What Is OTT Advertising: The Ultimate Guide

If you have ever binge-watched your favorite TV shows on HBO or similar streaming platforms, you have probably encountered over-the-top video content.

OTT ads, also known as streaming TV ads, use streaming services like Netflix, Hulu, YouTube, etc., to deliver advertising content directly to users, bypassing the traditional cable set box that is generally seen on TV.

While the idea of streaming ads may seem jarring at first, they can be an effective way to reach a large audience quickly and efficiently. So what is OTT advertising, and why should you care?

Key Points

  • Definition of OTT Advertising
  • Why Should You Spend on OTT Marketing
  • OTT Distribution Services
  • OTT Advertising Platforms
  • How to Buy OTT Advertising
  • Benefits of OTT Advertising
  • Challenges of OTT Advertising
  • Our Takeaway

Definition of OTT Advertising

OTT advertising is a type of digital marketing that involves the placement of ads on platforms that provide over-the-top content.

This can include streaming services like Netflix, Hulu, or Amazon Prime Video. OTT advertising can be used to reach a wide variety of audiences, as over half of all US adults use an OTT service.

Why Should You Spend on OTT Marketing?

Many marketers choose to adopt over-the-top advertising as an effective way to reach their target audience. If you haven’t invested in an OTT campaign yet, here’s why it’s time to start.

High Value for Low Cost

Streaming services are usually seen as a less expensive alternative to standard cable packages. For example, a premium Netflix subscription costs around $17.99, while the basic plan is only $8.99.

Original Content

OTT companies such as Netflix, Amazon Prime, and Disney+ have recently begun generating original material that is only available through their subscription programs. 

Available on Multiple Devices

Watching cable television has always required the use of a TV set but that’s not true anymore. We can now watch OTT material on a variety of devices, including game consoles, smartphones, tablets, and smart TVs.

OTT Distribution Services

SVOD (Subscription Video on Demand)

Subscription video on demand is a type of streaming service that allows users to pay a monthly fee to access a library of content. The two most popular SVOD platforms are Netflix and Amazon Prime Video. 

While SVOD has been around for several years, it has only recently become mainstream thanks to the proliferation of high-speed internet and broadband connections.

These platforms offer a variety of content, including movies, TV shows, documentaries, and stand-up comedy specials. Some platforms also produce their own exclusive content, which can only be accessed by subscribers.

AVOD (Advertising-Based Video on Demand)

Contrary to SVOD, advertising-based video on demand includes all platforms where users can watch content for free but need to watch ads to do so.

This business model has become increasingly popular in recent years, with services like Roku and Hulu offering AVOD options alongside traditional subscription plans.

vMVPD (Virtual Multichannel Video Programming Distributor)

A virtual multichannel video programming distributor, or virtual MVPD, provides users with access to live and on-demand TV content. 

Unlike traditional MVPDs, virtual MVPDs don’t require users to install any additional equipment, such as a set-top box. Instead, users can watch TV content on their computers, smartphones, or other internet-connected devices.

CTV (Connected TV)

CTV is a television set that can connect to the internet and has built-in apps. Connected TVs give users access to a wide range of content and applications, including streaming video services, social media, news and weather, and more.

Some models also include voice control and other features that make them more interactive and user-friendly. While connected TVs have been around for a while, they have become increasingly popular in recent years as more consumers look for ways to get the most out of their TV viewing experience.

Linear TV

Also known as traditional television, linear TV is a format in which programming is presented sequentially, with each hour of programming being broadcast at a specific time. This contrasts with non-linear television, where viewers can watch programs whenever they want.

Linear television is the most common format for broadcast networks and cable channels. Many people, especially the older generations, still prefer this format because it allows them to watch their favorite shows live without having to worry about recording or streaming them later.

OTT Advertising Platforms

TV Publishers

TV publishers are companies that create and distribute video content. This can include traditional television networks, as well as digital-first companies that produce original programming for the web.

In order to generate revenue, TV publishers typically sell advertising space on their programs. In recent years, many of these publishers have also begun selling advertising on their over-the-top platform.

OTT Native Services

These companies create and distribute video content specifically for OTT devices. These platforms typically offer a variety of original programming, as well as licensed content from other providers. Many of these services also sell advertising space on their programs to earn additional revenue.

Streaming Linear Services

Similar to traditional TV, linear streaming allows specific programs to be shown within certain time periods. However, linear broadcasts are supplied over the internet via an OTT service rather than through a cable provider.

OTT Devices

Many OTT devices are internet-connected devices that come with pre-installed apps. They enable users to access plenty of online content, including smart TVs, streaming media players, gaming consoles, and more. 

How to Buy OTT Advertising

If you’re planning to incorporate OTT campaigns into your marketing strategy, here’s how you can purchase these ads.

Programmatic Buying

The use of software to buy digital advertising is known as programmatic ad purchasing. While the traditional technique comprises bids, proposals, quotations, and negotiations, programmatic buying purchases and sells online advertising space using algorithmic software.

Guaranteed Insertion Orders

Guaranteed insertion orders (IO) are contracts that guarantee a certain amount of ad impressions. This type of agreement is typically used for traditional television, but it can also be used for OTT.

Benefits of OTT Advertising

If you’re still unsure why you should adopt OTT advertising, take a look at the most notable advantages.

Guaranteed Ad Delivery

With OTT advertising, marketers can be sure that their ads will be delivered to their target audience. This is because OTT platforms allow advertisers to specifically target their ads to viewers who are most likely to be interested in them.

Accessible and Affordable

OTT advertising is typically more accessible and affordable than other types of digital advertising—they have lower ad rates than most websites or apps.

On top of that, the OTT advertising cost is often less competitive, making it much easier for advertisers to get their ads in front of their target audience.

Excellent for Retargeting

OTT advertising is a perfect way to retarget your viewers —here’s why. Over-the-top platforms generally provide various audience targeting options that allow advertisers to specifically target their ads to people who have already engaged with your brand.

Challenges of OTT Advertising

While OTT advertising offers a number of advantages, there are also a few challenges that advertisers should be aware of.

Management and Measurability

Due to the complex nature of OTT advertising, it can be difficult to manage and measure your campaigns. Unfortunately, their different ad delivery methods make it difficult to track what is working and what is not. In addition, OTT advertising typically requires more workforce and resources than other types of digital advertising.

Limited Regulations

Compared to other types of digital advertising, OTT advertising is relatively unregulated. This lack of regulation can make it difficult for advertisers to protect their ads from being placed next to offensive or controversial content.

Functionality Issues

Due to the complex nature of OTT advertising, there is a tremendous potential for functionality issues—ad-blocking and buffering are some of the most common problems. Sadly, these issues can lead to a poor user experience, which can ultimately hurt your brand.

What Is OTT Advertising: Our Takeaway

So, what does this all mean for you as an advertiser? 

With so much change in the industry, it can be difficult for marketers to keep up with the latest trends. But if you want your business to stay ahead of the curve, consider using OTT advertising in your marketing strategy.

You can reach out to customers and get them interested in your product or service in an easy and affordable way.

Frequently Asked Questions

Which is an OTT platform?

OTT platforms are online media services that provide streaming content directly to viewers without the need for a traditional cable or satellite television subscription.

Instead, OTT platforms use the internet to deliver content, which can be accessed on a variety of devices, including computers, smartphones, tablets, and streaming boxes. While many OTT platforms offer a mix of video content, such as movies, TV shows, and live sports, others focus on a specific type of content, like music or news. Some of the biggest names include Netflix, Amazon Prime Video, Hulu, and Disney+.

What is OTT in marketing?

Now that we’ve answered the question, “what is OTT advertising,” here’s how you can make the best out of it in your marketing strategy.

Over-the-top marketing reaches consumers who are not actively seeking out your brand. OTT marketing generally takes the form of online ads that are served to users as they browse the web, watch videos, or use applications. These ads can take many different forms, but they all share the common goal of reaching consumers who might not otherwise be exposed to your brand.