What is OTT (Over The Top) Advertising?

Here is the outline we will be covering in this blog:

• What is OTT (Over The Top)?
• Growth of OTT
• What is OTT Advertising
• Benefits of OTT Advertising
• TL;DR – What Have We Learned?

Streaming platforms are all the rage nowadays, with Netflix, Amazon Prime, Disney+, Apple TV, etc. all fighting for people’s attention. What do they have in common? These channels are all OTT (Over The Top), meaning video content delivered over the internet, versus traditional satellite or cable TV.

An important term associated with OTT is Connected TV (CTV).

Connected TV stands for the device one uses to watch OTT video. Note, it is closely related but not the same.

OTT is the actual delivery method, which is bypassing satellite and cable TV, hence, going over “the top”.

OTT ads are served through video format on:

• Smart TV apps (like Netflix, HBO Go)
• Streaming boxes (Apple TV etc.)
• HDMI sticks (Amazon Firestick, Roku, Chromecast)

 Amazon’s Fire TV has 50 million active accounts and Roku has 46 million.

The COVID-19 pandemic in 2020 sped things up for the popularity of OTT channels. People are spending more time at home, and all streaming channels have seen a jump in subscriptions. Many are switching from cable television to only streaming (cutting the “cord” if you will).

Emarketer predicts that the number of US households that subscribe to traditional television will drop from 86.5 million to 72.7 million between 2019 and 2023.

As mentioned earlier, OTT is streamed through Connected TV (CTV).

The Drum identified that Connected TV had grown 35% year over year in 2020.

Here are some statistics to showcase how popular streaming channels are:

• 61% of US households subscribe to 2+ OTT channels
• 45% subscribe to 3+ OTT channels
• 31% subscribe to 4 or more

Here are the most prominent video streaming players:

• Netflix
• Disney+
• Amazon Prime Video
• Apple TV+ 

To give you a sense of how big the userbases are, as of December 2020:

Netflix has around 200 million subscribers and Disney+ has 86 million worldwide.

It’s the hottest thing, and everyone wants a piece. Players that recently entered the arena include:

• Hulu
• HBO Max (HBO)
• Peacock (NBC)
• Discovery+
• AMC+ (AMC)
• Shutter
• Crunchyroll and more

This competitive group is often dubbed as “The Streaming Wars”. Here is a 2019 CNBC feature and a quick look at their analysis in 2021:

However, 57% of Netflix users said they would cancel their subscriptions if Netflix brought in advertisements.

How do brands manage to reach people in their households in this new era of media consumption?

OTT advertising is delivered through Connected TV’s online video streams, powered by programmatic technology. Ad formats may include:

• Banner ads
• Sponsored content
• In-stream video ads

For every marketer, Return on Ad Spend (ROAS) is an important metric to measure. Because OTT is internet-based, it has detailed data analytics of ad performance, which allows brands to attribute that to conversions (website visit, sale etc.). Insights gained from finding out which ads were effective and which weren’t are useful for optimizing future ads!

OTT is booming and only going to continue to grow.

As a programmatic advertising agency specializing in hyper-targeting audiences for our clients, we cannot stress enough how much potential OTT advertising can have.
We think it is an excellent channel for brands to consider branching out to. It can amplify your ads on other ad channels such as Display and Social campaigns.