Why Advertise on OTT Devices

Today, a growing number of businesses have discovered benefits in utilizing Over-the-top (“OTT”) television advertising. This innovative medium offers a way for advertisers to direct content to interested recipients within specific markets.

A New Era of OTT Television Advertising

The rise of OTT promises to significantly disrupt traditional broadcast television advertising. Essentially, this new technology involves the provision of streamed “on-demand” content to television viewers. While broadcast networks and cable services typically maintain a predetermined schedule for programming, streaming services allow viewers to watch the content they prefer on their own timetables.

Currently, the category of “OTT” services covers six basic types of on-demand devices. These include a smart TV (e.g. Netflix and Hulu); smart DVD and Blu-ray players; gaming consoles; DVR set-top boxes; streaming boxes (e.g. Apple TV); and HDMI boxes or sticks (e.g. Roku and Chromecast). Analysts expect these innovative technologies to witness significant growth in popularity during the next few years. (1)

Who Watches OTT Advertising ?

Television advertising reflects some important demographic divisions. By and large, the viewers who have adopted streamed content fall within two main segments of the population: the Millennial generation and Gen Z.(2) A small yet gradually increasing number of seniors have begun viewing OTT television advertising.

These audiences tend to watch OTT content in family groups for specific protracted periods of time. They became accustomed to requesting digital content on computers as children, and as adults largely reject predetermined programming schedules. This audience differs from online web video viewers, who tend to browse content at random as individuals. (2) Instead, OTT television watching often centers around specific content selections viewed in sequence, such as the “binge-watching” of popular streamed television series.

A Bright Future For OTT Technologies

Recent research forecasts a bright future for OTT technologies. The number of people regularly watching streaming television content should surpass 200 million in the United States alone by 2019.(3) Clearly, this medium has achieved widespread popularity.

One aspect of this technology which excites advertising experts relates to the degree of customization possible when audiences watch streamed content. Many companies now send ads to viewers and re-target them again on other digital platforms. The development of sophisticated information-rich customer databases allows marketers to identify groups of potentially interested customers for some products. Streamed services frequently permit innovative advertising presentations, such as content programming with a single sponsor and the use of significantly shorter ad spots.

Recent Statistics About Television Advertising

One impressive statistic relating to the OTT marketplace captures the attention of many companies placing commercials. By 2020, analysts predict OTT ad buys will account for nearly 50% of the total $85 billion spent on TV advertising!(4) This remarkable growth suggests businesses anticipate results in this new market.

The availability of OTT ads offers a viable way for many comparatively young businesses to enhance name recognition in specific local markets. Decades ago, when companies of all sizes had to compete for space on broadcast networks, many firms could not afford to place ads during Prime Time. The rise of OTT has helped spark new, healthy competition in the TV advertising marketplace.

OTT Obstacles

Of course, companies creating OTT advertising still face challenges. This technology has evolved rapidly. Yet advertisers cannot always customize ads and capture uniform result “milestones” as effectively as they would prefer.(4)

For example, the Nielsen Ratings system does not yet measure OTT content views.(4) Will measurements improve soon? Although likely, these developments remain ongoing.

Advertise on OTT Now

Your enterprise currently enjoys an excellent opportunity to use OTT advertising to penetrate the regional marketplace (or other local markets). This increasingly popular technology offers an exceedingly cost-effective way to reach individually identified customers and demographic consumer groups. Harness the power of Over-the-top television ads to ensure your firm utilizes its marketing budget as effectively as possible! 

OTT Advertising Costs and Spends

Over-the-top (OTT) is the latest buzzword in the video advertising world and is becoming a significant chunk of the homes watching television. The rise of OTT services and the fall of traditional services is creating a major shift in the television advertising world. The question is not should I be advertising to OTT audiences, but the question is how much of my ad dollars should I spend on OTT and how much should I pay. Recent reviews of the major media companies that offer an OTT product has shown the cost to far exceed the cost of advertising on traditional cable or broadcast TV advertising. But the geographic and demographic targeting capabilities do present an attractive ability to eliminate wasted exposure, which could possibly result in higher consumer response and more sales for advertisers.

The Rise of OTT

Over the years cable and satellite television providers have lost large amounts of subscribers. A recent USA Today article presented some alarming numbers for traditional television providers. 1.1 million homes cut the cord during the July to September 2018 period. That is the largest ever quarterly loss for cable and satellite companies. So where are all these subscribers going? Hulu, Netflix, Sling TV, DirectTV Now and other over-the-top (OTT) pay-TV providers.

The low cost and ease of use of these new products are attracting those who are fed up with the exorbitant and rising costs of traditional television services. According to ComScore, one of the largest media research firms in the United States, in April 2018, 59.5 million U.S. homes used an OTT service. OTT has grown over 17% year-over-year and 80% of U.S. homes have at least one OTT capable device.

How to watch OTT

The ability to quickly and easily subscribe to non-traditional pay TV services makes this even more attractive. You can subscribe to Hulu, SlingTV, DirectTV Now or YouTubeTV and be watching in minutes. The technical term for these services is Virtual Multichannel Video Programming Distributor (vMVPD).

The simple definition of vMVPD is a service that provides multiple television channels through the internet. vMVPD’s allow you to watch TV on a connected TV, laptop, tablet or mobile device. To watch on a connected TV, you have to have a Chromecast, Roku, AppleTV or similar device. You simply connect the device to your TV and use the built-in app to stream your content or stream the content from your phone to your TV to watch.

How to advertise to OTT audiences

Some of the largest media companies have either built a demand-side-platform (DSP), acquired an OTT access platform or partner with companies that give them access to the publisher’s inventory. Most if not all cable or broadcast TV companies offer an OTT product, but there are however some important metrics to consider before choosing an OTT product. OTT viewers watch content through tablets, laptops, smartphones or connected TV. The largest possible display or your ad and the method that matches traditional TV is the connected TV method, so naturally, the desire should be to have a large percentage of the impressions delivered on the big screen. Demand that 80% or more of your impressions be served on a connected TV. Most companies provide real-time reporting and can show you the percentage of delivery of impressions by a device.

Another important metric is the ad completion rate. Although viewers cannot skip over these advertisements, they can choose to change the channel during the commercial or turn off their device. Demand a completion rate of 95% or better to ensure that you get what you pay for. The standard delivery percentage for gross rating points, when conducting a post for broadcast and cable TV buys is 90%, but if you are a good negotiator you can get 95%. This is the standard for traditional TV buys so it should be the same for OTT.

Premium Content vs. YouTube and Online Video

What is markedly different about OTT content is that it is full episodes of TV shows or full movies also known as Full Episode Player (FEP). Other online video content is typically 30-seconds to 5-minute content and can be skipped which is classified as pre-roll, mid-roll or post-roll video. These short online videos come with a low engagement rate and a less interested audience. Furthermore, the quality of this content is an issue. YouTube and online video ads have been under constant scrutiny for fraud and viewability issues.

YouTube also has been in the news for running ads alongside racially sensitive content, which has led many brands to boycott YouTube advertising inventory. OTT ad inventory provides premium quality content where your ad will be featured alongside some of America’s best publishers and TV networks. The ads are unskippable and come with higher completion rates and more engaged audiences. The reason this inventory is quality is that media companies own television networks or have direct partnerships with some of the top-tier TV networks and channels. This gives them a “first look” at premium FEP content and an advantage in the digital video advertising space.

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