for advertisers.
Types of OTT Advertising
Pre-Roll Ads Pre-roll ads are short promotional videos that play before the desired content starts. They are typically 15 to 30 seconds long and are designed to capture the viewer's attention quickly.
Mid-Roll Ads Mid-roll ads are similar to traditional TV commercials. They play in the middle of the streaming content, breaking up the viewing experience. These ads are often longer and can be more detailed.
Post-Roll Ads Post-roll ads play after the streaming content has ended. While they have the lowest view rate, they can be effective for delivering strong calls to action.
Interactive Ads Interactive ads encourage viewer engagement by offering interactive elements, such as clickable buttons or forms. They can be highly effective for driving direct responses from viewers.
Display Ads Display ads in OTT advertising can take the form of banners or overlays that appear on the screen during content streaming. They are less intrusive than video ads and can be used to complement other ad types.
Native Ads Native ads are designed to match the look and feel of the content they accompany. They are less disruptive to the viewer experience and can lead to higher engagement rates.
Choosing the Right OTT Advertising Platform
Choosing the right OTT advertising platform depends on several factors, including the platform's user base, targeting capabilities, ad formats, and cost. Advertisers should also consider the platform's integration with other marketing tools and its ability to provide actionable insights. Selecting the right OTT advertising platform is a critical decision that can significantly impact the success of your advertising campaigns. Here are some key factors to consider:
User Base of OTT Platform
The user base of an OTT platform is one of the most important factors to consider. You'll want to choose a platform whose user base aligns with your target audience. Consider factors like the number of users, their geographic locations, and demographic information. For example, if your target audience is young adults, a platform like Hulu, which has a large user base in this demographic, might be a good choice.
Targeting Capabilities
Different OTT platforms offer different targeting capabilities. Some platforms may offer more granular targeting options, allowing you to reach specific audience segments based on factors like viewing habits, interests, and geographic location. Consider what kind of targeting capabilities you need for your campaign and choose a platform that can meet these needs.
Ad Formats
The ad formats available on an OTT platform are another important consideration. Some platforms may offer a variety of ad formats, including pre-roll, mid-roll, and post-roll ads, as well as interactive and display ads. The right format for your campaign will depend on your advertising goals and the nature of your ad content.
Cost of your OTT platform
Cost is always a crucial factor in any advertising decision. Different OTT platforms may have different pricing models, such as cost per thousand impressions (CPM), cost per click (CPC), or cost per action (CPA). Be sure to understand the pricing model of any platform you're considering and how it fits with your budget.
Integration with Other Marketing Tools
If you're using other marketing tools, like a customer relationship management (CRM) system or a data management platform (DMP), you'll want to choose an OTT platform that can integrate with these tools. This can allow you to leverage your existing data and tools to enhance your OTT campaigns.
Actionable Insights
Finally, consider the kind of insights the platform can provide. Good OTT platforms should provide detailed analytics and reporting that can help you understand the performance of your campaigns and optimize them over time. Look for platforms that offer real-time analytics, detailed audience insights, and tools for measuring ad effectiveness.
Choosing the right OTT advertising platform involves a careful evaluation of each platform's user base, targeting capabilities, ad formats, cost, integration capabilities, and the insights it can provide. By considering these factors, you can select a platform that aligns with your advertising goals and maximizes the effectiveness of your OTT campaigns.
Best Practices for OTT Advertising
Crafting Engaging Ad Content
The content of the ad should be engaging and relevant to the target audience. It should also align with the platform and the content it accompanies.
Optimizing OTT Ad Length and Frequency
In the realm of OTT advertising, striking the right balance in ad length and frequency is crucial. Here's a deeper look at how to optimize these two important factors:
OTT Ad Length
The length of your ad can significantly impact viewer engagement. Too short, and you may not convey your message effectively; too long, and you risk losing the viewer's attention. Here's how to optimize ad length:
Understand Your Audience: Different audiences have different attention spans. Younger audiences might prefer shorter, snappier ads, while older audiences may be more receptive to longer, more detailed ads. Understanding your audience can help you determine the optimal ad length.
Align with Your Message: The complexity and nature of your message also play a role in determining ad length. If your message is simple and straightforward, a shorter ad might suffice. If it's more complex or emotional, a longer ad may be necessary to fully convey your message.
Test and Learn: Experiment with different ad lengths to see what works best for your audience and your message. Monitor metrics like video completion rates and engagement rates to understand how ad length impacts viewer behavior.
Ad Frequency
Ad frequency refers to the number of times a viewer sees your ad. While repeated exposure can reinforce your message, too much repetition can lead to ad fatigue, where viewers become disinterested or annoyed. Here's how to optimize ad frequency:
Avoid Overexposure: Repeatedly showing the same ad to the same viewer can lead to diminishing returns. It's important to set frequency caps to limit the number of times a viewer sees your ad within a certain time period.
Use Frequency Capping: Frequency capping is a technique used to limit the number of times your ad is shown to the same viewer. This can help prevent ad fatigue and ensure a positive viewer experience.
Rotate Your Ads: Rotating different ads can keep your content fresh and engaging, reducing the risk of ad fatigue. This can be particularly effective if the ads are part of a larger campaign with a common theme or message.
Monitor Viewer Response: Keep an eye on metrics like engagement rates and conversion rates to understand how ad frequency impacts viewer behavior. If you see a drop in these metrics, it could be a sign that viewers are experiencing ad fatigue.
Optimizing ad length and frequency in OTT advertising involves a careful balance. By understanding your audience, aligning with your message, and continuously monitoring viewer response, you can find the optimal ad length and frequency for your campaigns.
A/B Testing for Ad Performance
A/B testing involves testing two versions of an ad to see which performs better. This can help advertisers optimize their ads for better performance.
Monitoring and Analyzing Campaign Metrics
Monitoring and analyzing campaign metrics is crucial for understanding the effectiveness of an OTT advertising campaign. This can help advertisers make data-driven decisions and improve their future campaigns.
Measurement and Analytics in OTT Campaigns
Key Performance Indicators (KPIs) for OTT Advertising
Key Performance Indicators for OTT advertising may include ad impressions, click-through rates, completion rates, and conversion rates. These metrics can provide insights into the effectiveness of an OTT advertising campaign.
Tracking Ad Impressions and Reach
Ad impressions refer to the number of times an ad is displayed, while reach refers to the number of unique viewers who saw the ad. Tracking these metrics can help advertisers understand the exposure of their ads.
Assessing Viewability and Completion Rates
Viewability refers to whether an ad was actually viewable by the audience, while completion rates refer to the percentage of ads that were watched to completion. These metrics can provide insights into audience engagement with the ads.
Analyzing Conversion and ROI
Conversion refers to the desired action taken by viewers after watching an ad, such as making a purchase or signing up for a service. ROI, or Return on Investment, measures the profitability of the advertising campaign. These metrics are crucial for assessing the effectiveness of an OTT advertising campaign.
Challenges and Limitations of OTT Advertising
Ad Fraud and Invalid Traffic
Ad fraud refers to fraudulent practices that inflate the number of ad impressions, clicks, or conversions. Invalid traffic refers to traffic from bots or other non-human sources. These issues can skew campaign metrics and lead to wasted ad spend. A good ad platform has mechanisms in place to minim ize these effects and will give you added value impressions to compensate for these issues if needed.
Ad Blocking and Skipping
Some viewers may use ad blockers or skip ads, reducing the effectiveness of OTT advertising. Advertisers need to find ways to create engaging ads that viewers want to watch.
Privacy and Data Protection Concerns
OTT advertising relies heavily on viewer data for targeting. However, privacy regulations and data protection concerns can limit the amount of data available for targeting.
Future Trends in OTT Advertising
Personalized Advertising Experiences
As technology continues to evolve, OTT advertising will become increasingly personalized. Advertisers will be able to create highly targeted ads based on detailed viewer profiles, leading to more relevant and engaging advertising experiences.
Programmatic OTT Advertising Campaigns
Programmatic advertising, which involves the automated buying and selling of ad space, is expected to become more prevalent in OTT advertising. This will allow for more efficient ad placements and real-time optimization.
Advanced Targeting Technologies
Advancements in targeting technologies will allow advertisers to target viewers based on more specific and nuanced criteria. This could include psychographic targeting, mood-based targeting, and real-time targeting based on current events or trends.
OTT Frequently Asked Questions (FAQs)
What is the difference between CTV and OTT?
Think of OTT as the content and CTV as the viewing method. When used hand in hand, both channels can create highly effective digital campaigns.
OTT = content streamed over the internet (Pluto TV, Paramount, Fox News, NFL, ESPN)
CTV = connected tv devices such as Roku, Amazon FireStick, Smart TV, Google Chromecast, Gaming Consoles including XBox
OTT refers to the delivery of content over the internet, bypassing traditional cable or satellite TV systems. CTV, or Connected TV, refers to TVs that are connected to the internet and can stream OTT content.
How does OTT advertising benefit advertisers?
OTT advertising allows advertisers to reach a growing audience of cord-cutters and cord-nevers. It also offers advanced targeting capabilities, personalized ads, and measurable results.
Can I target specific demographics with OTT advertising?
Yes, OTT advertising allows for precise demographic targeting. Advertisers can target viewers based on characteristics like age, gender, income level, and education.
What are the main challenges in OTT advertising?
Challenges in OTT advertising include ad fraud, ad blocking, measurement issues, and privacy concerns.
How can I measure the effectiveness of my OTT advertising campaign?
Advertisers can measure the effectiveness of their OTT advertising campaign using metrics like ad impressions, click-through rates, completion rates, conversion rates, and ROI.
Will OTT advertising replace traditional TV advertising?
While OTT advertising is growing rapidly, it is unlikely to completely replace traditional TV advertising in the near future. However, as more consumers shift to streaming platforms, OTT advertising will become an increasingly important part of the advertising mix.
OTT advertising offers a powerful way for advertisers to reach and engage with their target audience. Despite its challenges, it holds great potential for the future of advertising. As technology continues to evolve, OTT advertising will become increasingly sophisticated, offering even more opportunities for personalized, targeted, and effective advertising.
Contact us today to learn more about how you can incorporate OTT advertising into your marketing mix!
OTT Glossary
1. Over-the-top (OTT): Refers to video content that is delivered over the internet, bypassing traditional TV broadcast methods.
2. Connected TV (CTV): Refers to televisions that are connected to the internet, enabling viewers to access streaming services and OTT content.
3. Streaming Devices: Refers to devices such as Roku, Apple TV, and Chromecast that enable viewers to stream OTT content on their TVs.
4. Cord-cutters: Refers to viewers who have canceled their traditional TV subscription in favor of streaming services.
5. Cord-nevers: Refers to viewers who have never had a traditional TV subscription and rely solely on streaming services.
6. Ad-supported Video on Demand (AVOD): Refers to OTT content that is free to viewers but supported by advertising.
7. Subscription Video on Demand (SVOD): Refers to OTT content that requires a subscription fee and is ad-free.
8. Programmatic Advertising: Refers to the automated buying and selling of advertising inventory, enabling advertisers to target specific audiences.
9. Targeting: Refers to the ability to direct advertising to specific demographics, interests, and behaviors.
10. Impression: Refers to each time an ad is displayed to a viewer.
11. Viewability: Refers to the percentage of an ad that is actually seen by the viewer.
12. Brand Safety: Refers to ensuring that ads are displayed in a context that aligns with the values and objectives of the advertiser.
13. Frequency Capping: Refers to limiting the number of times a viewer sees a particular ad.
14. Retargeting: Refers to displaying ads to viewers who have previously interacted with an advertiser's content.
15. Attribution: Refers to measuring the effectiveness of advertising campaigns by attributing conversions or sales to specific ads or channels.
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