What is OTT Advertising and Why Is It Better than Traditional TV Advertising?

Over-the-top (OTT) media is online streaming services like Netflix, HBO Go and Hulu, which go over-the-top of traditional cable satellite television. Streaming services have changed the way that the advertising industry reaches its customers, which is where OTT advertising comes in.

Some streaming services are subscription-based video on demand (SVOD), while others are advertising-based video on demand (AVOD). People who have a lower tolerance for ads and are willing to pay a premium to avoid ads subscribe to popular services like Netflix, Disney+, HBO Max and the ad-free upgraded versions of YouTube and Hulu. Still, the fastest growing viewership is occurring with AVOD services, with nearly a quarter of all streaming viewers now watching this way (1) — the primary growth driver being the difficult economic environment where consumers are hyper conscious of cutting household budgets while still wanting to be entertained at home.

Why OTT Advertising is Necessary

As more and more people stop using cable or satellite TV, OTT becomes increasingly important. A recent study indicated that 27 percent of people in the United States have completely stopped using traditional TV in favor of streaming services (2). If you are only advertising through traditional TV, that is 27 percent of households that you are not reaching. This is especially important if you want to reach younger generations, like Millennials and Gen Z, because they make up a large percentage of those who are leaving cable and satellite in favor of streaming services.

Advantages of OTT Advertising

OTT advertising can be highly beneficial to advertisers, and they are intended to give the consumer a positive experience. Let’s look at some of the main advantages of OTT advertising for both the consumer and the marketer.

Precise Targeting

When you put out an ad on traditional TV, you can select the channels you think your audience will watch, during the time slots they might be watching, but there is no guarantee that the people you want to see the ads are the ones seeing it. Essentially, you are casting a wide net in hopes of catching some of the specific fish you are looking for.

OTT advertising gives you precise control over who sees your ads. You can target your ads based on demographics, behaviors, topics, geographical information, and more, so you can segment your audience easier. This allows you to design different ads for different target groups, so that your ads are more relevant to each group. You can focus your efforts on the people who need your product or service, instead of engaging with people who will not need or use it.

OTT ads are not skippable and fill the entire screen, just like traditional TV ads. Even better than regular TV ads, since your ads are tailored to be meaningful to that audience segment, they are more likely to notice your ads.

Creative Flexibility

Since you are able to tailor your ads to specific segments of your audience, you have more opportunities to get creative with your advertising, efficiently testing out and swapping out varying creative copy.

Analytics

Measuring the effectiveness of an ad campaign on traditional cable or satellite TV can be difficult. With OTT advertising, you have access to real-time reporting and analytics that can show you how your campaign went. This information can help you develop even more effective and engaging campaigns in the future.

Extend Your Reach

One of the biggest reasons why OTT advertising is so beneficial is because of the sheer amount of people who use streaming services. Millions of people use streaming services, and that number will only continue to grow.

Multiple Devices

Typically, with traditional TV, there is only the TV in the living room, and maybe the bedroom, but the ads are not leaving those areas. One of the benefits of OTT advertising is that things are streamed through the internet, they can not only be watched on the big screen in the living room, but they can also be watched on phones, tablets, computers, video game consoles, and more. This increases the number of people streaming at once, and it can increase exposure to ads overall.

Since users are often on a phone or tablet while streaming content, they are usually able to respond to your ad right away, whether they can click on the ad or if they have to visit your website to do so — depending on the streaming service they are using — the device they need is already right in their hands. Even if they are streaming on a TV, their phones are usually nearby, so they can still respond quickly. This can help boost sales and increase the return on investment that you are putting into your advertising.

Flexible Ad Insertion

When you put out an ad on traditional TV, you have to pick one strategy to focus on. If the campaign ends up being less effective than you had anticipated, changing your strategy can be expensive. With an OTT ad, if you find that the campaign is not effective, it is much faster and easier to replace it, so there is often much less loss.

Easier Budgeting

Since you have so much analytical data available when you run an OTT advertising campaign, you can determine a budget for the new campaign a little easier when you put a new campaign together. You also might not need as many ads to reach your audience, since you have such precise targeting options available.

You are typically charged based on views for an OTT ad, so you can start out a campaign smaller to test how an audience responds to it before making it more widespread. This can help you plan for a budget for the larger campaign.

Conclusion

OTT advertising can be highly beneficial for any brand, since it lets you reach so many people in an advertising campaign that may not be reachable on traditional cable or satellite television. Contact JamLoop today to learn more about our OTT advertising platform and get started planning your OTT campaigns today!

References:

(1) Mediapost, Oct 2020. https://www.mediapost.com/publications/article/356557/nearly-a-quarter-of-streaming-adults-use-avod-regu.html

(2) Carlson, Edward. “Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV.” National Telecommunications and Information Administration. 21 May 2019. https://www.ntia.doc.gov/blog/2019/cutting-cord-ntia-data-show-shift-streaming-video-consumers-drop-pay-tv