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What is OTT Advertising? – TV’s Biggest Rival Is Here

January 1, 1970

What Is OTT Advertising?

OTT advertising is an internet-based, non-skippable, immersive, video-on-demand content format that allows advertisers to engage with a unique audience that is committed to the content it is consuming.

OTT stands for Over-the-Top-Television, which originally referred to the devices that go “over” a cable box to provide the user access to TV content such as Roku or AppleTV.

In OTT channels, content is delivered via the internet rather than through a traditional cable/broadcast provider.

A connected TV, also called CTV, is a television or connected device with an internet connection and a UI that enables users to access OTT content through applications.

OTT Ads

OTT and CTV ads are served as pre-roll and/or mid-roll within streaming content on connected devices such as Roku, Amazon Fire TV, Google Chromecast, Apple TV, and gaming consoles.

It refers to film and television content provided by a high-speed internet connection rather than a cable or satellite provider.

OTT ads are the closest digital marketing product to traditional TV viewing.

The big-screen guarantee promises that your OTT viewing experience will parallel the traditional broadcast experience.

How Does OTT Work?

OTT ads are delivered using a variety of factors such as programmatic TV delivery, household audience targeting, performance optimization, and as an extension of traditional TV.

Programmatic TV delivery utilizes machine and artificial intelligence as a mechanism for buying and placing media to enable real-time impressions and targeting reporting.

Household audience targeting enables OTT and CTV users to enjoy an enhanced TV experience that allows them to choose what to watch, and when to watch it.

We identify viewers based on their online behaviors.

In this way, we target the audience group behaviorally and not by the genre they are likely watching.

Performance optimization occurs when OTT analysts monitor and interact with campaigns daily.

Your OTT analyst will make adjustments to application inventory, Video Completion Rates (VCR), and frequency of the ads to deliver the best possible performance results.

OTT used as an extension of traditional TV combines the power of TV with the precision of digital marketing.

You should tailor campaigns to local audiences using advanced targeting tactics to maximize and measure relevance.

What Types of Targeting Are Used For OTT?

Geographic Targeting

Geographic targeting is one of the most advanced location-based advertising techniques for targeting users based on a specific and sought after geographic area.

This offers you the ability to accurately geo-target their potential customers across connected and streaming platforms.

This enables you to capture your audience’s location within a media market, city, state, country, zip code, and/or radius requested.

Behavioral Targeting

Behavioral targeting enables advertisers to combine the effectiveness of search with the brand impact and reach of OTT targeting.

Keyword level targeting gives advertisers the ability to target potential customers with OTT ads based on searches they perform across the web.

A user performs a search, then the system collects data associated with that search.

Then the same user is shown a pre-roll and/or mid-roll ad based on the keywords searched.

Brand recognition level increases for you as the user is seeing the brand on multiple mediums.

Addressable Geo-Fence Targeting

Addressable geo-fence targeting brings clients a powerful, effective, and accurate new way to target specific households and businesses with OTT and CTV video advertising.

Targeting up to one million street addresses within their campaign, clients can improve their TV campaigns, direct mail campaigns, and other marketing efforts.

This targeting is based on plat line data from property tax and public land surveying information to maximize the precision of addresses being targeted.

Benefits of OTT

Big Screen Viewing

OTT advertising is likely speaking to multiple members in a household.

Over 93% of these users are viewing in the same area of the house or are viewing simultaneously in other rooms of the house.

With a single impression, you are reaching multiple consumers with an opportunity to introduce your brand, drive, recall, engagement, consideration, and influence purchasing behavior.

Audience Targeting

Big screen delivery to an entire household reaches anyone in the home, geographically and behaviorally.

Advanced targeting delivers your ad to household members who have already expressed interest in your products and services.

Engagement

OTT/CTV has the highest level of engagement among all other digital products.

With no ability to skip ads on the big screen, OTT and CTV consistently deliver VCR rates over 90%.

Viewers have self-selected their content and are tuned-in, making them highly likely to pay attention.

Watching ads on the big screen means users are always “prime-time.”

Examples of OTT Streaming Devices

Over-the-Top marketing utilizes devices to give users access to the TV channels they want.

Here are a few of the most popular streaming devices currently being used:

Roku

Roku is a digital media player that allows you to stream video, music, and entertainment content.

You can stream Amazon Video, Netflix, HBO GO, Hulu Plus, Spotify, and more from the comfort of your own home without needing to pay for a cable package; all it requires is an internet connection.

Roku reported having over 29.1 million active users last summer.

Roku devices were used 3.5 hours per day on average, making it one of the most used devices in your home.

Amazon Fire Stick

The Amazon Fire Stick is a small device roughly the size of a flash drive that plugs into a TV’s HDMI port.

The Fire Stick enables any TV to stream content over Wi-Fi such as Netflix, YouTube, Hulu, Pandora, HBO GO, and much more without needing to pay for a cable package; all it requires is an internet connection.

Amazon has reported over 34 million active users for the Fire Stick.

Examples of OTT Streaming Services

While streaming devices such as Roku or Amazon Fire Stick give users access to streaming, they require streaming services to deliver the content to these devices.

Here are a few of the most popular Over-the-Top services:

Pluto TV

Pluto TV is an internet-based TV platform which is owned by Viacom.

Pluto TV generates revenue from Over-the-Top advertising between programming, with plans to remain a free television provider.

Pluto TV’s user base has increased by more than 3 million since the beginning of the year.

Viacom has said that Pluto TV finished 2018 with more than 12 million monthly active users, 7.5 million of which were on connected TVs.

Tubi TV

Tubi TV is a free, ad-supported service, with advertisements shown during commercial breaks between programming.

It is the largest independently-owned video service in the United States since Pluto TV’s acquisition by Viacom.

As of June 2019, Tubi TV offers more than 15,000 films and TV series with deals from major content creators such as NBCUniversal, Lionsgate, and Warner Brothers.

Tubi has over 20 million monthly active users.

Xumo

Xumo provides free Live and on-demand streaming entertainment.

Xumo features over 160 different channels to choose from including popular digital and television networks such as CBSN, History, and PGA tour.

As of April 2019, Xumo has confirmed over 5.5 million monthly active users after adding distribution deals with LG and Comcast Xfinity.

Last summer, Xumo reported a 325% rise in viewership and a 90% increase in user consumption.

OTT Pricing Model

In terms of pricing, OTT is based on a CPM (cost per thousand impressions) model.

This is very much in line with the majority of other digital marketing products, making the transition to OTT advertising easier for marketers.

While this pricing model lines up with the current digital marketing landscape, it stands in stark contrast to traditional TV pricing methods.

Traditional advertisers rely on an antiquated ratings points basis, using metrics such as cost per point (CCP), gross rating point (GRP), or television rating point.

These models have proven to be out of date and less effective than a CPM OTT pricing model.

Thanks to the programmatic and immediate nature of OTT, everything is bought in real time.

This means that platforms and advertisers are never left with an aging inventory that may be prioritized or deprioritized unfairly.

Everything is bought in real time and ads are only served when it matches the client’s targeting parameters.

Top Features of OTT Advertising

OTT, CTV and Internet TV, are popular buzzwords in the digital advertising world, and rightfully so.

Based on the significant video advertising shift towards OTT Television, agencies are missing more than just the boat if they are not including it within their product suite.

At Conduit Digital we like to call it “Tra-Digital” because OTT is the perfect extension of traditional advertising but with the power of digital targeting.

The explosion of 170 million OTT users was led by streaming on Smart TVs and devices like Roku, Amazon Fire Stick, Google Chromecast and Apple TV that allow them to access television content for free through the internet.

Power OTT applications like Pluto TV, ABC News, Sling TV, ESPN, and NFL allow viewers more live TV and on-demand content than they can possibly consume.

When it comes to brand awareness, OTT is king.

CTV delivers commercials with an average Video Completion Rate of more than 90% and those ads are non-skippable!

High video completion rates mean high engagement and relevance.

Here are our Top 4 reasons to add OTT and CTV to your digital advertising lineup.

1. Large-Screen Advertising

Connect TV advertisers are able to target the largest screen by household giving advertisers the capability of targeting audiences with a great likelihood of reaching multiple viewers at once when factoring in co-viewing.

2. Behavioral Targeting

Show commercials to audiences that are most interested in your brand or product to drive brand awareness, website visits and consideration that aids in conversions.

3. Geo-Targeting

Target by state, DMA, city or down to zip.

Yes, you read that correctly!

With OTT you can target down to the zip if market conditions allow.

This is great for local advertisers who want to utilize a cost-effective video advertising option that targets their business community.

4. Live and Dynamic Reporting

Be transparent with your clients.

Conduit campaigns come with advanced reporting capabilities giving agencies and advertisers data on delivery by day, application by keywords and helps to inform other marketing plans.

Video Completion Rate transparency allows clients to see the percentage of their commercials that are being watched from start to finish.

CTV advertising offers an industry VCR rate of more than 90% and is exceptional for advertisers looking to improve brand awareness and reach.

OTT Trends

OTT advertising is the fastest growing digital marketing product.

In fact, the data suggests that it will only keep growing.

Here are some important trends currently happening in Over-the-Top marketing:

  • 61% of Americans own a Smart TV (or CTV)
  • 52% of Americans use OTT services
  • For viewers between the ages of 18-34, OTT usage is over 65%
  • The average OTT customer owns up to three OTT devices they can use to watch OTT content and subscribe to different services
  • People spend more time watching OTT content than they do driving a car or talking to friends and family

As OTT services gain more and more popularity, this presents grim news for cable, satellite, and broadcast providers/advertisers.

Cord-cutting millenials are supplanting aging baby-boomers as the primary consumer target. In fact:

  • Millennials who subscribe to at least one OTT service watch more than twice as much OTT content as they do live TV.
  • The top content that people want is movies, followed by scripted TV shows. Live news and sports, thought to be the killer app keeping broadcast and cable alive, rank #3 and #4 respectively across all demographics.
  • Fewer than 40% of Millenial OTT users plan to keep their cable package. The amount of cord-cutters is rising exponentially.
  • Nearly ⅔ of cord-cutters are more like “cord burners;” they say that cutting cable has noticeably improved their life and there is nothing a cable company can do to lure them back into having a bundle.

TV Advertising vs OTT Advertising

Last year, brands spent over $70 billion in advertising through traditional television audiences.

Studies and data show that this media strategy is extremely outdated.

Only 5% of all ad dollars go toward OTT marketing, despite the fact that over 50% of the audience is already there.

As over the top advertising catches up with traditional TV advertising, it is important to stay ahead of the curve.

What Is The Future Of OTT?

OTT advertising is the bridge that will finally connect digital and traditional marketing.

As OTT continues to grow, it is important to have a strategic digital partner who understands over the top advertising and where it is going.

Conduit’s OTT team utilizes robust datasets and emerging industry trends to develop conversion-oriented OTT campaigns that deliver proven results.

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