What Is OTT Advertising? The Definitive Guide
The discovery phase of the consumer journey is a prime time for marketers to engage potential customers, and streaming video is a popular and effective way to reach modern viewers. Through the use of sight, sound, and motion, streaming video advertisements successfully bring together brands and interested consumers.
Over-the-top (OTT) video content can be seen whenever and anywhere you like, including whether you binge-watch a series on Freevee, watch a live event on YouTube, or use a Chromecast to view your favourite network broadcast app. Over-the-top (also known as “streaming TV”) refers to any video material that is streamed to a user’s computer or mobile device directly from the internet and watched on a television set, rather than through a traditional cable set-top box.
To help you get started with OTT advertising and start measuring its efficacy, this article will discuss the basics of OTT, its advantages, and how to get started with it. Finally, we’ll go through some of the best standards that should be followed while advertising on OTT services.
The Difference Between OTT and CTV
SVOD, AVOD, or just plain old VOD — there are so many different TV terms out there nowadays. But possibly one of the most confusing is OTT and CTV, which tends to be used interchangeably. If they mean the same thing, then why are there two different terms? Well, the short answer is that they’re similar yet ultimately carry different meanings.
So, what’s the difference between OTT and CTV? Let’s take a quick look at the differences:
Over-the-top (OTT)
Again, the term “over-the-top,” or OTT, describes the delivery of television programming over an internet connection as opposed to a cable or satellite subscription. Thus, over-the-top advertising (or OTT advertising) is the practice of promoting goods and services to this online audience as they watch a video.
You may watch it on your computer, smartphone, tablet, or any other device that can access the internet. There are many different types of electronic devices available nowadays, such as televisions, smartphones, computers, tablets, and even video gaming consoles.
Connected TV (CTV)
“Connected TV” (or CTV) advertising refers to commercials aired on TVs with internet connectivity. Either the TV itself has an internet connection, as with a smart TV, or an external video player, also known as an OTT device, is used. An OTT device can be used to “create” a CTV, but a CTV isn’t necessarily an OTT device. Confusing, we know!
In the marketing world, it is common practice to use these terms interchangeably, as they mean the same thing in a way. The key difference between CTV and OTT, however, is that the former is primarily designed for use on television sets, while the latter is available on a wider range of devices, including mobile and desktop computers.
How Does OTT Advertising Work?
Photo credit: Riplee
Advertising through OTT channels functions in a very similar fashion to how CTV advertising works.
Advertising in streaming media can be optimised with AI and first-party data for the foreseeable future. When viewed on a traditional television set in the comfort of one’s own living room, OTT content — and, as a result, OTT advertising — is at its most recognisable and effective. However, that doesn’t mean that advertising on other OTT platforms isn’t effective.
It all boils down to how OTT advertising works.
When displayed on TVs, OTT advertisements function similarly to other direct response channels, with the added benefit of the immersive environment that only television can provide. Advertisers may typically use OTT advertising to target specific audiences, track who sees their ads, and compare the results to those of their previous digital campaigns.
And because it’s cross-device, it can follow consumers who’ve seen your advertisements on OTT services as they navigate to your website and give them ads that are relevant to their journey until they make a purchase. This is done in a similar vein as online marketing channels. Where online adverts are user-specific, OTT adverts will tag an entire household with a “cookie”, which will track internet usage within that household once the ad is viewed.
Types of OTT Ads
As we can see, digital marketing has witnessed a significant transformation with the advent of OTT advertising. With its diverse formats and strategic placements, OTT ads offer unique opportunities for brands to connect with their audience. Each type of OTT ad comes with its own set of advantages and challenges, and understanding these is key to leveraging OTT platforms effectively in your digital marketing strategy.
With that in mind, let’s take a look at the main types of OTT advertisements:
Pre-Roll
Pre-roll ads, appearing before the viewer’s chosen content, serve as the initial touchpoint between the brand and its audience. These ads are crucial for making a strong first impression. You experience these frequently on streaming platforms, where an ad plays before your selected show or movie begins.
The first interaction often sets the tone for brand perception. Pre-roll ads, if executed effectively, can leave a lasting impact on the viewer, aiding in brand recognition and message delivery.
Pros
- High Viewability and Engagement: Pre-roll ads typically enjoy high viewability. They capture the audience’s attention when it is at its peak, just as they settle in to watch their chosen content.
- Effectiveness in Capturing Attention: The positioning at the beginning ensures that the message is delivered to an audience that is still fresh and attentive, making it a prime time for engagement.
Cons
- Potential Viewer Annoyance: There’s a risk of viewer annoyance, especially if the ad is perceived as an obstacle to the content they are eager to watch.
- Skip Rates and Limited Time Frame: Viewers often have the option to skip these ads, and the brief time frame restricts storytelling potential, challenging advertisers to convey their message succinctly.
Mid-Roll
Mid-roll ads are strategically placed within the content, basically like traditional TV commercial breaks. This positioning is critical for maintaining viewer retention and balancing content engagement with advertising needs.
Finding the right balance here is key. You need to ensure the ad is impactful without significantly disrupting the viewer’s experience.
Pros
- Higher Engagement During Breaks: These ads can re-engage viewers during natural breaks in the content, potentially leading to higher engagement levels.
- Opportunity for Re-capture: Mid-content ads offer a chance to recapture the audience’s attention, particularly if their interest in the content is waning.
Cons
- Viewer Disruption: There’s a risk of disrupting the viewer’s experience, which can lead to frustration or disengagement from the content.
- Timing and Relevance Challenges: The effectiveness of mid-roll ads heavily relies on their timing and relevance to the viewer’s experience.
Post-Roll
Post-roll ads appear after the content has concluded. This strategic placement targets viewers who have engaged with the content in its entirety.
The challenge lies in retaining the viewer’s attention post-content and encouraging action or further engagement.
Pros
- Higher Completion Rates: Viewers who have watched the entire content piece are more likely to view these ads to completion.
- Opportunity for Call-to-Action: This is an opportune moment for call-to-action messages, as viewers have just engaged with content and may be receptive to related offers or information.
Cons
- Likelihood of Viewer Departure: Many viewers tend to leave once the primary content concludes, reducing the potential audience for these ads.
- Reduced Impact Post-Engagement: The impact is often lessened as the viewer’s primary engagement – the content – has already ended.
Overlay
Overlay ads are displayed over the content being viewed, offering a less intrusive advertising option. These ads appear as small overlays, often at the bottom of the screen.
The key is to be visible without being overly intrusive, maintaining a balance that respects the viewer’s experience.
Pros
- Subtle Presence: Overlay ads offer a subtle yet effective way of presenting advertising content without major interruptions.
- Creative and Interactive Formats: These ads open avenues for creativity and interactivity, engaging viewers in a different way.
Cons
- Risk of Distraction: There’s always a risk that these ads might distract from the main content, potentially annoying viewers.
- Measuring Engagement Challenges: It is difficult to measure direct engagement or interaction with these ads, making it challenging to gauge their effectiveness.
Banner
Banner ads in OTT are either static or dynamic, displayed alongside the content. These banners are less intrusive and can be tailored to the content or viewer preferences.
The effectiveness of banner ads lies in their ability to maintain visibility and aid in brand awareness without interrupting the viewing experience.
Pros
- Constant Presence: Banners offer a constant yet non-intrusive presence, ensuring that the brand remains visible throughout the viewing experience.
- Targeted and Contextually Relevant Ads: Banners can be highly targeted and contextually relevant, increasing the likelihood of viewer engagement.
Cons
- Limited Engagement: Compared to more interactive ad formats, banners typically engage viewers to a lesser extent. They’re much easier to ignore compared to other types of OTT ads.
- Potential to Be Overlooked: There’s a risk that these ads may be overlooked or ignored, especially if viewers are deeply engrossed in the content.
Five Most Popular OTT Platforms
Whether you know it or not, you’ve probably used an OTT platform to watch your favourite show or movie within the last 24 hours. The industry is flooded with numerous over-the-top (OTT) video streaming options. There are services here that cater to a very particular niche market, and others that provide more to a broader audience. Over-the-top (OTT) streaming services all have the common characteristic of delivering video over the internet.
Keeping this in mind, let’s examine five of the most popular over-the-top streaming platforms today:
1. Netflix
One of the first OTT streaming services was Netflix. Its origins can be traced back to a DVD rental service, but it has since evolved into the streaming giant it is today. Its early success can be attributed partly to its readiness to adopt new features as live-streaming technology developed.
Netflix has become one of the most popular online video-streaming services, with more than 15,000 films available to stream instantly. Netflix offers movies and TV shows made by themselves on top of those by other studios and shows created just for Netflix. The fact that full seasons of TV shows may be downloaded at once is another selling point for the OTT video platform among “binge-watching” audiences.
For a long time, Netflix was unique among major streaming services in that it did not insert advertisements before or during its content. Netflix lost many customers once rivals Hulu and Peacock introduced ad-supported basic plans for less money per month.
But on November 3, 2022, Netflix introduced a new subscription option called Netflix Basic with Ads for £4.99 a month (compared to £6.99 a month without ads). Advertisers can count on four or five minutes of advertising space per hour, as Netflix maintains a strict frequency cap on the number of ads shown to users per day and the number of times an ad will repeat.
You’ll need to collaborate with a fantastic advertising agency to make an attention-grabbing ad if you want to compete with the hundreds of advertisers vying for the four to five minutes of advertising per hour. You’ll only have 15 to 30 seconds to “wow” your viewers, after all — so every second counts!
2. Prime Video
Prime Video, Amazon’s OTT streaming service, provides subscribers with unrestricted access to a library of video material and also features extra content for rent or buy. All Amazon Prime subscribers automatically gain access to Prime Video. However, those who find themselves without the need for Amazon Music or expedited shipping can subscribe to the streaming service on its own.
The fact that customers can pay to watch movies while they’re still in theatres sets this OTT video provider apart. Live events such as sports can be viewed on Prime Video as they happen rather than as video-on-demand (VOD).
Like other OTT services, Amazon allows advertisers to reach a large audience by placing 15- to 30-second video commercials before, during, and after streaming content. The abundance of Amazon’s ad inventory guarantees that advertisers, whether they are major brands, small businesses, or ad agencies, will be able to develop and implement successful OTT marketing campaigns.
Despite the fact that Amazon has always included advertisements in its content, the sheer number of people who view Amazon’s videos has recently made it more appealing to marketers. Amazon has made significant investments in expanding its viewership since the debut of its initial streaming platform in the early 2000s.
3. Disney+
Disney+ is an over-the-top (OTT) streaming service that provides users with access to Disney movies and television shows — both old and new. You can find Disney, Pixar, Marvel, Star, National Geographic, and Star Wars content among them. The Walt Disney Company recognised the rising popularity of OTT services and decided to launch its own in 2019. Prior to 2019, Disney-owned material was distributed on Netflix.
There are a number of subscription options with Disney+: basic with ads for £7.99 a month and ad-free for £10.99. For those living in the US, Disney+ can also be bundled ad-free with other streaming services, including Hulu and ESPN+ — although there will still be ads on ESPN+.
Commercials on Disney’s OTT service will be 15 or 30 seconds long, similar to those on Netflix and Prime Video, and will total no more than five minutes for each hour of programming. Disney+ is in it for the long haul with monetisation, and the company doesn’t want to damage its reputation by including questionable advertising. Instead, they intend only to allow ads from more established brands on Disney+. For this reason, Disney employs a direct-from-publisher strategy, wherein advertisers must buy commercial time directly from the company.
The service also restricts the kind of content on which advertisements can appear. Specifically, kindergarten shows will be ad-free, and the few commercials that do air will focus on topics appropriate for children and their families. This makes it imperative that companies looking to advertise on Disney+ work with the right creative ad agency to increase their chances of getting a coveted spot on the platform!
4. YouTube TV
Almost certainly, you have heard of YouTube, the popular website that hosts videos for free viewing online. Perhaps less well-known is YouTube TV, an over-the-top (OTT) service from the video giant. You may either subscribe to YouTube TV and watch all of their shows for a set monthly fee, or you can buy individual episodes or movies a la carte.
The platform is also launching “Prime Channels” service in the UK, in which users can subscribe to streaming services directly from YouTube.
This OTT service is comparable to Twitch in that it caters to the gaming community by providing live streaming access to a large number of “streamers” — content creators who live stream their content on YouTube. However, YouTube TV subscribers will also be able to access over 85 TV stations with their subscriptions, giving YouTube TV a slight edge over Twitch.
Unfortunately, the YouTube OTT service is currently only available in the United States. There has been no news of when the OTT service plans to roll out to the rest of the world.
5. Pluto TV
Pluto TV is a dependable OTT service that any fan of conventional cable television should consider using. The fact that it’s free and comes with access to 190 different streaming channels is a significant plus that sometimes goes unrecognised. Pluto TV offers a large selection of entertainment with over 1,000 available movies on demand. And unlike cable TV, it offers many channels and original programming that are both interesting and hard to discover elsewhere.
Despite the lack of sports programming, the variety of informational channels and extra programming is a valuable takeaway. Pluto TV, on the other hand, is a pioneer and a good alternative for a large number of fans who are looking for these on conventional TV because of its accessibility and unlimited concurrent streams.
Since Pluto TV is a free service, all of its users will be shown ads during their viewing experience — unless they pay for the ad-free service. All of the advertisements on Pluto TV are tailored to the specific audience watching. Banner advertisements, pre-roll videos, and in-stream videos are all available through this OTT service. Advertisements that play while you’re watching content are called “in-stream video commercials,” and they make up the bulk of Pluto TV’s advertising. These commercials typically take the form of brief videos that start before the actual content.
Five Advantages of OTT Advertising
Whether through linear TV channels or OTT platforms, television is here to stay — and with that, the effectiveness of TV advertising! If you’re considering advertising through OTT channels, you should definitely consider these benefits:
1. Greater Targeting
The ROI on data-driven ads is expected to be five to eight times higher than that of less traditional, non-targeted adverts. If you’re looking to increase the effectiveness of your advertising spend, whether for on-demand or live programming, OTT is definitely the way to go.
Since OTT commercials may be more precisely targeted to their audience, they have the potential to be far more effective than TV ads. You may target certain audiences and reach them at specific times, much like paid search and social media advertising. Focus your advertising efforts on specific demographic groups, locations, and other factors. Time can also be targeted, so you can put your adverts where they will get the most attention.
2. Increased Reach
OTT ads offer the opportunity to reach a large number of people with relevant interests. As a result, many people are abandoning traditional television in favour of online video streaming services. While TV commercials still have their place, OTT platforms allow advertisers to target consumers based on a wide range of demographic and psychographic characteristics.
Hulu and YouTube, for instance, both have millions of people that companies could potentially advertise to. On these platforms, extremely relevant adverts can appear on audiences’ favourite TV shows, movies, and other on-demand films that span practically any interest.
3. Higher Engagement
People are usually glued to their devices once they start watching something. This means that your ad spend on OTT services is more productive. One explanation for this is that commercial breaks in OTT services are typically significantly shorter than those in TV. People are less inclined to get up and do anything else during a commercial break when they know that only two or three commercials will play before the film or TV show returns.
The commercials featured in specialised content are more relevant to the viewers and, therefore more likely to hold their attention throughout the commercial break. As a result, while watching, they’ll be more likely to utilise their phones to learn more about your brand or company — if they aren’t using it already!
4. Better Analytics
Brands rarely succeed unless they make a meaningful connection with their ideal customers at the perfect moment. OTT advertising allows brands to hyper-target their campaigns to specific audiences based on factors such as age, gender, watching habits, location, and more. Companies can ensure they are communicating with the appropriate demographic by taking use of this targeting functionality. Also, marketers may learn more about their viewers and their viewing habits, which can improve the efficacy of future advertisements. In addition, businesses can compare two versions of the same ad to see which ones work better and which ones need tweaking.
An advertising campaign might aim to raise awareness of the brand, for instance. The success of your advertising efforts can be gauged by tracking metrics such as impressions, views, and percentage of videos watched to completion.
5. Cost-Effective
When compared to campaigns using only one channel, those using at least three channels have a 287% greater purchase rate. For one of those channels, using OTT is a fantastic method to boost earnings.
The cost of OTT advertisements can be set at a very granular level. The cost per thousand (CPM) is often determined by the target audience size or the number of times an advertisement is shown, in addition to the OTT channel in question.
Unlike conventional TV advertising campaigns, programmatic advertising allows advertisers to choose the method they want to use to reach their intended demographic. Advertisers only pay for OTT advertising when the audience views them, making it one of the most cost-effective channels based on the approach and CPM.
How to Create an Effective OTT Advertising Strategy
Creating a successful Over-The-Top (OTT) advertising strategy requires meticulous planning and execution. As OTT platforms continue to reshape the media landscape, advertisers must adapt with a strategic approach to harness the full potential of this medium.
Here, we’ve outlined the key steps and considerations to help you craft an effective OTT ad campaign.
Step 1: Plan Your Campaign
The foundation of any successful campaign is a clear set of objectives. What are you aiming to achieve? Is it brand awareness, lead generation, or increased sales? Defining these goals upfront guides all subsequent decisions.
You must have a deep understanding of your target audience and current market trends. This knowledge helps tailor your campaign to resonate with your intended demographic, ensuring relevance and impact.
Step 2: Narrow Your Audience
Audience segmentation is crucial in OTT advertising. By dividing your audience into smaller, more defined groups, you can create more targeted and effective ads. This targeted approach ensures your message reaches the right people.
Use data analytics and market research to identify and refine your target demographic. The more precise your understanding of your audience, the more effective your campaign will be.
Step 3: Choose Your Preferred OTT Platform(s)
Each OTT platform has its unique strengths and audience types. Netflix, for example, might cater to a different demographic than Hulu or Amazon Prime. Understanding these nuances is vital.
Your choice of platform should align with your campaign objectives and audience demographics. A platform that resonates well with your target audience and suits your campaign goals is your best bet.
Step 4: Create Your Ad Content
The content of your ad must be engaging and relevant to your chosen audience. It should capture their attention and convey your message clearly and effectively.
Invest in high-quality production. The quality of your ad reflects on your brand. Clear messaging, professional visuals, and compelling storytelling are essential.
Step 5: Buy Ad Spots
Buying ad spots on OTT platforms typically involves selecting the type of ads, negotiating prices, and finalising the deal. This process varies between platforms, so be sure to get in touch with their advertising team to get exact details.
Consider your budget and strive for cost-effectiveness. Balancing your spending with the potential reach and impact of your ads is key to a successful campaign.
Step 6: Set a Schedule
Much like traditional TV ads, the timing and frequency of your OTT ads can significantly impact their effectiveness. Schedule your ads to coincide with when your target audience is most likely to be watching.
Strategic scheduling can enhance viewer engagement and campaign effectiveness. Avoid overexposure, as it can lead to ad fatigue among viewers.
Step 7: Review & Improve
It goes without saying that monitoring your OTT campaign’s performance is crucial. Use analytics tools to track metrics like view counts, engagement rates, and conversion rates.
Based on the data, make informed adjustments to your campaign. Continuously refining your strategy in response to performance metrics ensures ongoing improvement and success.
Best Practices for OTT Advertising
Keep It to 30-seconds (or less)
Don’t get caught up in the temptation of making your commercial as long as one featured on a premium television channel, even if that is what you’re going for. Keep in mind that consumers of OTT services have various expectations for streaming material. Non-skippable content should be succinct and to the point — think 15-30 seconds. Teaming up with a great advertising agency can help make the most of every second while effectively pushing your brand’s point across.
Utilise Dynamic Creatives
To prevent user fatigue and overexposure, you should carefully consider how often ads appear. It takes between seven and ten exposures for someone to remember your brand. The best ads are those that have been planned in advance and shot with a modular approach so you can swap out offers or products so the creative assets can last longer. We also recommend playing out the same ad but with three or more end frames with different offers and seeing which one performs best and then using this to scale up onto other channels. This will allow us to experiment with music, voiceovers, messaging, and calls to action while simultaneously saving time and money.
Your videos should have the same feel, appearance, and sound as they would in their native environment. The day of the week, the time of day, the location, the weather, and even indications from the individual’s own conduct can all play a role. You can use any or all of these factors in tandem to inspire originality in your OTT adverts.
Be Consistent
If a company maintains a constant brand image, consumers will be more willing to support and interact with the business. Most households have more than one person watching the same show at the same time. This is a great chance to introduce your company and its products to new customers. Be sure to highlight your company’s values and main benefits whenever communicating with new clients. Keep your company’s logo and website address front and centre in all ads to increase brand recognition.
Include a Strong CTA
The audience of your over-the-top (OTT) ad cannot click on it like they can with social media or search ads and be taken directly to your website. To that end, including a noticeable call-to-action (CTA) is an important best practise for OTT marketing. Take use of the audio capabilities of OTT advertising by adding a compelling voiceover to your ad. Better yet, utilise different technologies, like QR codes, to increase the effectiveness of your advert’s CTA.
Verdict — OTT Advertising
Over the past few years, there has been a consistent rise in the number of people using “over-the-top” (OTT) streaming services. More and more businesses are coming to the conclusion that OTT can extend the scope of their marketing efforts. It is essential to communicate effectively with your target demographic, given the dominance of OTT and streaming services over conventional television.
But, just like regular, linear television advertising, it’s important that companies partner up with an experienced TV advertising agency who’ll make sure that your ads — whether through linear, CTV or OTT — is well-crafted for your marketing campaign. There’s a reason why some of the best TV advertisements are so effective, after all!