OTT Advertising Guide: What is Over-The-Top Advertising?
Television has been placed in the midst of a fundamental shift with OTT advertising growing in popularity. For decades, millions of viewers connected a screen-bearing device to a signal interpreter via a cable to render linear television programming in their homes.
Here we discuss OTT advertising. What is OTT, and why in the last decade, tens of millions of households have “cut the cord” to their antenna, satellite dish, or cable box in favor of Over-the-Top (OTT) video content.
What is OTT (Over-the-top)
OTT is content delivered over the internet — “over the top” of the legacy cable box, etc. OTT can be non-video content such as audio, messages, etc, but we will focus on what most refer to as “streaming” content: OTT video content.
How does Over-The-Top video content work
OTT video content can take many forms, be distributed across many platforms, and be viewed on a wide variety of devices. OTT video can be in-line videos on a website, videos on social media, video on demand (VOD), and even linear (scheduled) television. OTT video content options are expanding rapidly, but some examples include:
- Online video (OLV): Ads or video content playing within the context of an article on espn.com or on social media platforms like YouTube and TikTok which can be user-generated content (UGC) or distributed media
- Video on demand: VOD can take on many forms, but the common denominator is that the viewer is in control of when they consume the content rather than adhering to a linear schedule
- Advertising-based VOD (AVOD): free services like Peacock, Freevee, and Tubi allow users to watch shows and movies on demand with advertising breaks
- Subscription-based VOD (SVOD): paid services like Netflix, Disney+, and BritBox provide viewers with access to their video content library for a nominal fee — free of advertisements
- AVOD+SVOD: tier-based services like Hulu that have multiple price-points allowing subscribers to pay an increased subscription fee to have ads removed from their viewing experience
- Pay-per-view (PPV): premium content like the early release of Encanto on Disney+ or the live stream of UFC 281 on ESPN+ can be accessed for a premium fee during a specific time period
Linear television: free ad-supported television (FAST) offerings like Pluto TV or subscription-supported television like YouTube TV, give viewers access to a more traditional experience with a channel lineup filled with scheduled programming and advertisements
OTT & CTV
As OTT continues to grow and evolve, more players and options will emerge to replace traditional television with mobile devices and connected TVs (CTV). CTVs are televisions that are connected to the internet and are thus able to display OTT content. CTVs can access the internet via internal hardware (Smart TV) or through internet-enabled devices like gaming consoles, HDMI plug-ins, or casting devices. While OTT content can be viewed on phones and tablets, full-size television is still the preferred viewing experience.
OTT Advertising & How it Works
With millions of new OTT adopters going online each year, monetization through OTT advertising has become a booming billion dollar business. Much like OTT content, OTT advertising is also distributed over the internet. Ads can be disseminated to both OTT and traditional over-the-air (OTA) services through a rapidly expanding plethora of cloud-based ad exchanges.
Video advertising is no longer as straightforward as aligning the demographics of a television channel or program with a target audience and purchasing a commercial spot in the broadcaster’s lineup. That’s still an option, but with OTT advertising, brands are able to optimize their ad spending through significant improvements in audience targeting and generally lower costs per impression (CPM) than traditional OTA options.
Advantages of OTT Advertising
Advancements in targeting through the use of IP address, device ID, and other online profile attributes are a great improvement over demographic-based targeting, but they are only the tip of the iceberg. Channel monetization and advertising models are becoming more sophisticated with options like cost per view, cost per completed view, or prorated costs per partial view. Other variables like device type and even device settings can potentially be cost variables.
In addition to better targeting and optimized costs, options for driving and attributing conversions have expanded with OTT advertising. Ads can be tailored by device — even made clickable on mobile devices. With the ability to target at the individual level, it’s possible to build progressive ad journeys that advance a sequential story based on engagement much like a series of promotional emails or display ads. Once a target engages, it’s possible to then connect them to the remainder of the digital purchase funnel if they continue on the same IP address, device, or profile. Video ads have never looked as good as they do in the OTT landscape.
TVU FAST Channel for OTT Advertising
Though video content distribution and advertising has never been so accessible, it’s still a complicated ecosystem with a plethora of players at all levels. Solutions like TVU Channel provide video content producers light-weight, highly secure, cloud-based solutions to launch a FAST channel that can be easily populated with live or pre-produced video content and advertising. Not only is the content management solution simple to use, but the OTT nature of the channel allows for the advertising advantages discussed above.
Additionally, for those approved and wanting to focus purely on content, TVU Channel Plus has advertising support to fill out their schedule with relevant, performance-based ads to create a revenue stream. The company guarantees .05 cents per viewing hour filling 12 minutes per hour with geographic and demographically targeted ads. Barriers to entry into television are greatly reduced with TVU Channel and risk is completely removed with free Channel Plus — both empowering video content creators to reach new, wider audiences and to create a sustainable business model.