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After decades of cable and satellite providers dominating the television market, streaming television has become the new norm, with cord-cutters forecasted to outnumber cord-nevers this year. And many of the same things that make streaming content so appealing to viewers carry over into the advantages of streaming advertising for brands and services.
But streaming advertising isn’t just one thing; there are many manners of reaching customers who are streaming video content. In this article, we’ll explore what OTT advertising (over-the-top advertising) is, key benefits it offers, how it’s purchased, and why it’s an important part of a full-funnel digital marketing strategy for brands of all sizes and niches.
“We expect US subscription OTT video ad spending to near $10 billion and account for 3.4% of all digital ad spending—and 10.2% of total video ad spending—by the end of 2023.” — eMarketer
Just like people enjoy watching their favorite content on their own schedule, advertisers enjoy reaching their target audience whenever and wherever they watch through OTT ads. Add in the advanced measurement OTT media buying offers, and you have a win-win for viewers and brands alike.
“We have found that the barrier to entry for streaming advertising compared to linear tends to be lower due to improved measurement and the agility of our targeting. For linear advertising, you need to run a test for longer to get a signal on what is and isn’t working. For streaming—because we have more granular attribution—we’re able to detect that signal much faster and then iterate on that, improving our buys and recommendations. We of course also see linear work very well for a lot of our clients, but it is a bigger commitment to get the channel going.”
— Stefanos Metaxas, Chief Strategy Officer, Streaming+
What is OTT Advertising?
OTT advertising describes buying and serving ads to people who are watching or listening to streaming video content delivered via internet-connected devices through a streaming service. Prospective customers see or hear OTT ads when consuming ad-supported programming via apps, websites, or Connected TVs (CTVs). CTV ads are baked into the equation as CTV is a subset of OTT, with the additional opportunity to reach viewers on their computers, phones and more.
The types of devices that OTT ads can be served on are numerous, and include: Smart TVs, mobile devices, streaming sticks, Apple TVs, Roku devices, and video game consoles.
As for the OTT acronym itself, “over-the-top” refers to the way in which the content a viewer is watching or listening to is delivered. In this case, the “top” is a cable set-top box or satellite dish —neither of which are needed to stream OTT content.
Key Benefits of Buying OTT Advertising
The benefits of OTT advertising are extensive, and only continuing to grow as more folks cut the cord for good. And people aren’t just subscribing to one platform. As findings shared by eMarketer in December 2022 show, “54% of US internet users subscribe to four or more over-the-top (OTT) video services,” with 20% subscribing to 8 or more services. This allows for more granular segmentation of audiences, making sure advertisers are reaching them with the right message at the right time based on the publisher they subscribe to and the additional targeting we can apply on top of that.
Refined Targeting for No Wasted Ad Spend
When advertising to a linear TV viewing audience, advertisers typically cast a very wide net that will naturally include many people who aren’t in their target markets. This is valuable from an overall awareness perspective, and has long been accepted as a literal part of the price you pay to reach the viewers that are likely to be interested, and ultimately convert. But that wide net comes at a cost. With OTT advertising, you can target just the audiences that you want to, improving your return on investment.
As an extension of reaching the most relevant audiences, OTT advertisers also enjoy a higher level of ad engagement. By reaching the people most likely to be interested in your offering, you save money and get eyes more closely attuned to the video being served to them. Gone are the days of people watching something because “it’s the only thing that’s on.” With streaming services giving us the opportunity to watch only what interests us on our own schedule, we are much more intentional about what programs we actively seek out.
Reach Audiences on a Variety of Platforms
There is an ever-increasing number of folks who can’t be reached by cable ads because they’ve simply cut the cord completely, or never had a cord to begin with. This is especially true for viewers under age 55. Instead, they are using one or more of the many popular ad-supported OTT apps to consume content. Advertisers can reach these relevant new and existing audiences with OTT ads, with YouTube leading the pack.
Some of the most popular places your ads can appear include:
The granular segmentation capabilities available through OTT media buying help you make smart use of your investment. And because the results of OTT include KPIs and other engagement metrics similar to what you’re familiar with from other digital advertising avenues, you can continue to scale and refine your campaigns over time much more efficiently and effectively across different advertising channels (and streaming apps!).
Lower Cost of Entry
OTT advertising offers a lower upfront cost than most traditional TV advertising from cable and satellite providers. This doesn’t always mean the media itself is cheaper, rather the amount you need to invest to get started is usually lower. Even brands and services with a modest advertising budget can dip their toes in the streaming waters, and begin building brand recognition.
How to Buy OTT Advertising
OTT ads are typically purchased from streaming providers directly, or through agencies. Agencies like Tinuiti offer the combined advantages of working directly with networks, and utilizing programmatic platforms when more flexibility is helpful to achieving a campaign’s goals.
Buying OTT Advertising Directly from Platforms and Publishers
When buying OTT ads from platforms and publishers, you’re going straight to the source. This method of buying is useful for advertisers who want to guarantee their ads will display to users watching a specific platform—such as Netflix or Hulu—or those who are watching via a specific device, such as an Apple TV or Amazon Fire TV Stick. An agency that works directly with publishers can help you achieve the same thing of course, while tapping into the advantages of buying at scale (without breaking the bank).
Buying OTT Ads from Agencies
Agencies act as an intermediary between the publishers and platforms and the advertisers, offering a number of benefits to brands…
- Among the key advantages of working with an agency is they already have established relationships and partnerships with platforms and providers. They also understand the ins and outs of OTT media buying because they’re involved in it every day across multiple client accounts
- This experience coupled with valuable existing relationships can help in securing the ad inventory you’re most interested in at the best possible price. Just like brands can buy ad space directly, so can agencies—and often at scale to support all their clients. The benefits of our incredible buying power extend to every campaign we manage
- From a cost perspective, working with an agency is typically preferable to buying directly from the publisher
- Finally, if an agency is worth their salt, they will be able to track performance against your business goals and recommend optimizations to further improve. Most 3rd party MTA platforms are not built with view-through attribution in mind, so this is key to running an efficient campaign
What is the currency of OTT?
As with most forms of advertising, the price you’ll pay for OTT advertising is determined by a number of factors, including the ad types you choose and where the ad will be shown. That said, the pricing model is typically a CPM or CPCV model. Other possible pricing models include CPA (cost-per-action) and CPI (cost-per-install, for apps).
CPM (Cost per Mille / Cost per Thousand Impressions): On a CPM pricing model, advertisers pay a set price for every one thousand impressions their ad receives.
CPCV (Cost per Completed View): With a CPCV pricing model, advertisers only pay when a viewer has watched their ad in full.
At Tinuiti, we typically purchase on a CPM or flat rate impression model, not CPCV. As explained by Shasta Cafarelli, SVP Media Strategy, Streaming+:
“Since Tinuiti largely operates on buying full episode player (FEP) media where most ad inventory is non-skippable, cost per completed view (CPCV) is organically baked in. Our video completion rate is over 95% for FEP media, we don’t charge an advertiser more for a completed view. CPCV when used in streaming can help draw a parallel to other digital channels, but it generally doesn’t apply for this type of inventory because a user can’t watch their content unless they watch the ad as well.”
It’s important to remember that with cable TV advertising, you’re paying for your ad to run whether anyone is watching the program or not. Because OTT ads are only delivered during content that is actively being watched or listened to, you know your ads are actually being seen and heard.
How to Target Audiences When Buying OTT Ads
Targeting and measurement are two areas OTT advertising shines, making it possible to not only reach your desired audiences, but also uncover the data you need to test the effectiveness of your ads on those specific audiences.
Targeting options for OTT ads vary, and can include:
- Third-party data
- First-party lookalike targeting
- TV audience data
- Consumer behavior
- Consumer interests
- Purchase data
- Life event groups (eg. new parents)
We think eMarketer summarized it well:
“The last decade saw the buildup of streaming. Now, the industry is facing a change as it pivots toward ads and looks for ways to cut costs. The future of streaming will be ad-supported, more selective, and will involve social video even more.”
To reach the widest audience possible, it’s essential to engage in streaming advertising. Want to learn more about how Tinuiti can help your brand realize streaming success? Visit our Streaming+ Services page, or reach out today to chat with an expert.