Benefits of OTT Advertising

Prime-time TV? Cable channels? In today’s media world, streaming is the top dog. Between Netflix, Hulu, HBO, and Youtube, modern audiences are increasingly watching content via the internet, not the TV box.  

So what does this mean for marketers? Advertising must adapt to streaming audiences—and OTT advertising is one of the best ways to do that.

Imagine reaching a relevant audience—the kind that directly relates to your business—right from their laptops, phones, and consoles. OTT advertising is a win-win deal for the customer and provider. In this guide, we’ll discuss each of the benefits of OTT advertising and how it can enhance your digital marketing services.

What is OTT Advertising?

Before we define OTT advertising, let’s define OTT, which stands for Over-The-Top. 

More specifically, OTT is a term that describes any video content streamed directly from the web. When you watch any video without using broadcast, traditional cable, or satellite TV, you’re streaming it “over-the-top” of those platforms via the internet. 

Today, the most popular OTT streaming platform includes:

• Youtube Red
• Netflix
• Hulu
• HBO Now
• Amazon Prime Video
• Peacock TV
• Disney Plus
• Apple TV+

OTT’s internet basis makes reaching specific consumers very accessible for marketers. Just think of how many places you can watch the latest season of Great British Bake Off on Netflix—laptops, mobile phones, tablets, and even gaming consoles. Then, compare that to the TV-only limitation of network sitcoms that are limited by channel and television schedules.

So, how does OTT advertising play into the accessibility of OTT? 

Basically, OTT advertising is delivered directly to viewers across any OTT platform—which includes the unskippable commercial during Handmaid’s Tale on Hulu and the skippable ads before a makeup guru’s video on Youtube.

While some OTT platforms (such as HBO Now or Netflix) charge audiences pricier subscriptions for zero ad features, other platforms run ad-supported or hybrid models, including:¹

• Youtube
• Hulu
• Peacock TV
• Paramount+
• Discovery+
• Roku TV
• Pluto TV
• Tubi

5 Key Benefits of OTT Advertising

From smartphones to desktops, OTT advertising is here to stay—let’s dive into five reasons why.

#1 Reach Mass Audiences

Long gone are the days of cable box superiority. Today, many audiences have shifted from primetime broadcasts to internet-connected devices to enjoy their favorite media.

For advertisers, that means a treasure trove of customers awaits you on the OTT side—and they’re here to stay.

Need some proof of OTT’s reign over modern audiences? Let’s take a look at some statistics on the platforms’ growing number of viewers:

• More CTV owners – Ever seen an Apple TV? Roku stick? Chromecast box? These are all CTV devices, or a device that connects television sets to the internet and OTT streaming services. Last year, over 80% of U.S. homes owned a CTV—an increase from 54% of homes five years earlier.²  
• Rising streaming subscribers – Currently, about 82% of U.S. customers subscribe to at least one OTT video content service.³ Even better, the average U.S. customer subscribes to at least four services. In the future, experts predict the total number of subscriptions to only grow.⁴
• Decreased satellite and cable users – In 2020, 6.6 million watchers cut off their cable or satellite TV subscriptions.⁵ The steep cut dropped total viewers by 7.5%, a loss that’s only expected to continue across TV audiences.⁵ Classic TV advertising slots are losing their value compared to OTT advertising.
• Younger audiences – For a peek into the future, look to the children—or in this case, young audience demographics. Traditional TV viewership dropped by 23.4% over the last year for consumers aged 18 to 34 years old.⁶ And with 12 to 17-year-olds, you have the first generation for whom streaming content on CTV’s is more familiar than watching traditional TV.⁶ 
• More ad-supported services – During 2020, ad-supported streaming services grew by 9%, while non-ad services grew only by 5%.⁷ Translation? Consumers prefer to pay less for their subscription, even if they have to watch ads. 

#2 Micro-Target Viewers

In comparison to OTT advertising, TV commercials are a “wide-net” marketing strategy. Sure, your ad campaign will be viewed by large slices of the population, but most TV channels have too varied a target audience for one commercial to capture the attention of all viewers, leaving some viewers slipping through the cracks to nibble on tastier promotions. 

On the flipside, OTT content offers advertisers the opportunity to benefit from addressable advertising—or customizing and playing different ads for different viewers depending on their demographic and interests.

With addressable advertising, OTT allows you to micro-target consumers for maximum engagement. For example, a 17-year-old boy and a 32-year-old woman could stream the same episode of “Bob’s Burgers” but each view completely different ads: Advertisers can target a video game console advertisement to the teenager and a cruise package to the woman. 

When working with OTT advertisements, advertisers can target specific demographics, such as:

• Age
• Gender
• Location
• Income Level
• Education
• Ethnicity
• Time of device use

Instead of casting that wide TV commercial net, with the best OTT platforms, you can target the exact customer your business is looking for. It’s a no-brainer for marketers.

#3 Utilize Better Data Analytics

OTT advertisers can target niche audiences and demographics with advanced data feedback and analytics, which are accessible from many web-based platforms that host OTT advertisements. 

From viewing times to completion rates, here are the data points that only OTT advertising can provide to advertisers:

Track Consumer Behavior

It’s not just the type of person watching that matters—it’s also their behavior.

How long does a viewer watch a 30-minute comedy show? What time of day do they watch romance films? Which device do they use most? OTT platforms store all of these metrics and more. 

And for marketers, that’s a valuable cache of consumer data. The more you know about a targeted viewer’s behavior, the more likely you can get the right ad in front of them at the right time.

View Performance Analytics

OTT services and advertising also allows marketers to view their own advertisements’ performance levels among viewers.

With TV commercials, the most feedback you’ll get is viewer location and whether the screen stays on (and even then, viewers might take a bathroom break). But with OTT ads, you can collect a slew of useful feedback to improve your campaigns, such as:

• Total views – How many viewers saw any part of the advertisement
• Video completion rate – What percentage of viewers watched the entire advertisement
• Attribution tracking – Product-based actions taken by consumers following the ad (such as click-through rates, proceeding internet searches, and more)
• Demographic responses – How different consumer ages, ethnicities, and other demographics responded to the advertisement

#4 Gain Higher Audience Attention

With the invention of TiVo, television ads have never been easier to skip. Even those without pre-recording devices can simply change the channel during a TV commercial break. TV advertisements are no longer viable in an evolving technological world. 

Luckily, OTT advertisements have a few features that make them stand out and stay relevant. Here are some of the ways OTT ads stand out from the crowd:

• Unskippable ads – TV viewers have many methods for skirting commercials—fast-forwarding on TiVo, running to the bathroom, changing the channel. But on OTT platforms, ads are way less skippable—users can’t fast forward through commercials, and the digital format makes it impossible to switch shows without losing your spot. As such, most viewers end up watching an OTT advertisement to completion.
• Multiple platforms – Since users can access OTT services across multiple devices (smartphones, tablets, laptops, etc.), it’s possible to see targeted OTT advertisements multiple times. And when it comes to ads, more views equals more desired responses—a concept known as “effective frequency.”⁸
• Efficient format – On TV, every commercial break guarantees five minutes of pure ads. But on OTT services, ads are much shorter (64% of CTV ads are just 30 seconds)⁹ and usually shown in breaks no longer than two minutes. This can help viewers better remember ads and stick around to watch them.
• Engaging content – Unlike TV commercials, OTT ads can micro-target customer interests, improving the odds of memorability. When surveyed, 72% of OTT users could recall a specific ad.¹⁰ In fact, users can even like these personalized ads—research found that 47% of ad-supported OTT viewers saw commercials as “useful or enjoyable.”¹¹

#5 Acquire More Consumer Interactivity & Action 

One of the most unique benefits of OTT advertising is the concept of interactivity.

With network television advertisements, viewers are just that—viewers who can watch an advertisement and turn the screen on and off—but that’s about where the interaction ends.

However, with OTT advertising viewers can click on links and take surveys within the ads, and even open a new tab to search for a specific product or service. For advertisers, that level of interactivity provided by OTT advertisements equates to a clearer, shorter path toward consumer action. 

Customers are Information-Seeking 

With the internet at their fingertips, OTT viewers can easily research products —and that’s perfect for instigating consumer action, whether it’s purchasing an item or browsing a seasonal sales page. 

During OTT advertisements, 40% of viewers pause content to learn more information or even purchase the given product.¹⁰ Additionally, 65% of second-screen viewers (those with multiple internet tabs open) look up product information.¹² Just by being on the internet, OTT content immediately spawns customer interest.

OTT Advertising Provides High Click-Through Rates

At this point, you’ve probably observed that almost all Youtube ads have a clickable link—and there’s a reason why. 

Clickable ads take out the “middle-man” search step for viewers. Unlike watching TV, OTT viewers don’t have to pull out a second device to look up a product. They can just click the ad to find more information. It’s faster, simpler, and more trackable than TV-based ad traffic.

OTT Advertising—A Growing Market for Marketers

Broadcast and cable TV still have a decent hold on media audiences, but OTT programming is rising in numbers—and it’s not stopping anytime soon. As viewers continue to “cut the cord” on cable and transition to digital streaming, advertising must follow suit.

If you’re curious about OTT advertising, check out Power Digital Marketing’s services. Our data-based approach can help organically integrate OTT into your marketing campaigns in a way that serves your business. And for more general information, take a look at our OTT resources to get started! 

Sources: 

1. Willcox, K. Guide to Free Streaming Video Services. https://www.consumerreports.org/streaming-video-services/guide-to-free-streaming-video-services/
2. Leichtman Research Group. 80% of U.S. TV Households Have at Least one Connected TV Device. https://www.leichtmanresearch.com/80-of-u-s-tv-households-have-at-least-one-connected-tv-device/
3. Deloitte. COVID-19 and Shifting Generational Preferences Reshape the Future of the US Media and Entertainment Landscape. https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/digital-media-trends.html
4. Advanced Television. Forecast: 5 OTT subscriptions per US home in 2023. https://advanced-television.com/2021/05/18/forecast-5-ott-subscriptions-per-us-home-in-2023/
5. Pressman, A. Cord cutting is breaking records during the pandemic. https://fortune.com/2020/09/21/cord-cutting-record-covid-19-pandemic/
6. Marketing Charts. The State of Traditional TV: Updated With Q3 2020 Data. https://www.marketingcharts.com/featured-105414
7. Cision PR Newswire. Comscore Releases 2020 ‘State of OTT’ Report Examining OTT Consumption Across CTV, Ad-Supported Services, And More. https://www.prnewswire.com/news-releases/comscore-releases-2020-state-of-ott-report-examining-ott-consumption-across-ctv-ad-supported-services-and-more-301083020.html
8. Pilcher, J. Say It Again: Messages Are More Effective When Repeated. https://thefinancialbrand.com/42323/advertising-marketing-messages-effective-frequency/
9. Interactive Advertising Bureau. OTT Streaming Video Playbook for Advanced Marketers. https://www.iab.com/wp-content/uploads/2019/12/2019_12_IAB_OTT_Streaming_Video_Playbook_for_Advanced_Marketers.pdf
10. OpenX. 2019 Consumer OTT Report. https://www.openx.com/resources/thought-leadership/2019-consumer-ott-report/
11. Interactive Advertising Bureau. Direct Brands and the Ad-Supported OTT Video Viewer. https://www.iab.com/wp-content/uploads/2018/12/IAB_Direct-Brands-and-the-Ad-Supported-OTT-Video-Viewer_2018-12-03_Final.pdf
12. The VAB. You Down With OTT? https://thevab.com/insight/you-down-ott