What is OTT Advertising? Why should your business care about it?

How OTT platforms can help you better target customers.

What is OTT Advertising?

Simply put, OTT advertising is just another form of digital advertising that makes use of OTT platforms. Over the top advertising allows your brand to reach customers directly through streaming devices and services. It helps you target a unique audience or a specific market segment via OTT channels.

OTT advertising represents an exciting opportunity to increase customer engagement across multiple channels while maximizing your advertising return on investment.

The number of OTT platform adopters has skyrocketed in recent years. As users pile on to find new content from OTT services, the number of active users on these platforms has now exceeded the US population.

According to Nielsen, “By 2024, it’s estimated that streaming platforms will have amassed 210 million subscribers, which represents a staggering number of consumers and a major shift in media habits”.

What are the benefits of OTT Advertising?

OTT advertising has taken over traditional TV as millions continue to migrate from traditional Pay-TV operators. As more and more people flock to newly launched OTT channels, it is imperative that you incorporate OTT advertising into your digital marketing plan to target a niche audience more effectively and minimize ad spend waste.

Here are some of the major benefits of advertising through OTT platforms:

Improved targeting

OTT platforms leverage analytics and in some cases artificial intelligence by curating content enabling advanced audience targeting and better monetization.

A greater number of ads does not necessarily mean higher revenue. You have to be targeting the right pool of customers for effective monetization. Through better segmentation (and more segments to analyze), OTT channels can identify people that are more likely to click on your ads for a product or business, building brand awareness and driving higher conversions..

Better Engagement

Unlike TV ads, OTT advertising interjects ads in the right places and for short spaces between movies and shows for which the audiences are much more inclined to sit through. Users can interact with the ads more effectively, and you can even lead them to your product and services page if they choose to click on the relevant links.

Shorter, engaging ads are sometimes more effective for ad recall. A study by the World Advertising Research Center showed that 30-second spots are ideal for a good brand-building television commercial, in that it is sufficient time to make an emotional and intellectual connection, but not so much as to lose interest.

Some studies also suggest that short ads bring almost as much engagement as the longer ones. The Journal of Advertising Research published a study which states that 7-second ads were almost as effective as 15-second advertisements and 60 percent as effective as 30-second advertisements.

Attractive Prices

OTT advertising allows you to reduce ad spending because you do not pay for ads ‘real-estate’ on print media or outdoor digital signages. Nor do you waste time and money targeting the wrong audience through short TV ad windows.

OTT advertising allows for a more specific and targeted advertising approach by tracking key metrics allowing you to better understand the relative performance of your advertising campaigns. These metrics let you understand audience preferences so that you can further streamline ad spending and reallocate resources as needed.

Geographical/ Device Independence

Audiences are increasingly leaving regular broadcast TV networks for OTT channels on mobile devices over the internet. They are no longer tied to a particular device or location to find and consume content. OTT platforms thus eliminate the limits of broadcast entertainment services that use cables and wires.

The advanced user analytics provided by OTT platforms lets you target users based on their locations and device preferences. You can then focus your advertising strategy on those parameters for better results and decreased ad-spend.

Uninterrupted Ads Serving

Traditional viewing experiences can be interrupted by unexpected events such as network disconnections, signal issues, and power outages, especially in developing countries. Rigid TV schedules for broadcasting shows at certain times of the day limit viewers from accessing content at any time. In contrast, OTT platforms bring more accessibility and engagement, which means uninterrupted ad serving.

Popular examples of OTT advertising platforms

There is a vast amount of OTT channels/platforms that offer OTT advertising for you to choose from for your product and business. But how do you gauge which ones can do the job better for your specific advertising needs? How do you tick off your set of business KPIs by serving ads in terms of the likelihood of conversion, ease of operation, the availability of resources, and more?

Let’s find out by comparing 5 of the most popular OTT advertising examples:

1. Amazon OTT Advertising – Wide Reach

Amazon’s OTT advertising, known as Amazon Fire Advertising, has the most significant advantage of harboring customers from around the globe. Having found success on a massive scale with their expansive video streaming device and platform offering, you can never go wrong with Amazon ads. They also stand out as one of the few OTT ad techs with support from multiple first-party and third-party apps for more spread-out campaign success. Amazon’s IMDb TV is available to advertisers for wider ad space.

2. Roku – Exclusive Pool of Users

The closest competition to Amazon Fire TV is Roku. Roku started as a CTV (Connected TV) experience device and progressed to streaming services through its OTT platform with The Roku Channel.

The completely ad-based model offers advertisers a variety of advertising opportunities. Most Roku users also don’t use a secondary OTT channel, making them an exclusive pool as far as ad viewership is concerned.

3. Hulu – Flexible Pricing

Hulu stands out as one of the oldest and most popular OTT platforms. They offer a variety of subscription opportunities for users, which means advertisers can target different groups of users.

The Hulu ad manager offers flexible pricing models for different businesses. It is now inclusive to SMBs, differing from their earlier pricey solution, allowing advertisers to target users who opt for ad-based subscriptions because of the pricing variance. Hulu is uniquely attractive to its viewers because it streams TV shows and movies ahead of the cable and theatre release.

4. Sling – Better Inventory

Sling has combined traditional cable TV advertising with modern digital techniques to promote more targeted ads to viewers. Their ads are not skippable, and advertisers pay for impressions. They also use programmatic advertising giving businesses more control over where and which TV inventory they want to advertise. Sling TV is a great choice for advertisers who want to maximize ad spend and avail data-driven advanced targeting options..

5. Tubi – Large User Base

The number one channel in doing what they do, Tubi is a unique OTT platform. Tubi does both live streaming and regular broadcast TV advertisements while holding an impressive 33 million active users as of 2021. Tubi’s live streaming and scheduled TV streaming allow ads to serve without interruption. Thanks to its expansive library of TV shows and movies for the younger audience, this OTT platform is not going out any time soon.

For a more extensive list of ad-supported streaming VOD services, check out this list.

You might come across terms such as AVOD, CTV, Linear TV quite often in your research for the best OTT advertising platforms. It is important to know the difference between these to ensure you are moving in the right direction with your advertisement goals. Let’s get right to it!

AVOD stands for advertising-based video-on-demand, which comprises OTT streaming services that offer customers free, ad-supported streaming video. The most popular examples are Video Dailymotion and Tubi. Customers don’t have a subscription but sit through ads to watch content freely on these platforms.

AVOD does not promote premium content to its consumers as much as other forms of OTT advertising services. Advertisers should focus on AVOD if their product is consumable by a larger pool of audiences at lower prices. Users prefer device independence when consuming content, and this offers advertisers the opportunity to target users with personalized ads.

CTV is Connected TV that allows devices to connect to the internet to experience OTT services. Users with CTV usually tune into regular broadcast TV and online content. CTV offers users the choice to shave off some of their regular Pay-TV channels and opt for OTT streaming instead.

Linear TV is the traditional TV viewing experience with scheduled broadcasts. The only improvement in today’s OTT channels is that viewers can also experience linear TV on different mobile devices. Viewership for linear TV has been steadily declining in recent years.

Advanced TV or ATV encompasses Linear TV, CTV, and Addressable TV – which is TV connected to the internet for on-demand content. Users prefer device independence when consuming content, and this offers advertisers the opportunity to target users with personalized ads.

How is OTT advertising priced?

Advertisers can choose between many options in the OTT advertising space. Sometimes you need to choose between a steady amount of investment for ads or pay based on different ad spending models listed below. You should carefully consider each of these depending on how much you want to spend and how long you want your ads displayed to make an impression.

CPM (cost per mille) charges per thousand impressions for one ad.

CPV (cost per view) lets you pay for each ad view on an OTT platform.

CPCV (cost per completed view): As an advertiser you are only required to pay for each ad that has been played to the fullest length without users clicking on the ‘skip ad’ option. Some models of OTT streaming bring better engagement if there is no option to skip.

vCPM (viewable cost per mille) or vCPV (viewable cost per view) measures cost based on how many people see the ad. This option is great for advertisers who are aiming for significant ad impressions during their campaign interval.

CPH (cost per hour) and CPS (cost per second) are for those who want to spend for the length of impressions made through their ad.

CPE (cost per engagement) can also be an effective method of measuring the value of ads by the engagement it generates.

How do you get started?

To get started in the OTT advertising space, you’ll have to understand the various OTT platforms and what they offer in terms of advertising inventory. Based on your marketing goals, budget, and other considerations such as your target pool of audience, you can develop and deploy an advertising strategy.

There are primarily two options to choose from:

Programmatic buying: An automated and real-time method for buying ad space across channels in a particular platform, programmatic buying is meant to simplify the process of purchasing ad space. With the help of analytics, the platform helps you bid for ad space in their inventory. It is also the most effective way of buying because AI tools choose the best price for your investment. The drawback is that you cannot have custom services, platforms, devices, or channel space.

Direct buying: Works well when you are sure about the type of audience and messaging you want to portray. Direct buying provides increased visibility as far as ad performance is concerned. This will help you figure out what works best over the long term. It will limit your cross-platform advertising but guarantees control.

Once you choose how to advertise, you can design your ads considering the appropriate messaging, length, and placement. In the end, it is essential to measure the impact of your ad and the results of your marketing campaign.

Conclusion

In conclusion, OTT advertising is more than just a trend in today’s entertainment world. It is a powerful channel for marketing. It’s less expensive than traditional advertising and TV because it can target the right customers through better segmentation – if you know your customer, you can spend your marketing dollars with confidence.

There are many advertising services/platforms out there – some big, some small. You’ll have to decide where your marketing dollars should go. Larger service providers like Amazon will have a broader reach in terms of customers (a user base), and smaller, possibly niche services could help you target specific market segments that are more aligned with your marketing goals.

There is no time better than right now to embrace OTT advertising – low competition (for now) and better segmentation means lower costs – and more customers!

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Why should your business care about OTT Advertising?

Published by Lana Moiseenko on December 21, 2021December 21, 2021

Table of Contents:

How OTT platforms can help you better target customers.

What is OTT Advertising?

What are the benefits of OTT Advertising?