For a long period, linear TV was the only option for video entertainment in American homes. Netflix then changed the way people consumed video content. While YouTube was already there, it was mostly filled with user-generated content. With time, we saw massive growth in the number of streaming platforms where you could get subscription video services and free content. With the shift in media consumption, advertisers also need to adapt to user preferences and plan their ads for these OTT services.
What Is OTT Advertising?
Over-the-top (OTT) advertising refers to an advertising practice that uses streaming media services to show ads to viewers over the internet, bypassing traditional cable, broadcast, and satellite TV platforms. With advanced targeting and interactive ad capabilities, OTT advertising allows you to reach specific audience groups viewing content on devices like computers, smart TVs, and mobile devices.
This provides you with detailed analytics that you can use to measure the effectiveness of your ads. Now that you know the OTT advertising definition, let’s see how OTT as a platform differs from the traditional ones.
OTT vs Connected TV (CTV)
Connected TV (CTV) is a device connected to the internet that allows users to access OTT content on a television. OTT is the method of delivering video content, while Connected TV is the device used to consume the delivered content. Some common examples of CTVs are smart TVs, gaming consoles, streaming devices, etc.
OTT vs Video on Demand (VOD)
Video on demand (VOD) is a service that lets viewers select and watch video content on-demand at their convenience. The major difference between OTT and VOD is that OTT is a content delivery method, while VOD is a type of content delivered. VODs can be premium movies or libraries of TV shows, concerts, or sporting events. It may also include user-created video content. Some of the common examples of VOD platforms are Netflix, Disney+, Amazon Prime Video, and Hulu.
The Benefits of OTT Advertising
There are several reasons to use OTT advertising. It allows you to target ads more accurately than in traditional TV advertising, adapts to privacy changes, makes ad content more relevant and engaging, and ensures brand safety while providing top-notch inventory without fraud.
Targeted Reach
With OTT advertising, you can utilize the audience targeting features and ensure that your ads reach the users who are interested in your products and services. OTT advertising pairs well with local targeting campaigns, using geo-fencing, zip codes, IP addresses, and designated market areas to achieve more ad-targeting precision. You can target specific users based on their:
- Age
- Gender
- Location
- Interests
- Purchasing history and more
In simpler words, you can reach your ideal customers who are most likely to make a purchase from you, helping you generate more high-quality leads and conversions.
Engaged Audiences
OTT advertising often boosts engagement by tailoring the ad content to individual viewer preferences through data analysis. It offers precise targeting based on interests and demographics. So, there is a higher chance of reaching the right audience.
Interactive elements and different ad formats make ads more engaging and encourage viewer interaction. Timing the ads while the audience watches relevant content improves engagement, while frequency capping prevents ad fatigue. You can also use detailed performance metrics to refine your ad campaigns for better engagement outcomes.
Advanced Measurement
With traditional TV ads, measuring your campaigns’ performance is almost impossible. With OTT advertising, however, you can easily check out essential data and metrics about your campaign to analyze how well it is performing. You can see which ad strategies are working in your favor. You also understand which ad types and OTT platforms drive the best results for your business.
You can use that data to optimize and improve your campaign to earn the highest possible return on investment for your efforts. As a result, you won’t have to worry about wasting your time and resources on strategies that do not drive the desired results for your business.
Real-time Optimization
With OTT ads, you can get faster data insights on both audience and performance. You can use such information to make better, more informed decisions during and after campaigns. In a majority of the cases, the businesses witness increased revenue through real-time, in-flight optimization of ads.
You can use the analytics data to modify the variables that need changing in your ad campaign. Additionally, you can take note of the campaign data and use the insights to optimize future campaigns that target the same audience group. You can also make single variable changes to your campaigns over time for creatives, locations, and placements. Each iteration can help you better understand your audience.
Engaging Ad Formats
OTT advertising also gives you enough opportunities to create personalized marketing messages that resonate with your target audiences. More engaging ads mean more clicks and conversions for your company. You can use these engaging ad formats to create different ad content to ensure they resonate with your specific users.
Platforms like Hulu allow you to create binge video ads that display when users binge-watch a TV series. With such ads, you can appeal to the users’ current actions and create a more personalized experience that encourages more sales for your business.
How Does OTT Advertising Work?
Video streaming services are ruling the home entertainment segment right now. They allow users to watch videos, movies, TV shows, and more for free, on rent, or at a set subscription fee. Several video streaming platforms allow advertisers to promote their services and products to people who use the video streaming services.
When you invest in OTT advertising, your ad will be shown to users when they watch content on a video streaming platform. You can choose to promote your brand with display ads, video ads, and more. You also need to identify your target audience and place your ads around the content they like to watch. With the right advertising strategy, you can use OTT ads to boost your brand awareness and reach a larger number of potential buyers to boost your sales and revenue.
How to Create an OTT Strategy?
It is recommended that you seek expert assistance while developing an OTT advertising strategy. The process of developing an OTT advertising plan includes the following steps:
- Plan the Campaign
In this step, you need to identify your target audience. Figure out who they are, where they live, what their preferences are, and more. This will help you plan your advertising campaign effectively.
- Select Your Audience
You can choose who sees your OTT ads. You can group people based on their interests, occupations, or locations.
- Pick an OTT Platform
The choice of the OTT platform is crucial to the campaign’s success. This is where your video ads show up. You can work with advertising experts to configure where you want your ads to display across different streaming services, such as Hulu, Roku, and others.
- Create Ad Content
With the help of professional ad experts, you need to create interesting and relevant ads that can resonate with your target audience. The ad content could be commercials, short clips, or promo videos.
- Buy Ad Space
Once you have selected the OTT platform where you want to publish the ads, you need to buy space for your ads. You can either do it through the platform or use AI to automate the process.
- Set a Schedule
After buying the ad space and choosing the right audience group, you need to decide when and where the ads will appear on the chosen OTT platform.
- Monitor Performance
Keep track of how the ads are performing. Check crucial areas like the number of people watching the ads, clicking on them, or buying something.
- Improve the Strategy
Analyzing your ads’ performance may help you understand if certain aspects of the ad campaign need to change. Based on the performance, you can adjust your ads, decide when they should be played and who sees them.
- Review Success and Mistakes
You need to put together a report once your campaign is over to see how well it performed. This report has some crucial insights that help you plan your next campaign better.
Types of OTT Advertising
In today’s highly competitive advertising market, you can deliver several types of ads through streaming media over the internet. The most common forms of OTT ads include:
Pre-Roll Ads
This type of OTT ad appears before the content the viewer is trying to watch. The typical length of such ads ranges between 15 and 30 seconds. They can be skipped by the user after a certain amount of time.
Mid-Roll Ads
This kind of OTT ad appears during video content, typically in the middle of a longer piece of content, such as a TV show or movie. The average duration of such ads is usually longer than pre-roll ads, and they cannot be skipped.
Post-Roll Ads
These ads appear after the requested content ends. They are similar to pre-roll ads, but since the viewer has already completed watching the requested video, the completion rate of these ads is comparatively lower.
Banner Ads
The banner ads are typically small pieces of ad content that appear at the bottom or top of the screen while the requested content is shown on the screen.
Overlay Ads
Overlay ads appear on top of the content but do not interrupt the viewing experience. They are usually clickable and can lead to a landing page.
With OTT advertising, brands can explore different options to reach viewers through streaming media. All these different types of ads have their own set of pros and cons. Also, they can be used in various ways to engage your target audiences and drive results.
Types of OTT Platforms
You can find several types of OTT platforms or business models that offer streaming content directly to consumers. Viewers can access a wide range of on-demand shows, movies, and original content on platforms like Amazon Prime Video and Netflix. These channels also insert targeted ads, ensuring relevance to individual viewers through data-driven insights. Some of the most common types of OTT platforms are:
Advertising-based Video on Demand (AVOD)
Advertising-based video on demand is a popular model of video content delivery over the internet. In this model, the content is available for free to viewers. However, they use advertising to generate revenue. In such OTT models, the viewer does not have to pay for the content but is subjected to ads (often unskippable ones) during playback. The revenue generated from the ads is used to support the production and distribution of the content. Some common examples of AVOD platforms are Crackle, YouTube, and Pluto TV.
Transactional Video on Demand (TVOD)
This type of video-on-demand service allows viewers to access content on a pay-per-view basis. With a TVOD model, viewers get to rent or purchase individual TV shows or movies and typically have a set period of time to watch the content before it expires. This model of content delivery is generally used for newer releases that are not yet available on other types of content-delivery models. One-time events like concerts or sporting events are also included in the TVOD model. Some of the common examples of TVOD platforms include Amazon Prime Video, Google Play, and iTunes.
Premium Video on Demand (PVOD)
This video distribution model allows viewers to rent or purchase movies or TV shows that have just been released to home entertainment platforms before they are made available on subscription-based video on demand (SVOD) or conventional physical media, such as Blu-ray discs or DVDs. With PVOD, consumers get access to high-quality video content at home. Typically, PVOD titles are available to rent for a limited period, usually 48 hours, at a premium price point. This is often more expensive than renting the same title to conventional video-on-demand platforms.
Types of OTT Devices
If you look for OTT devices in the market, you will come across several popular names. Common devices that access streaming media include TVs, smartphones, desktops, and tablets. Since the video content streamed on these devices is going “over” via an internet connection, it is referred to as OTT content.
Amazon Fire TV Stick
This is a small OTT device that you can simply plug into an HDMI port on your TV to access various streaming services. An Amazon Fire TV Stick offers access to Amazon Prime Video, Netflix, Disney+, Apple TV+, Hulu, and more.
Roku
This OTT device also connects to your smart TV via an HDMI port. You can access numerous channels and streaming services on your TV with the help of this device.
Apple TV
Apple TV (not to be confused with the streaming service Apple TV+) allows viewers to stream content from services like Apple TV+, iTunes, Netflix, and Hulu. You can also access live TV and sporting events using the device.
Google Chromecast
This streaming device from Google allows you to stream or cast content from your smartphone or computer to your television.
Smart TVs
Nowadays, most TV sets come with built-in streaming capabilities, allowing users to access content without plugging any additional devices like a Fire TV Stick or Chromecast.
Gaming Consoles
Gaming consoles like Xbox and PlayStation can also function as streaming devices besides offering a great gaming experience. You can use streaming services on these devices to access content through the console.
As the streaming technology evolves, we may see a lot more innovations in OTT devices. In fact, a majority of these aforementioned devices receive new updates every once in a while.
Is OTT Advertising Effective?
In today’s digital landscape, OTT advertising is highly effective. As an advertiser, you can reach a growing segment of audiences who prefer online platforms over traditional TV. Its ability to target specific demographics and interests makes it more relevant and personalized for the audience, leading to a higher rate of engagement.
OTT advertising platforms offer detailed analytics, allowing advertisers to monitor their ad performance in real-time and optimize campaigns for better outcomes. This cost-effective alternative to traditional TV advertising also offers flexible budgeting options and a potential for interactive ads. As streaming video service providers continue to dominate the market, investing in OTT advertising appears to be a smart move for brands looking to stay relevant and connect with new-age audiences.
What Types of Results Can I Expect from OTT Advertising?
OTT ads are becoming increasingly popular for the results they provide. If you invest in OTT advertising with a proper strategy, you, too, can achieve the following results for your brand.
Increased Brand Awareness
With over 90% of American adults consuming video content on online streaming platforms, it has become one of the most popular mediums for home entertainment in the US. Quite naturally, promoting your business using OTT ads can make your brand more visible to the audience and boost brand awareness.
Improved Audience Targeting
OTT advertising offers you advanced audience targeting features that traditional advertising lacks. You can easily choose which audience group you want to target and display personalized ads to those people who will be interested in your products or services.
Higher Completion Rates
With OTT advertising, you can focus on a specific group of people who are genuinely interested in your offerings. So, when you run an OTT ad campaign on a popular streaming platform, the users are more likely to see the entire ad as they resonate with its content.
Enhanced Brand Perception
When OTT audiences see relevant content about a brand, they develop a positive perception of it and are likelier to click on the ad or visit its website. The increased focus on a particular audience group also contributes to the change in perception.
Data-driven Optimization – Multi-device Reach
OTT advertising also enables you to monitor your ad performance on the OTT platforms and optimize the campaign based on the insights. Since OTT ads target different types of devices, such as a smart TV, mobile phone, and computer, you can optimize your content to reach the audience across different devices.
How Do You Advertise on OTT?
Anyone can run OTT ads, even if they do not have a huge ad budget. There are six steps to execute the OTT advertising process successfully.
- Develop an OTT advertising strategy
- Choose your OTT platform or provider
- Create relevant and engaging ad content
- Select your target audience
- Deliver ads to viewers during the most appropriate streaming content
- Measure the KPIs and optimize the ad performance
What Types of OTT Campaigns Can You Run?
You need to choose between two of the most effective OTT campaign strategies:
Performance TV Prospecting
In this strategy, you can reach new customers by tapping into thousands of users available through an agency’s unique integration with data providers.
Performance TV Retargeting
You can use your own first-party CRM data to retarget audience members who are interested in your brand by serving them OTT ads.
How Do I Buy OTT Ads?
If you need to buy OTT ads from platforms and publishers, you are going directly to the source. This process is more useful for advertisers who want to confirm that their ads will display to users watching content on a certain platform. An agency that directly works with publishers can help you achieve the same results while helping you buy at scale.
Agencies can act as intermediaries between publishers, platforms, and advertisers. These agencies can buy ad space directly to buy at scale and support all their clients. So, you can either connect with an agency to buy space for your ads on a certain OTT platform or go directly to the publisher and platform.
What Is the Cost of OTT Advertising?
The cost of OTT advertising can vary depending on who or what you are targeting. For instance, if you are using a cost-per-thousand pricing model, you may have to pay around $25 to $40 per 1,000 impressions.
In 2023, the CPM for YouTube videos used to be $20-$25, while the CPMs for CTV ran $35-$65. Ad networks generally connect advertisers with the available slots of OTT and CTV. It is important to note that OTT advertising cost is affected by a number of factors, including:
Streaming Platform: Different streaming platforms like Prime Video, Apple TV, Netflix, Disney+, and Hulu charge different rates based on the size of their audience and the capacity of their ad inventory.
Target Audience: Choosing a more specific target audience will be more expensive to reach. So, if you are targeting a certain age range in a specific location with specific interests, it will cost you more.
Ad Format: The rates may also differ depending on the chosen ad format. For example, display ads on Amazon Fire Stick or Roku home page cost more than video ads.
Competition: In-demand slots come at a higher price due to high competition. Competition can change according to audience size, surrounding content, and demographics.
OTT Metrics and Measurement
In advertising, the major KPIs and metrics used in measuring OTT ad campaigns are as follows:
ROAS: The return on ad spend (ROAS) is a metric that measures revenue earned for each dollar spent on advertising. It is the profit generated from a particular OTT campaign divided by the total spend on that campaign.
LTV: Lifetime value (LTV) estimates how much revenue a business can expect to generate from a customer over their relationship with the company.
CPA: Cost per acquisition or cost per action refers to a business’s ability to convert ads. It measures the cost of a customer taking a specific action.
CPI: Cost per install refers to the amount a company spends for each installation of their app. This metric is measured by dividing the ad spend by the total number of installs.
CTR: The click-through rate (CTR) measures the average number of clients an ad gets in relation to the number of times the ad is displayed. However, high CTR does not always mean higher revenue. It only shows that an ad is generating interest and attention.
ARPU: Average revenue per user is a crucial metric that measures the amount of money a business earns from a customer. You can measure this by dividing total revenue by your total number of users from an OTT campaign.
OTT Video Content Best Practices
Before launching your OTT ad campaigns, you need to understand the key to success in the OTT landscape. Here is a list of OTT advertising tips and best practices that can help you achieve your desired results.
Use Audience Targeting Features
As discussed previously, OTT video ads allow you to reach your target personas and ideal customer profiles (ICPs) more easily than traditional advertising methods. You should utilize advanced audience-targeting features to make sure your ads reach the people most interested in your products or services. For instance, you can target users based on their age, location, interests, and more.
Make the Ad Content Personal and Relatable
Every advertiser knows that personalized and relatable content produces better results. OTT ads are no different. You need to create personalized OTT ad content for different audience personas and ICPs. This way, the users will feel like your brand understands them. Your messaging should be relatable and focus on highlighting how your company can ease their problems and provide the solutions they need.
Add Voiceovers and Captions to Video Ads
You will be surprised to know how many users turn their TV volume off during the commercials or OTT ads. So, you should be prepared for such scenarios and more. Use voiceover for the users who leave the sound on but aren’t looking at the TV screen to ensure they hear your branded message. At the same time, you should add captions to the video ads so that people who mute their TVs during advertisements can watch your ad and still get your message.
Evaluate Ad Performance and Optimize Your Efforts
As an advertiser, your goal should be continuously improving your ad campaign to get the best ROI from your OTT advertising. Since tracking and analyzing your ad performance on OTT advertising platforms is easy, you can access crucial data about your ads whenever you want. You can check how many people have viewed your content, clicked on the ad, made a purchase, and more.
High-Impact OTT Advertising Campaign Examples
While the internet is filled with numerous high-impact advertising campaigns on OTT, let’s talk about some OTT advertising examples that were published recently.
1Password
We all know Ryan Reynolds for his iconic movie roles. However, his other ventures deserve equal attention. Reynolds’s OTT ad for 1Password, a cybersecurity app, is funny, on-point, and impactful. The video ad features players of Wrexham AFC, which the actor co-owns. Even though the ad does not talk much about the app, it highlights its primary function and popularity — perfect for a 30-second ad.
Rumpl
Rumpl’s OTT ad follows the typical pattern of advertising content. It highlights the major features of the fashionable, travel-friendly, and warm blankets that are created from recycled materials. The relevant visuals, fast shots, and clear voiceover immediately pull you in and address the traveler in you.
The Future of OTT Advertising
A recent study suggests that Netflix’s major competitors are losing money in an effort to catch up with its massive subscriber base. Also, the economic squeeze is a major issue for OTT platforms. As discretionary spending slows, investors will start mounting pressure on OTT service providers to boost their ad product and non-subscription revenue.
5G Technology Is Revolutionizing Internet Accessibility
In the last few years, 5G technology has reached different parts of the world, changing the way people consume media content. As it continues to grow and reach even the most remote areas in the world, it will enable publishers to broadcast immersive experiences in high definition or perhaps in 4K. With the massive jump in download speeds, mobile users around the world are getting used to high-quality streams without any disruptions. This would encourage businesses to target their preferred audience groups with OTT advertising.
Increased Personalization and Priority on Data Privacy
From an advertiser’s point of view, consumer data is valuable. If you are aware of the viewing behavior of your target audience, you can use it to create more contextual advertisements. At the same time, streaming services need to ensure data privacy for all their users. Data clean rooms allow OTT media publishers to share customer data with advertisers while maintaining consumer privacy. Using a combination of first-party and third-party data, advertisers can reach a huge pool of targeted audiences.