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What is OTT Advertising? Should you be leveraging OTT Advertising?

Video Advertising

Ana Gotter

June 9, 2020

When you think of paid advertising, what are the first platforms you think of?

Most brands automatically jump to PPC campaigns like search ads on Google or display ads on social media. Sponsored content (including influencer campaigns or high-authority placements) may be in the mix. Some may think about paid commercials on TV. 

Now, though, there is an abundance of platforms to choose from, and an increasing number of ways to reach your audience daily. While your standard search and display ads should always have a place in your marketing mix, it also can significantly benefit brands to break outside their standard molds when they’re ready to improve their marketing campaigns.

OTT advertising is one exceptional option for this, opening the door for many brands to a new type of advertising they may not have worked with before. In this post, we’re going to discuss everything you need to know about OTT advertising and if it’s right for you. We’ll be starting with the obvious question, of course: What is OTT advertising anyway?

So What is OTT Advertising? 

Since television sets started rolling out into homes, advertisers really only had one way to reach those audiences within that medium: Television commercials, which could cost an arm and a leg from TV providers. 

Streaming permanently changed that. While there are still people who watch cable, increasing numbers of viewers are shifting to streaming platforms, even if they’re watching shows in real-time. These streaming platforms aren’t bound by a TV provider’s or network’s prices, restrictions, or available placements when it comes ad space—they have created their own.

This, essentially, is OTT advertising. OTT stands for “over-the-top,” which is a reference to streaming platforms going over the heads of standard cable and TV providers. 

OTT advertising

OTT advertising, therefore, is advertising on streaming platforms that fit this definition. Some of these platforms may include:

  • Streaming boxes like Apple TV, Amazon Fire TV, and Android TV
  • Smart TV (and desktop sites) and apps like Netflix, Hulu, or HBO Go 
  • Game consoles, including XBOX and Play Station
  • Internet-enabled smart Blu-Ray players 
  • HDMI sticks like Roku or Chromecast

Some of these platforms offer advertising systems, which you can use to purchase ad space to promote your brand, products of services. Hulu Ads is often the most prominent example that people are most familiar with, but free versions of YouTube, Sling, and CBS are other great examples of apps that show advertisements to viewers.

Why Should I Use OTT Advertising? 

OTT advertising has distinct benefits that can help you improve your overall marketing success. 

While the specific features and benefits vary heavily depending on the platforms you’re choosing, here are a few advantages that OTT advertising can offer, particularly compared to traditional TV commercials:

  • OTT advertising is typically much more cost-effective than standard television commercials, even those only broadcast locally. Costs vary heavily based on the platform, but you might be looking at $5-20 per thousand views (CPM) on OTT advertising as opposed to $30 per thousand views minimum for local TV airing, or up to $115,000 for a standard national airing
  • Unlike standard television commercials, OTT ads have higher engagement rates. With the Super Bowl as the main exception, most users ignore commercials when watching cable. They get up and walk around, and fast-forward when watching later on DVR. With OTT, there are short ad breaks that users need to watch. You’ve got more of a captive audience, which means higher engagement. And this, of course, can mean better results.  
  • OTT advertising typically offers better targeting than standard television commercials, which focus on location, time of day, and channel targeting. OTT advertising, on the other hand, can help reach different demographics, take interests into consideration and even utilize retargeting. 
  • It’s a new place to reach your target audience. When users see an ad on Facebook, they most often scroll past. They can’t do that here, and this is a new way to reach potential audience members and build brand awareness.

How to Purchase OTT Advertising 

How you purchase OTT advertising will depend heavily on the specific platform, but there are two main options.

The first is Guaranteed Insertion Orders (or “Guaranteed IO”). With this method, you buy a set number of impressions for a set price. That price is typically based on the frequency of ads shown and your potential reach. Many online streaming sites for TV providers (like NBC’s Peacock) often opt for this approach. 
The second is the Data-Driven Programmatic option. If you’re familiar with self-serve PPC platforms that work on a bidding system, this will be more familiar to you. You buy placements based on a bids in a marketplace. You get control over targeting. There is, however, no guarantee of impressions or frequency, but you only pay for what’s delivered. This is going to be self-serve platforms like Hulu and Roku.

OTT advertising

Both options do allow you to really only pay for the views that you’re getting, which is good. Programmatic platforms are going to give you a little more control over your bid and potential placements, typically only requiring minimum ad spend. Guaranteed IO platforms vary wildly, but typically don’t offer the same pricing flexibility that bidding models do. That being said, you may be guaranteed a much larger reach with these platforms.

Open vs. Closed Ecosystems for OTT Ads 

Another factor to consider when you’re purchasing OTT advertising is what type of ecosystem or marketplace you’re working with: Open or closed. 

Open marketplaces allow you to access inventory across multiple publishers within a network’s inventory. So NBCUniversal, for example, doesn’t restrict you to showing ads on the Peacock streaming ad because they have multiple other operties. They can show your content to users on multiple channels and devices. 

Closed ecosystems all you to purchase ads only on the advertiser’s inventory. Amazon’s OTT network only grants you access to placements on content served through Amazon devices. This can be slightly more limited, but you also have more control and knowledge of how your ads are being served.

There is no one right answer here, but it’s important to understand where your ads might appear and how that can impact their effectiveness. Open ecosystems can increase your reach, but closed ecosystems may offer more results depending on your specific goals. 

Potential Drawbacks of OTT Advertising 

OTT advertising clearly has a large number of benefits that advertisers should consider, and for some brands, they absolutely outweigh the costs. That being said, there are disadvantages to this type of advertising that brands will want to consider. Most are technological challenges compared to the potential of online ads. 

These include the following: 

  • Tracking may be more difficult. There are no third-party measurement platforms to help you track, analyze, and optimize your OTT campaigns. The data you do get may be limited. You know, for example, when someone clicks on a Google search ad and then converts; it can be tricker to track the impact of an ad that people are just expected to remember.
  • They may work best for brand awareness. Because you aren’t necessarily driving immediate purchases of specific items since there typically aren’t links involved, trying to optimize for brand awareness may be key. This isn’t necessarily a bad thing, but other types of ads may be more successful at driving direct sales more immediately. .
  • Targeting is not as in-depth as other types of ad platforms. You’re getting more accurate targeting than you would through conventional tv commercials, but not by much when you compare it to what you can do with platforms like Pinterest, Google, Facebook, and LinkedIn. Even your email marketing gives you much, much more retargeting information to work with. 
  • Growing subscriptions may reduce placement options. There will always be OTT advertising placements available. Hulu, for example, has free and subscription plans, and even subscription “ad-free” plans do still show ads on some shows (not my favorite thing, but I digress). That being said, as cable subscribers cancel their plans and shift funds to OTT platforms, there may be a slight reduction in overall placements, which could drive costs up. 

Final Thoughts

OTT advertising is a quickly-growing marketing channel that’s likely to continue increasing in popularity, accessibility, and reach over the next decade. As more customers move from conventional cable plans to online streaming, conventional commercials will have less reach and may become less effective.

OTT advertising really does offer a nice combination of the ability to reach potentially captive audiences on a wide scale for brand awareness purposes while also having some basic targeting that you don’t get with conventional TV, combining some of the benefits (and, to be fair, some of the drawbacks) of both commercials and online ads.

This advertising option may not be right for everyone, but if you have the budget for it, consider testing it out. If you want to get started with an easy-to-use platform, look into Hulu Ads as a trial channel.

Interested in discussing the best marketing channels for your business? Get in touch with us for a free consultation!

What do you think? Have you ever tested out OTT advertising platforms? How well did they work for you? If you haven’t, are you considering it? Share your thoughts and questions in the comments section below!

Ana Gotter

Author

Ana Gotter is a freelance writer specializing in social media and content marketing, though she writes on a variety of other niches and subjects. She can be contacted at anagotter.com.

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