While advertisers still spend the bulk of their advertising dollars ($69.2 billion) on linear TV but in 2019, advertisers slunk 20% or $2.6 billion dollars in OTT (over-the-top) streaming video. Find out the truth behind OTT TV here!
And while the OTT advertising industry is growing in popularity within the marketing industry, there’s already some confusion about how it relates to CTV or connected TV. Especially from an advertising standpoint.
We want to help you get the biggest ROI (return on investment) with your marketing dollars. Keep reading to learn the difference between OTT TV service and connected TV and what the latest possibilities in advertising are using these new technologies.
The Difference Between OTT TV and CTV
OTT TV and CTV are similar but not the same. Here’s how:
What OTT Service Is
What is OTT? It stands for over-the-top. What OTT refers to is the video content provided to a consumer over the traditional closed television system.
When a customer uses OTT TV services they don’t need to subscribe to anything or even pay a TV cable company to watch their content. This is because these customers get the majority of their content via the internet.
OTT Service Providers
Some examples of OTT Service Providers are:
- Amazon Prime
Connected TV advertising is best used to complement digital advertising buys or as an extension of conventional television buys.
How Users Watch OTT
While you can watch OTT using a TV connected to the internet (or a laptop or mobile phone, etc.), you can also watch using an OTT box. The box serves as the hub for its customers to connect to OTT services.
The box functions as a mini-computer equipt with the applications, connections, and specifications necessary to watch OTT TV. Some well-known examples are:
- Apple TV
- Amazon Fire
It’s easy to buy an OTT box and they’re not very expensive.
What CTV Is
What is CTV? It means connected TV which means that a TV either uses an ethernet connection or is wirelessly connected to the internet.
CTV is just the device through which a customer would consume OTT content. You can connect to OTT content using anything from a gaming console to a multimedia device like Roku.
Smart TVs are also an example of a CTV.
OTT TV and Advertising
OTT brings with it a new landscape for companies to reach their target audience through advertising opportunities. Some streaming companies such as Hulu give their customers a choice on how much they want to pay for their subscriptions.
The less you pay, the more advertising you agree to watch. And surprisingly, 70% of Hulu’s customers 82 million customers opted to watch commercials in exchange for the lower subscription price of $5.99. That’s 58 million people who advertisers can reach in the comfort of their own homes.
Roku and OTT TV Advertising
And while Roku is a bit different in that it provides its customers with an all-in-one experience with their OTT box. This lets their customers connect to TV apps such as YouTube, Amazon Prime, Netflix, and Roku’s own channels.
Roku easily adds users to their platform because they sell OTT TV at a low price compared to competitors. It then uses that platform to show ads to their customers.
But you can also find ads popping up in apps for YouTube, Spotify, and Vimeo.
CTV and Advertising
CTV advertising works best for companies when it complements their digital advertising buys or as an extension of their conventional TV buys.
Since CTV acts as a conduit for OTT video content. And a lot of the content on OTT is the same as traditional media service. It’s just delivered over the internet for free or at a much lower cost.
Examples of CTV and Advertising
One example is WhatsApp. It’s a free and encrypted text-messaging app for Smartphones. What’s app uses the internet rather than a mobile phone texting plan. It’s both an example of and an OTT messaging application.
CTV is similar to Netflix in that it does the same thing as traditional television, you’re just receiving it from a different source.
CTV Makes the Transition from Traditional TV Advertising to Internet ads Seamless for the User
How it relates to advertising is that a consumer’s experience watching a show from traditional content or via the internet is no different. Therefore, they’re already used to watching ads and will accept watching those ads even though the way they’re viewing content has changed.
And customers are willing to watch video advertising both before and during content. This is known as pre-roll and mid-roll advertising.
Consumers Prefer Mid-Roll OTT TV ads
Interestingly enough, the time when consumers are most willing to watch an advertisement in order to watch the content is mid-roll. It’s the most competitive type of video advertising.
Advertisers love OTT video ads because they’re usually displayed full-screen and viewers can’t skip over them.
The Benefits of CTV Advertising
As an advertiser, you want your marketing budget to go where you stand to get the highest ROI. Here are a few reasons why you should consider CTV advertising:
OTT TV & CTV is Practically Everywhere
Despite the fact that there are Smartphones, laptops, and iPads everywhere, 80% to 90% of all viewing is still done using an actual TV set. And as Amazon, Hulu, and Netflix all continue producing their own popular shows, more people are going to join their streaming service subscriptions.
Which is why advertisers are rushing to CTV in record numbers. There were 1.7 billion CTV ad requests in 2017 and 29.9 billion requests by November 2018.
Millennials and Gen Xers Prefer CTV
89% of millennials watch their shows using CTV. 78% of Gen Xers do the same.
This means and advertisement on a traditional network aren’t as likely to be seen by your target audience anymore. Even if the consumer watches cable, many won’t watch it live meaning they can easily fast forward through commercials.
CTV now has the most concentrated audience which is where smart advertisers should focus their video advertising.
Again, there’s very little difference the consumer experiences when binge-watching their favorite Netflix show and one that premiered on CBS that night. The big difference is that it’s much easier to correctly find your target audience based on the data you receive from the apps.
Traditional tv ads are harder to accurately target since there are less data available to the advertiser. Also, apps for viewing content through CTV is usually much cheaper than with traditional TV.
Common Metrics and Performance Indicators
Here are the most common key terms to know when advertising via CTV:
- CPCV: Cost-per-completed-view
- CPM: Cost per mile (cost per 1,000 views)
- VCR: Video completion rate
Clicks can only occur on video streaming using a mobile device or laptop which means the Click-Through-Rate (CTR) and click-to-conversions can’t be used as your primary metrics of success.
You can only track time such as the cost-per-completed-view (CPCV) or the video completion rate (VCR). And while the ad space on CTV isn’t any cheaper than traditional video advertising, it’s almost a guarantee your ROI will be higher.
Advertisers Get What They Pay For
That’s because CTV advertising space requires advertisers to pay a higher CPM or a specific price floor. And those prices can be up to three to five times higher than the rate of a standard video placement.
While CTV isn’t cheap the outcomes are higher in terms of video completion rates. The higher your VCR, the more quality views with better impressions you receive.
Viewers Don’t Mind Watching CTV Ads
In other words, a consumer doesn’t mind watching one or two advertisements if they know they’re saving money and are more in control of what they get to watch and when. Consumers also realize that ad watching is part of the business model, especially if they’re given a choice to spend more money in order to opt-out of watching commercials altogether.
What an advertiser loves about this is that a consumer feels that watching an ad is a fair exchange for the lower-cost content they have access to. Therefore, those same ads watched through a CTV are perceived far less “annoying” than an ad featured on a traditional TV platform.
Huge Video Advertising Opportunities Available with CTV
While it’s true that CTV inventory isn’t high and most of it is quickly grabbed, that will soon change. As the demand for CTV continues to grow, so will video advertising via CTV.
As technology continues to improve and more people cut their cable cords in favor of more options via streaming services, the TV ad dollars will begin shifting from traditional to CTV.
Lower Impression Costs
It’s safe to assume that advertising will follow where the viewers go. That means every Smart tv will soon have ads.
And since it’s typical for most users to watch programs with other people, these new devices help get advertisers more views than those users browsing the web by themselves using their Smartphone.
The more viewers per household, the cheaper your impression costs are.
Can Target Customers More Easily
CTV ad requests can also target primetime viewing hours of premium content such as a live concert or sporting event. And that gives the advertiser access to a unique audience with a lot of potential for a high ROI.
Also, since OTT users have choices such as:
- The content they want to watch
- How they want to consume that content
- How they want to interact with the content
The more control someone has over their life, even if it’s just a movie or TV show, the higher the level of satisfaction they feel. And when someone is happy and in control, they’re more receptive to and continue to have a positive attitude toward any advertised content.
Data Boosts Your Marketing Efforts
There are so many advertising opportunities using CTV. It starts when a user is required to log in using their credentials such as their Google or Facebook account in order to watch content.
That third-party data is then collected.
It’s Easy to Identify and Target Your Core Audience Using CTV Data
That data is based on internet behavior and demographic information such as:
You can now identify your perfect target market which will enable you to create an advertising campaign with messages specifically tailored to that audience. That will help you grow and promote your brand to those most likely to appreciate and use your goods and services.
Enjoy Higher Completion Rates
CTV advertising lets advertisers showcase their goods and services on a large-screen viewing experience that comes with high visibility. But the ads are shorter and then continue immediately into the content to that views tend to pay more attention to the ad than they would on a traditional TV.
And while your ad is playing for your intended audience, you can to sit back and measure its success in real-time. Metrics allow you to track how many views, clicks, responses, and conversions that one advertisement gave you.
Creative and Interactive Advertising
A traditional ad is somewhat removed from its audience. But CTV ads can be targeted and personalized.
These are advertisements in HD using stereo sound and full screens. Seeing your company lit up in the most attractive way possible helps promote brand loyalty.
Also, CTV lets advertisers a way to connect to their audience in creative and entertaining formats.
CTV Ads Help Advertisers Connect with Their Consumers
You can now create ads that are:
- Includes a CTA (call-to-action)
These types of ads make viewers sit up and take notice rather than running to grab a snack or use the bathroom before their content begins again. That uniqueness helps increase performance on your video ad campaign while promoting higher numbers of consumer engagement with your company.