What Is OTT Advertising?

What Is OTT?

OTT is short for over-the-top, which refers to streaming services, such as Disney+, Peacock, Netflix, YouTube TV, and Amazon Prime. OTT also includes the growing number of FAST (free ad-support streaming TV ) services, like the Roku Channel, Pluto TV, and Tubi. 

Content is delivered over the internet and bypasses traditional broadcast television. Instead of watching a program at a set time or recording it for later viewing, people can access streaming content whenever they want. 

Viewers access content through various devices, including:

• Smart TVs
• Gaming consoles (Switch, PS5, Xbox)
• Streaming devices (Roku, Firestick, Tivo Stream, etc.)
• Smartphones
• Tablets
• Laptop/desktop computers

What Is CTV?

CTV, or connected TV, is another term used alongside OTT. Some people use the two terms interchangeably, but they mean slightly different things. CTV refers to viewing streaming content on a television screen, whereas OTT includes CTV and viewing content on smartphones, tablets, and computers. 

What Is OTT Advertising?

OTT advertising involves showing ads to viewers on accessible OTT devices. Ads need to be tablet and mobile device-friendly and formatted to work well on laptops, desktops, and large-screen TVs. 

Unlike traditional TV advertising, businesses can target their ads to be delivered to a specific audience, age group, geographical location, zip code, and more. OTT ad technology can also look at viewership habits, shopping habits, and other data to ensure ads are delivered to just those people who would be interested in your brand, products, or services. 

What Is the Difference Between OTT and CTV Advertising?

The primary difference between OTT and CTV advertising is the delivery of the ads. With OTT advertising, ads can be delivered to any connected device viewing streaming content. With CTV advertising, ads are delivered to television screens through a streaming device, gaming system, or Smart TV.

Benefits of OTT Advertising

There are several benefits businesses gain with OTT advertising over traditional television ads, including:

• Lower cost: OTT ads cost significantly less than traditional TV ads, which makes it more affordable for small businesses and mom-and-pop operations to advertise to streaming viewers.
• Targeted ads: Unlike TV broadcast ads, OTT ads can be targeted to a specific market segment based on specific criteria, such as geographical location, age, or viewership habits.
• GPS targeting: One of the coolest benefits of OTT advertising is being able to target people based on the GPS location through their smartphone or tablet. This means you can reach people on business trips or vacations visiting your area you would otherwise overlook in conventional campaigns.  
• Customizations: OTT ads can be customized for better engagement. For example, a built-in call to action can be placed where the user clicks a button on their remote control or screen to purchase a product. 
• Ability to prevent ad skipping: On certain OTT devices, ads can sometimes be skipped. However, there is the option to prevent people from doing this. 
• Most people watch the entire ad on CTV: People will sit through an entire ad when viewing programs on CTV because they are invested in the show or movie. 
• Limits views: OTT ads will only play a set number of times to a specific user or household to prevent over-saturation. This feature means that your ads will be viewed by a larger number of people in your targeted segment. 
• Maximizes spending budget: Since OTT ads can be targeted, it allows you to maximize your spending budget. This ensures people who are most likely to be interested in your products, services, or brand see your ads. 
• Measurable results: With traditional TV ads, it is a guessing game as to how well the ad performed. With OTT ads, you can see actual data showing how well the ad performed. 
• Can be tied together with other advertising: You can tie your OTT ads into an overall marketing strategy that includes social media marketing, SEO, and more. 

Is OTT Advertising Really That Important?

Many businesses are wondering whether OTT advertising is that important for their business. But we’re here to tell you that OTT advertising will continue to grow as more people cut the cord. 

This trend began in the late 2000s but didn’t really take off until the COVID-19 pandemic. With rising cable and satellite TV costs, people enjoy the flexibility of choosing which streaming services they want to subscribe to and not being tied into a contract. They also like being able to switch between devices. So, they could start a program on their smartphone and finish it on their TV later. 

In addition, as the costs for ad-free services continue to increase, many people are dropping to the more affordable ad-supported plans and ad-supported bundles. Another trend is the number of people subscribing to FASTs. According to Grand View Research, in 2023, the FAST market size was $8.03 billion and is expected to grow by 23% by 2030. Smart TVs accounted for 48.4% of the FAST market size, and movies accounted for 23.7% of the market size. 

Another factor to consider is how you plan on reaching younger audiences. Nielsen data for 2023 shows the following for CTV usage among different age groups:

• 80.2% for 12 to 17-year-olds 
• 73.6% for 21 to 34-year-olds 
• 56.8% for 25 to 54-year-olds 

So, if your target audience is Gen Z’ers, Millennials, or Gen X’ers, you won’t reach them through traditional television ads. There was also an increase of more than 20% in time spent on all connected devices by these age groups. 

Furthermore, the number of U.S. households who subscribed to at least one paid streaming service was 83% in 2023, and as of 2024 is now 99%. Other important details businesses need to be aware of, as reported by Forbes Home, are:

• Netflix, Amazon Prime, and Apple TV+ are the top 3 paid streaming services
• Netflix is the number one streaming service, with 260.28 million subscribers
• U.S. subscribers, on average, spend $46 a month on 3 streaming services
• 50% of subscribers have paid ad-supported services
• The streaming industry accounts for $544 billion and is expected to grow to 1,902 billion by 2030

Combining all this information means one thing for businesses: If you want to have the best reach and connect with their targeted audiences, you must utilize OTT advertising. 

Leverage the Power of OTT Advertising Today

Companies of all sizes can leverage the power of OTT advertising to reach their target audiences. You can get help creating innovative and unique ads from the experts at Levy Online. We also offer customizable OTT ad management services, comprehensive analytics, budget management, and tailored ad campaigns to fit your specific needs. Contact us today for further information.

Sources:

Amid the Fragmented TV Landscape, Time Spent With Content Is the Best Planning Data There Is. (2024).

Durrani, A. (2024). Top Streaming Statistics in 2024.

Richter, F. (2024). Streaming Hits 40% of U.S. TV Usages for the First Time.Free Ad-supported Streaming TV Market Size, Share & Trends Analysis. (2024).