What Is OTT Advertising and What Are Its Benefits? A Complete Guide

OTT advertising

Did you know that 69% of people prefer video over text when learning about a new product or service? Although the video is a difficult piece of content to create, it’s necessary for certain ad campaigns. Keep reading to learn more about OTT advertising.

If traditional TV ads are too expensive for your marketing budget, there are more affordable and better ways to get your videos seen.

OTT advertising allows businesses to advertise their brand on different platforms and devices. Keep reading to learn more about this form of advertising.

What Is OTT Advertising?

The term OTT (over the top) comes from when streaming options were box-like devices that you placed over the top of the television. OTT devices and advertising has come a long way since then.

OTT now refers to any streaming content coming through different devices, including the following:

  • Roku
  • Amazon Fire TV
  • Smartphones and tablets
  • Gaming consoles
  • In-browser streaming on desktops or laptops

OTT advertising refers to placing ads on streaming channels. Some of the most common streaming channels are:

  • Hulu
  • Amazon Prime
  • Netflix
  • Disney Plus

There are publishers that have created their own lesser-known OTT channels. Most of these are monetized through ad revenue.

OTT is all about video so OTT advertising tends to be video content too.

Why Invest in OTT Video?

Over-the-top video meets a variety of sales and marketing initiatives for different industries. OTT video allows for data-driven targeting through measuring and scaling.

OTT goals aren’t the same as TV goals, but this is a gross oversimplification. OTT video can be leveraged as a full-funnel performance channel that can move potential customers through the entire sales funnel.

OTT Video Advertising Benefits

For publishers and advertisers, there is a wide world of revenue opportunities. The following are the top benefits of OTT video advertising:

Cross-Channel Content Availability

If you want to reach more than the people on the internet, you’ll need to find ways to reach not just mobile and desktop browser users.

You can make your video content available on an OTT channel to reach a wider audience. OTT is distributed on various devices.

Not only can people see your video content on desktops, laptops, and smartphones, but they’ll see the content if they stream through the television and gaming consoles.

Viewers can’t always skip OTT ads. Because of this, they are likely to see your campaign message which will give you higher completion rates.

Since your consumers know they are watching ad-supported content, they are okay with watching your ads. Ads are a small “setback” when it means watching content for free.

Fostering Growth

OTT advertising platforms can foster growth for your advertising revenue and your audience.

Precise targeting through OTT can help eliminate waste and enhance ad relevance. This leads to more consumer engagement and builds campaigns with a focus on complementary strategies.

Once you get into OTT, you’ll notice you’ll have more opportunities to build OTT content. This means you can put your existing content library in front of more people. Overall, you’ll be expanding content libraries to more users.

Less Volatility

The advertising world is volatile especially when you have to rely on the rules of search engines like Google.

If Google wants to update the search algorithm or release new standards, it can cause problems for publishers and advertisers.

However, it’s important to know that each platform has different advertising requirements. Although algorithms don’t change, there is not a universal language for OTT advertising.

OTT advertising has fewer rules than internet advertising. Plus, OTT channels are immune to search algorithm updates. This means if a user has a certain OTT channel that you market on, they will be exposed to your content.

OTT Viewership Is Growing

OTT is growing in popularity as more people are cutting the cord with cable. More people are watching television through streaming services rather than through the traditional TV industry.

Plus, OTT services are appearing more frequently. Everyone wants to join the market and compete for the growing viewership.

OTT ad investments are on the rise because more brands are investing in OTT ads. Because OTT platforms operate in a closed environment, the odds of becoming a victim of ad fraud are lower than in online video advertising.

The market potential is massive which leads to growth in viewership, platforms, and more.

Reach Ideal Customers

A lot of OTT advertising platforms will help you take advantage of advanced targeting options. Through audience targeting, you can reach the users who are most likely to buy your products and services.

You can maximize your sales and revenue by targeting users based on the following:

  • Purchase history
  • Interests
  • Age
  • Location
  • Gender

With this information, you’ll reach ideal customers on popular streaming services to increase brand visibility and sales.

Create Personalized Messages

To encourage your audience to click on your ads, they need to resonate with them. You can create more personalized marketing messages to reach more members of your target audience.

Hulu is one of the OTT platforms that allows you to create messages based on the actions of a user. For example, you’ll be able to tell if they are binge-watching a TV show and place your ads accordingly.

This results in a more personalized experience for users that encourage more clicks and sales for your business.

Higher Return on Investment (ROI)

Compared to traditional TV advertising, OTT ads allow you to track and measure campaign results without the hassle. You’ll have the visibility of essential metrics and data on the ads you place.

By seeing your views and impressions, you’ll be able to analyze audience behavioral data. When you find out how many users click on your ad or made a purchase, you’ll be tracking the success of your campaign.

This also helps you identify areas of your strategy that require improvements. From there, you’ll optimize your campaigns to drive the best results and reach your business goals. In return, you’ll reap a higher ROI.

Minimize Ad Spend Waste

Because OTT ads are more targeted, you can stretch your marketing dollars and reduce spending waste. This can also help you increase your return on investment.

OTT makes it more likely that your ads are seen by people who have an interest in what your brand offers. This also means not wasting time on users who will never buy your products.

Strong Analytics

One of the best benefits of OTT ads is that you can pull powerful analytics to help your ad spend and increase campaign success. The following are just some of the data variables you can pull from OTT ads:

  • Device-level performance
  • Behavioral data
  • Click-through rate (CTR)
  • Pacing
  • Impressions
  • View-through conversions

View-through conversions are one of the most powerful conversion tracking tools most brands aren’t aware of. You’ll use this metric to measure who has converted on your website through online actions, purchases, and form submissions.

More Affordable Than Traditional Broadcast

Traditional broadcast and linear TV buy cost more in regard to monthly budget minimums.

On average, OTT ads can cost anywhere from $25-$40 based on the cost per 1,000 impressions (CPMs). In contrast, traditional TV advertising rates range from $40-$200 CPM.

Traditional TV comes with more inefficiencies. You’ll reach a lot of people you don’t intend on targeting via broadcast advertising. Because of this, the high cost is not worth the investment in the long run.

Where Are OTT Ads Displayed?

Over-the-top video ads are displayed on various devices, but they don’t appear randomly on a device. Instead, they are seen through a video stream from a number of OTT distribution channels.

Streaming videos and seeing ads gets more complicated when you factor in the different publishers, platforms, devices, and channels.

The term OTT is not a one sized fits all claim for the industry. There are different competing business models that determine how people access streaming content.

This is the related terminology that is important to know:

  • SVOD (subscription video on demand): streaming services for consumers with a subscription
  • AVOD (advertising-based video on demand): streaming services for free via ad support
  • vMVPDs (multichannel video programming distributors): streaming services with paid TV programming
  • CTV (connected TV): a TV device connected to the internet

Netflix, Hulu, and Amazon Prime are among the most popular SVODs. AVOD streaming services include Crackle, Vudu, and Tubi.

Sling TV, YouTube TV, and AT&T Now are multichannel video programming distributors.

How Do You Buy OTT Ads?

For advertisers just starting out with OTT, it can be complicated to access OTT ads. There are generally two ways to buy OTT advertising:

  1. Guaranteed IOs (insertion orders)
  2. Programmatic

Insertion orders are bought at a set price and offer set impressions. The price is generally based on frequency and reach.

Programmatic advertising buying occurs through real-time bidding. The advertiser and the agency can control where they target consumers but not set impressions or frequency.

Publisher Direct

Publisher-direct ads happen when companies communicate with an OTT content provider directly. Advertisers get more control with this option but it only offers limited exposure.

Plus, this option is more expensive than others.

Platform Direct

Ads purchased directly from the OTT device provider are platform-direct ads. For example, if you buy ad space from Fire TV or Roku, it would be considered platform direct.

Programmatic

Programmatic ads, unlike insertion orders, use Demand-side platforms with AI technology to optimize placement and ad pricing.

Advertisers benefit from more cost-effective bidding and better targeting. The downside is that you have less control of your campaigns in other elements.

How Are OTT Ads Inserted?

So, how are OTT ads inserted into the content? The two primary insertion methods are client-side ad insertion (CSAI) and server-side ad insertion (SSAI), also known as ad stitching.

CSAI is an older insertion method that involves loading the ad within the OTT box before delivering it to the viewer. This method is less effective because it is susceptible to ad blockers.

Ads come from outside the content delivery stream where ad blockers can detect them and prevent them from showing.

The SSAI method is more efficient for advertisers. It integrates ads directly into the content stream and hides them from ad blockers. This is a much more reliable service for marketers looking to get into OTT video.

The ad and content travel to the end device as parts of a frame-by-frame stream. The traditional ad-blocking strategy cannot differentiate ads from content streams.

This is why you’ll also hear it referred to as ad stitching. This method of ad insertion also works on live broadcasts. Some of the other benefits of SSAI over CSAI are:

  • Eliminates latency and buffering issues
  • Offers a better user experience
  • Better reliability, engagement, and consistency
  • Easier development and implementation

If you want the best return on investment for OTT ads, look for a platform that offers SSAI.

Types of OTT Ads

You can work with OTT advertising companies that offer the right type of OTT ad to help you reach your business goals.

Display ads, pop-up ads, video ads, and interactive ads are among the most common. Let’s dive deeper into each of them.

Display Ads

Display ads contain a form of multimedia like a button or an image. This digital advertisement is displayed next to or below a user’s video on OTT platforms.

They should include essential information about your business like a featured image or brand logo. You can also provide a phone number or website link depending on the messaging of the ad.

Since these ads appear below or next to a video, they are often used to promote services and products without the need of interrupting a video.

Pop-up Ads

Pop-up ads are similar to display ads because they generally contain an image or important details about the business. In OTT platforms, pop-up ads might appear within a user’s video. This is usually at the bottom of the screen.

Users can continue watching the current video while viewing the advertisement.

Video Ads

Video ads are some of the most common OTT ad forms because OTT is all about video. These ads, depending on the service, can be anywhere between five and 30 seconds long.

Video ads play before, during, or after a user’s video. This is one of the best ways to capture your audience’s attention because they have to watch the ad before watching their chosen video, movie, or show.

OTT platforms offer skippable video ads and some without the ability to skip. Others also allow users to skip after a certain amount of seconds.

Interactive Ads

You can create interactive ads that engage your audience by encouraging them to click on your videos through the OTT platforms.

Interactive ads give users access to click and scroll through your products and services. This is one of the best ways to encourage users to convert into paying customers.

Best Practices for OTT Ads

The best advice for OTT ads is to ensure they are relevant to your target audience.

Keep your ads short. You wouldn’t want to sit through a minute-long ad so your audience likely won’t want to either.

A lot of people skip ads as soon as they can so keep the ad to a maximum of 30 seconds. 15-second ads tend to be better.

It’s also important to place a focus on ad formatting. Your ad should be formatted for the big screen, smartphones, and all other devices.

OTT ads also need to be relevant and current to your audience. It’s best to get to know your target market on a deeper level before blindly creating ads.

When you get to know the people you are trying to target, you’ll create a personalized experience that turns viewers into long-lasting customers.

Types of OTT Campaigns

You’ll need an OTT campaign strategy when you get started. Campaigns typically follow two categories, but you can use OTT ads to reach a variety of business goals.

You’ll find that prospecting and retargeting are both solutions that come from OTT ads.

Performance TV retargeting involves using your data to retarget users who are already interested in your brand. You’ll complete the funnel by serving them OTT ads.

You can also extend your retargeting with audience extension. This experience begins with an OTT ad. After the ad is served, technology can track other devices that serve related display ads to the same user.

This will help you gain customers that continue to engage and immerse viewers into the world of your brand.

Best OTT Advertising Platforms

Typically, the best OTT advertising platforms are those that follow the AVOD monetization model and not a subscription-based model.

Yet, what once seemed like a safe space, Netflix is now expected to become a subscription-based paid model with ads. That’s right, Netflix is adding ads to their current subscriptions sooner than later.

There are also platforms that currently fall into both categories like Hulu. Consider promoting your business on the following services:

Roku

Roku is a pioneer in the OTT industry with millions of users. You can play 15-30 second long ads, form sponsorships, interactive videos, and advertise on overlays with Roku.

All types of advertisers can use Roku as an advertising solution.

Hulu

Hulu is another OTT advertising platform that had around 43 million subscribers last year and continues to be popular.

It is ad-based but there are also subscription options that eliminate the need to make money with ads.

Hulu offers three subscriber packages that include ad-supported and ad-free versions. They also offer Live TV for a more expensive amount.

Similar to Roku, the platform has different advertising options. You can opt for geo-targeting/geofencing, header bidding, and advanced performance tracking among other ad types.

AVOD ads are categorized as pre-roll, mid-roll, and post-roll.

This means the ads will either play before the video content, within the video, or after the video content has finished.

Tubi

Tubi has millions of subscribers and more than 250 partners. OTT advertising through Tubi provides businesses with brand-safe advertising, targeting, measurement tools, and a vast reach.

If you want to cast a wide web, consider Tubi for your OTT advertising campaign. The ad platform offers 15-30 second ad spots that viewers cannot skip.

Sling TV

Sling TV was the first live TV streaming service that started in 2015. Viewers can watch live and on-demand programs that used to be limited to satellite and cable television.

Although it has elements of traditional TV, it takes on a more modern identity when it comes to digital marketing.

Brands are charged per impression and can choose to advertise on different networks with various content. Ads are not skippable, cannot be blocked, and cannot be fast-forwarded.

Sling TV makes use of programmatic advertising so they sell their inventory via private auctions.

YouTube

YouTube has come a long way in the world of OTT advertising because users can view the video-watching site on practically any device with internet access.

Although YouTube TV also dabbles in OTT advertising, YouTube itself is different. When it comes to YouTube Premium vs. YouTube TV, the two sound similar but their content doesn’t overlap or offer the same features.

Consumers tend to purchase products they find through YouTube ads making it one of the top OTT advertising platforms. Unlike other services, YouTube is home to billions of active users.

YouTube allows consumers to watch their favorite videos while viewing ads that are relevant to them based on their location, interests, and more.

Advertising with YouTube allows you to promote your brand with the following:

  • Non-skippable video ads
  • Skippable video ads
  • Pop-up ads
  • Display ads

You could be missing out on potential leads when you forgo using YouTube as a marketing tool.

Is OTT Advertising Right for You?

OTT advertising is not just for big brands. Over-the-top video makes room for all businesses and industries that want to market on channels that aren’t as expensive as traditional TV.

Just knowing about OTT advertising isn’t enough to create a successful campaign. You’ll need a knowledgeable team by your side.

Contact us today to learn more about our OTT services and have all of your questions answered.

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