ClickCease OTT Advertising: A Deep Dive into the Next Big Thing in Advertising

OTT Advertising: A Deep Dive into the Next Big Thing in Advertising

Contents

OTT Advertising

What is OTT Advertising?

OTT Advertising is all about sending video ads directly to viewers on streaming platforms like Netflix, Hulu, and Amazon Prime Video, bypassing traditional TV channels.

Whether you’re watching a series on a smart TV or through a device like an Amazon Fire Stick, OTT ads can pop up before, during, or after your show. These ads are made just for streaming, offering a mix of formats from video to banners.

With OTT, ads find you on various devices—smartphones to gaming consoles—using smart tech to show relevant ads. It covers different ways people watch, like pay-per-view (TVOD), subscription (SVOD), or free with ads (AVOD).

Advertisers like OTT because it targets ads more precisely than old-school TV, even letting them pick and choose their spots programmatically. This method is changing the game by providing a direct route to viewers, making advertising more personal and efficient.

The Evolution of OTT: From Niche to Mainstream

OTT advertising has undergone a remarkable evolution, transitioning from a niche offering to a mainstream force in the advertising world. This shift began with the gradual move from traditional broadcast and cable TV to internet-based streaming services.

Initially, platforms like Netflix and Hulu focused more on content delivery rather than advertising, but as their audiences grew, so did the opportunities for targeted advertising.

This change has been driven by consumer preferences for on-demand, customizable viewing experiences. The growth of streaming services has not only disrupted traditional TV viewing habits but also opened new avenues for advertisers to reach diverse and engaged audiences.

Illustrating this growth, the market volume of OTT video advertising is anticipated to reach a substantial US$191.30bn in 2024, highlighting the significant economic impact and potential of the OTT advertising sector.

Adapting to a Changing Media Landscape

The evolution of OTT advertising also reflects a broader shift in the media landscape, where digital media consumption is outpacing traditional forms.

Advertisers are increasingly recognizing the value of OTT platforms not only for their growing audience base but also for the advanced targeting and analytics capabilities they offer.

This shift has encouraged a wave of innovation in advertising strategies, prioritizing viewer engagement and experience over traditional reach and frequency metrics.

By 2025, OTT is projected to generate over half (53.5%) of video subscription revenues in the US.

Relationship between OTT and CTV

In the complex world of digital ads, understanding the nuances of terms like OTT and CTV (Connected TV) is critical. OTT and CTV can be thought of as relatives in the family of streaming services, each with its unique role.

OTT: A Broad Spectrum of Streaming Services

OTT represents the broader category of streaming over the internet to various devices. This includes not just CTVs but also smartphones, tablets, gaming consoles, and even devices like the Amazon Fire TV Stick.

OTT advertising takes advantage of this diversity, delivering tailored video ads, including skippable and non-skippable video ads, overlay ads, and banner ads, across a range of platforms and devices.

It’s about reaching the target audience wherever they stream, whether it’s on subscription video services like Amazon Prime Video and Apple TV, or through transactional video on demand and ad-supported OTT services.

CTV: Specialized Focus on Smart TVs

Connected TV, on the other hand, is more specific. It refers only to smart TVs or traditional TVs equipped with internet connectivity, enabling streaming. Every CTV falls under the OTT umbrella, but not all OTT-enabled devices are CTVs.

In terms of advertising, CTV allows for more focused ad campaigns on the TV screen, leveraging the familiar format of traditional TV but with the added benefits of digital advertising, such as programmatic OTT advertising.

Almost 90% of U.S. TV households have at least one connected TV device.

OTT and CTV in Advertising

The key to understanding their relationship lies in recognizing OTT as the overarching category that includes streaming on all internet-enabled devices, while CTV is a subset focusing on internet-connected televisions.

This distinction is critical for advertisers looking to buy OTT ads or design OTT ad campaigns, as it influences where and how the ads will be displayed, whether on streaming platforms, mobile devices, or directly on a smart TV or screen via connected TV.

OTT advertising platforms thus offer a range of ad formats and strategies for reaching audiences across different devices and streaming services, from a live TV streaming service to video on demand platforms like SVOD and AVOD. The flexibility and reach of OTT streaming make it a powerful tool in modern advertising, significantly differing from linear TV and traditional broadcast TV advertising.

How Does OTT Advertising Work?

OTT ads

OTT advertising thrives on the extensive use of viewer data. Streaming services, be it on smart TVs, mobile devices, or even gaming consoles, collect detailed information about viewers’ watching habits, preferences, and demographics.

This includes insights from your streaming sessions on platforms like Amazon Prime Video or Apple TV, and even your secret indulgences in reality TV shows. This rich data pool is what makes OTT video ads strikingly relevant and personalized.

Creating a Connection with Targeted Advertising

By leveraging this information, OTT platforms are able to craft advertisements that resonate deeply with viewers. It’s a strategic approach that differs markedly from traditional TV advertising. The ads you encounter while streaming video content are not random; they are carefully curated to align with your interests and viewing history.

This method allows for a variety of ad formats, from skippable online video ads to non-skippable ones, including pre-roll, mid-roll, and post-roll ads, as well as overlay and banner ads.

Effectiveness and Reach of OTT Ads

This level of personalization is key to the effectiveness of OTT advertising. Whether through subscription video on demand services, transactional video on demand, or ad-supported streaming, OTT ads have a unique way of saying, “Hey, we get you, and here’s something you’ll love!”

This direct and personalized approach is what sets OTT advertising apart, making it a powerful tool in digital advertising. It reaches audiences across different devices and platforms, from streaming TVs and streaming devices like Amazon Fire to connected TVs and various OTT devices and services.

OTT advertising, by using data-driven strategies, offers a compelling alternative to linear TV and cable TV advertising. It provides advertisers with a diverse range of ad formats and opportunities to connect with their target audience more effectively, enhancing the overall ad spend efficiency and the impact of their advertising campaigns.

Types of OTT Ads: Exploring the Spectrum of Streaming Ad Formats

OTT advertising encompasses a variety of ad formats, each tailored to fit different viewer experiences and marketing objectives. Understanding these formats is key to leveraging OTT platforms effectively:

Video Ads: These are the most common form of OTT ads, mirroring traditional TV commercials but with added benefits of targeting and analytics. They can be further categorized into:

  • Pre-Roll Ads: These ads play before the start of a video stream.
  • Mid-Roll Ads: Similar to traditional TV commercial breaks, these ads appear during the video stream.
  • Post-Roll Ads: Displayed after the video stream concludes, these ads are less common but can still be effective.

Banner Ads: These ads appear as static or animated images on the streaming platform’s interface, often in the menu or as an overlay during video playback.

Overlay Ads: These are semi-transparent ads that appear on the lower third or other sections of the screen during video playback, offering a less intrusive advertising option.

Interactive Ads: Leveraging advanced technology, these ads encourage viewer interaction, such as clicking to get more information or to visit a website. They are effective in driving engagement and can provide valuable data on viewer preferences.

Skippable and Non-Skippable Ads: With varying lengths, these ads give viewers who watch video content the option to skip the ad after a few seconds or require them to watch the entire ad before continuing with their video content.

Branded Content and Sponsored Segments: Some OTT platforms offer opportunities for branded content integration or sponsorships, where the advertisement is seamlessly woven into the content itself.

Native Advertising: These ads are designed to blend in with the platform’s content, providing a less disruptive viewing experience while still effectively conveying the marketing message.

Programmatic Ads: Utilizing AI and machine learning, these ads are automatically bought and placed based on audience targeting data, making the ad placement process more efficient and effective.

Tailoring Ads to Viewer Preferences and Behaviors

The key to successful OTT advertising lies in choosing the right ad format that aligns with the target audience’s preferences and viewing behaviors.

For instance, interactive ads might resonate more with a tech-savvy audience, while traditional video ads might be more suitable for audiences accustomed to conventional TV viewing.

By diversifying ad formats and strategically matching them with viewer demographics and platform specifics, advertisers can enhance engagement, maximize reach, and drive better campaign results in the evolving OTT landscape.

Types of OTT Platforms: Navigating the Streaming Service Landscape

OTT platforms, where these ads are displayed, vary greatly, each offering unique opportunities and challenges for advertisers. Understanding the different types of OTT advertising examples and platforms is necessary for effective ad placement and targeting:

Subscription Video on Demand (SVOD):

  • These platforms, like Netflix, Amazon Prime Video, and Hulu, offer a wide range of content for a monthly or annual subscription fee. SVOD services traditionally did not feature ads, but some are introducing ad-supported tiers, opening new doors for advertisers.

Advertising-Based Video on Demand (AVOD):

  • Platforms like YouTube, Tubi, and Pluto TV fall under this category. They offer free content supported by advertising, providing ample opportunities for ad placement and viewer reach.
  • According to a forecast by eMarketer, AVOD (Advertising-Based Video on Demand) is expected to gain 13.3 million new viewers in 2023, including 4.3 million from free premium platforms.

Transactional Video on Demand (TVOD):

  • Services like iTunes and Google Play allow users to pay per view or download. While less common for advertising, they sometimes feature promotional content.

Live Streaming Services:

  • Platforms like Twitch and YouTube Live offer real-time content streaming. In-stream video ads can be placed before, during, or after the live stream, and these platforms are particularly popular for targeting younger, digitally-savvy audiences.

Hybrid Platforms:

  • Some services, like Hulu, offer both SVOD and AVOD models. These platforms provide flexibility for users and advertisers alike, allowing for a mix of subscription-based and ad-supported content.

Network-Specific Platforms:

  • Many traditional TV networks have launched their own OTT services, like NBC’s Peacock or CBS All Access. These platforms often feature a mix of live TV, on-demand content, and exclusive online series.

Niche and Specialty Platforms:

  • Numerous OTT platforms are catering to specific interests, genres, or demographics. For instance, Crunchyroll focuses on anime and manga, while CuriosityStream targets documentary enthusiasts. These platforms provide targeted advertising opportunities to reach specific audience segments.

Strategizing Ad Placement Across Various Platforms

Each OTT platform type offers distinct content and audience demographics, necessitating tailored advertising strategies. For instance, AVOD platforms are ideal for traditional ad campaigns due to their broader reach and frequency of ad spots.

In contrast, SVOD platforms with ad-support options may provide a more premium and engaged audience but with limited ad inventory. By understanding the nuances of each platform type, advertisers can craft more effective OTT ad campaigns, ensuring they reach their intended audience in the most engaging and contextually relevant way.

The Marketplace of OTT Ads: A Buyers’ Guide

Entering the world of OTT advertising requires a good grasp of how to purchase OTT ads effectively. The process is similar to online advertising, offering two main paths for buyers.

The first is programmatic buying, a sophisticated and automated approach where algorithms play matchmaker, connecting your ads with the target audience.

This method is popular for its efficiency and precision in reaching the right viewers, including those on streaming services like Amazon Prime Video and Apple TV.

Direct Buying

Alternatively, there’s direct buying. This approach allows advertisers to handpick their ad slots, similar to selecting items during a shopping spree but in the digital ad world.

Direct buying gives more control over where and when the ads will appear, essential for campaigns targeting specific demographics or streaming content.

Choosing the Right Strategy for Your Campaign

Whether you opt for programmatic OTT advertising or direct buying, it’s essential to consider factors like the type of video ad (such as pre-roll, mid-roll, post-roll, skippable, non-skippable, or overlay ads) and the specific OTT platforms or devices you aim to target.

This could include streaming TVs, a smart or connected TV itself, mobile devices, or even gaming consoles. Understanding these nuances will help in effectively utilizing your ad spend and maximizing the impact of your OTT ad campaigns.

Each approach offers unique advantages, and your choice will depend on the specific needs and goals of your advertising strategy. Programmatic buying is ideal for broad reach and efficiency, while direct buying offers more granular control.

Both methods enable advertisers to leverage the diverse and dynamic world of OTT streaming, offering a range of ad formats and opportunities to connect with audiences across various streaming platforms and devices.

Making a Case for OTT Advertising: Top Five Benefits

OTT advertising is not just about riding the wave of a new trend. It offers significant, tangible benefits to supercharge your brand’s reach and impact. Let’s delve into the top five advantages and benefits of OTT advertising:

1. Precision Targeting

OTT advertising excels in utilizing viewer data for precision targeting. By analyzing streaming content preferences, demographics, and viewing habits on platforms like Amazon Prime Video and Apple TV, OTT ads can be tailored to reach specific audience segments.

This level of targeting is a significant leap from traditional TV advertising, ensuring your ads resonate with viewers who are most likely to be interested in your products or services.

2. Enhanced Engagement

The personalized nature of OTT advertising, often involving skippable and non-skippable video ads, leads to heightened viewer engagement.

Unlike the more generic approach of traditional TV, OTT ads, including pre-roll, mid-roll, and post-roll formats, are likely to be more relevant and engaging, fostering better ad recall and a positive brand association.

3. Data-Driven Strategies

OTT platforms provide comprehensive analytics, offering insights into how your ads perform across various streaming devices, including smart TVs, mobile devices, and gaming consoles.

This wealth of data allows for ongoing refinement of ad campaigns, ensuring a higher return on ad spend (ROAS) and a more effective digital advertising strategy.

4. Trust and Credibility

OTT advertising often takes place on premium, trusted streaming services, providing a brand-safe environment. This aspect is particularly beneficial in maintaining the credibility and positive perception of your brand, setting it apart from the risks associated with more open ad environments.

5. Staying Ahead in a Shifting Landscape

OTT advertising offers a key advantage in reaching the growing demographic of cord cutters – those who have moved away from cable TV to streaming platforms.

This shift represents a significant change in the media landscape, and OTT ads ensure your brand remains visible and relevant to these audiences, who are increasingly consuming content on subscription video on demand (SVOD) services and ad-supported streaming platforms.

Challenges and Solutions in OTT Advertising

While OTT advertising offers numerous benefits, it also comes with its own set of challenges. One significant challenge is the diverse landscape of streaming platforms, each with different policies and user bases.

Advertisers must navigate these differences to ensure their content reaches the desired audience effectively. Additionally, the rise of ad-blocking technologies poses a hurdle in reaching viewers.

Solutions to these challenges include developing engaging, high-quality ad content that resonates with viewers and utilizing advanced targeting techniques to minimize the impact of ad blockers. Staying updated with the latest trends and technologies in the OTT ad space is needed for overcoming these challenges.

Embracing Technology and Innovation

Adopting new technologies and innovative methods is essential for staying competitive in the evolving OTT ad space.

This involves leveraging advancements such as AI for better targeting and personalization, exploring new ad formats like interactive ads, and staying agile in the face of changing viewer behaviors.

Additionally, understanding and adapting to the regulatory environment, especially concerning data privacy, is essential for sustainable success in OTT advertising platforms.

Integrating OTT into Your Overall Marketing Strategy

Integrating OTT advertising into an overall marketing strategy requires understanding its unique capabilities and how they complement other advertising channels.

OTT allows for targeted, data-driven campaigns that can reach viewers on a variety of devices, from smart TVs to mobile devices and gaming consoles.

To maximize the impact, it’s important to align OTT campaigns with broader marketing objectives, ensuring a consistent message across all channels.

Coordinating with digital and traditional advertising efforts can create a holistic approach, leveraging OTT’s strengths in precision targeting and engagement to enhance the overall marketing impact.

Creating Synergy Across Platforms

To effectively integrate the OTT platform into a broader marketing strategy, it’s important to understand how different platforms and channels can work together synergistically.

For instance, combining OTT advertising with social media campaigns or search engine marketing can amplify the reach and effectiveness of the overall strategy.

Additionally, integrating OTT data insights into other marketing channels can help create a unified, omnichannel approach that resonates with consumers across different touchpoints.

Future Trends and Predictions in OTT Advertising

future trends in ott advertising

The Future Landscape of OTT Advertising

The future of OTT advertising looks bright, with several emerging trends shaping its trajectory. The increasing integration of AI and machine learning is set to enhance targeting accuracy and ad personalization, making campaigns more effective and efficient.

Interactive and immersive ad formats, such as virtual and augmented reality, are expected to rise, offering new ways for brands to engage with audiences.

The continued growth of OTT platforms will likely lead to more innovative advertising models and strategies, making OTT video ads become an even more integral part of digital marketing in the years to come.

Anticipating the Next Wave in OTT Advertising

As we look to the future, we can anticipate further advancements in OTT advertising. The integration of 5G technology is expected to enhance streaming quality and open up new possibilities for rich, high-definition ad content.

We may also see a rise in programmatic OTT advertising, offering more efficiency and real-time bidding capabilities. Additionally, the expansion of OTT services into new markets and demographics will provide advertisers with even more opportunities to reach diverse and global audiences.

Key Takeaways and Next Steps

Embracing OTT for Modern Advertising Needs

OTT advertising is essential in today’s digital landscape, offering a direct way to reach audiences where they spend a significant amount of time: on streaming platforms.

OTT encompasses a wide range of internet-connected devices, including smart TVs and mobile devices, while CTV focuses on internet-connected TVs specifically.

This coverage allows OTT ads to be an integral part of a comprehensive digital ad strategy, reaching target audiences more effectively than traditional TV advertising.

Strategic Advantages of OTT in the Advertising Ecosystem

OTT ads, purchasable through programmatic or direct methods, offer versatility in ad formats, including video ads, overlay ads, banner ads, and skippable and non-skippable video ads.

The key benefits of OTT advertising lie in precision targeting, enhanced engagement, measurable results, and the creation of a brand-safe environment.

It’s especially beneficial for reaching cord cutters who have moved away from cable TV and are more inclined towards subscription video services like Amazon Prime Video and Apple TV.

A Tool for Reaching Diverse Audiences

The transition from traditional TV to OTT streaming platforms, including premium video on demand services like SVOD and transactional video on demand (TVOD), presents a unique opportunity.

OTT ad campaigns can be tailored to various streaming video content, enhancing engagement and ad recall among diverse audiences, including those using streaming devices like the Amazon Fire TV Stick.

Planning and Measuring Success in OTT Advertising

For those looking to incorporate OTT ads into their marketing campaigns, understanding the nuances of OTT platforms, ad formats, and the shifting dynamics of streaming TV is necessary.

Tools and platforms that facilitate the planning, measuring, and reporting of OTT campaigns can significantly improve the efficiency and impact of your advertising efforts.

OTT advertising stands out as a powerful tool in the evolving world of digital advertising, offering a variety of formats and approaches to reach and engage with a broad spectrum of audiences across multiple streaming services and devices.

If you’re looking to add OTT advertising to your campaign, you might need a better way to plan, measure and report. Take a tour of Mediatool today to see how to build media management workflows and processes to take your campaigns to the next level.

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