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What Is OTT Advertising (And Why You Should Care)

In just a few short years, digital marketing has undergone a complete transformation. While banner ads and pop-ups still exist (much to the chagrin of the average consumer), today’s marketing strategies are much sleeker, innovative and all the more compelling.

More importantly, they adapt to platforms consumers are truly vested in. Streaming services are currently adopted by an estimated 82 percent of US households, with a reported 61 percent of users subscribing to two or more services. With an estimated 31.2 million US viewers foregoing traditional cable and satellite TV in 2020, it’s been predicted that the number of streaming subscribers could reach as high as 1.25 billion by 2024.

It’s a high potential market. And OTT advertising is the tool which can tap it.

What is OTT Advertising?

Over-the-top (OTT) advertising has been one of the most buzzed about terms in digital marketing over the past few years. And with good reason. By delivering branded advertising content over any number of OTT streaming services (including Video On Demand and Smart TVs), OTT ads reach audiences who have foregone traditional TV services which have historically controlled content in favor of an entirely user driven format.

Why is this important? Historically, traditional TV viewers are limited to content specified by both geographic region and broadcasting providers. OTT advertising allows brands freedom of movement without relying on those same constraints which control exactly what a viewer should be consuming. Unlike traditional broadcasting formats which focus on providers, OTT relies on the greatest strength of the digital landscape at all stages: its users.

OTT Advertising is Not Traditional Advertising

One of the biggest misconceptions about OTT advertising is that it should act similar to traditional TV advertising: chiefly, a universal strategy based on reaching the widest audience possible.

Unfortunately, that’s a strategy which isn’t just unrealistic. It’s wasteful. RoAS will always be the bottom line when it comes to any marketing campaign. And if you’re not targeting the right audience with the right message at the right time, you’re simply not going to acquire the right customers.

OTT advertising, on the other hand, is a data-driven programmatic solution which can be targeted towards relevant audiences who truly want to engage with your content, no matter how difficult they are to reach. Its scope can be entirely scalable to your budget. And it helps qualify your ad spending, allowing you to measure your return more comprehensively and accurately; a factor not lost on the estimated 50 percent of ad buyers who increased their OTT budgets in 2020 to the tune of $1.18 Billion by the end of this year.

How Are OTT Ads Delivered?

Virtually any device which allows online streaming can be optimized for OTT campaigns. But some of the more popular ones include:

  • SVOD (Subscription Video on Demand): Paid, subscription-based streaming services including Netflix, Amazon Prime and Hulu.

  • CTV (Connected TV) and Smart TVs: Any television which also allows connectivity to the Internet.

  • AVOD (Advertising Video on Demand): Free streaming services supported by advertising including Crackle, Peacock and Vudu.

  • MPVD (Multichannel Video Programming Distribution): Streaming service providers with paid TV programming, including YouTube TV, Sling and AT & T Now.

  • PVOD (Premium Video on Demand): A streaming service which allows access to first run movies and exclusive TV content.

The Downside of OTT Advertising

Because each platform has their own unique specifications and limitations, there’s no universal functionality for OTT ads. Launching a campaign across multiple platforms requires tailoring a campaign to meet those specific requirements; a time consuming and frequently expensive process, particularly for a relatively uncharted marketing territory.

A greater challenge which has recently emerged is a wholesale lack of regulations. Because OTT itself is so relatively new, neither service providers nor advertising are currently licensed by any federal or state regulators as of yet. In fact, data from a 2019 study from non-profit consortium AdLedger found that as much as 18 percent of OTT ads are fraudulent—which has led some marketers to doubt the very credibility of OTT as a solution.

Like any other advertising platform, OTT can be as much of a challenge as it is a solution. Ideally, it can leverage and measure your audience’s insights based on their direct engagement much faster and more accurately than traditional advertising. But it’s still in its infancy. All new solutions will face growing pains as well as unique strengths based on their adoption. But as new delivery platforms emerge, it may no longer be a question of whether OTT advertising can address your needs. It may be a question of whether or not you can address it.


Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.

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