What is CTV and OTT Advertising?

Connected TV Device

What is CTV and OTT Advertising?

While both have similar but slightly different meanings, CTV/OTT refers to users that are streaming their TV content or watching video content on-demand, better known as VOD.

 

  • CTV stands for Connected TV, and refers to the actual device such as a Firestick, Apple TV, PlayStation/Xbox, and Smart TV device that allow you to stream content.
  • OTT stands for over-the-top, this term is derived from the content going over the top of the typical providers. OTT can be thought of as the delivery of the actual content. Netflix, Hulu, and Disney+ are all examples of OTT content.

 

CTV/OTT is quickly becoming the popular way of watching TV content with 68% of all TV consumption coming from streaming services compared to 28% for traditional TV. The pandemic has accelerated viewership trends and expect more consumers to switch to streaming services as more and more households “cut the cord”, cancel their traditional TV offering (According to TTD).

 

Differences Between Linear TV and CTV

 

 Most of us are familiar with traditional TV offerings whereas the user subscribes to a cable or satellite service and is able to watch programs based on a channel’s schedule.

 

With CTV, there is no mandatory subscription you are stuck in or monthly fees. Many of the devices you can acquire are under $100 and can you find ad-supported streaming services that do not require monthly fees. Subscription-based streaming options such as Netflix have been the popular way to stream content in recent years. However, consumers are shifting their attitudes as the percent of consumers who preferred free ad-supported streaming options grew since the pandemic. Currently, 47% of US consumers use at least one ad-supported streaming service. This means that chord-cutters are not reliant on ad-free experiences and are willing to use ad-supported streaming options (According to Deloitte).

 

There are other differences that advertisers need to think about such as the demographics of who watches CTV vs linear TV. Linear TV is known for its older-skewing audience (Boomers) while CTV remains the popular option for younger TV viewers (Gen Z and Millennials). However, the older generations are catching up, with Gen X totaling 48.5 million viewers and Baby boomers totaling 32.8 million viewers in the US in 2020 (According to Emarketer). These numbers should continue to grow as more and more households are committing to “cutting the cord”, the term for dropping traditional TV services for OTT/CTV options.

 

One of the big differences for advertisers looking at both of these television options is the way we target users. With Traditional TV, you buy spots, or commercials, by targeting demographics such as age and gender and serving ads on channels/programs that are believed to be watched by your target audience. Part of the problem when buying traditional TV spots is that you are serving ads to users outside of your target audience who watch the same programs that you target. With CTV, you get the same benefits of serving on the same TV content but are able to target users individually. When buying CTV ads, you are not stuck with buying ad spots on the content you think your audience watches, instead, you are targeting the individual users that make up your audience. You can then reach your audience across the multiple different channels/programs that they watch. In summary, you transition from content targeting with traditional TV to user targeting with less ad waste on users outside of your target audience. Digital audiences that can be used in CTV campaigns can be as simple as dog owners or households with certain incomes. Other targeting options can be more granular such as users in-market for buying/selling homes to users who are decision-makers in specific industries.

 

How CTV Can Help Advertisers

 

CTV can help advertisers reach their audience through TV content like never before. It has all the benefits that digital advertising has to offer, including granular user targeting. Savvy advertisers who understand their audiences’ behaviors and interests can reach them by targeting users shown to be highly relevant to your brand. With this level of targeting you get more value out of each ad knowing that it is targeting a specific user in your audience.

 

The use of data in CTV campaigns is also an advantage over linear TV. Advertisers have tons of data at their disposal today, now they can use it to back up their TV buys. With the advancement of digital advertising, we now have access to deep reporting insights such as knowing how many times a video was completed, which audience engaged more with an ad, the location of where the ad was served, among many other different metrics. One of the biggest advantages of CTV is being able to attribute a user’s online actions, such as signing up for a newsletter or making a sale, to an individual CTV impression. Attribution was not always possible in the early development of CTV/OTT campaigns, but as streaming technology continues to grow, so too will reporting metrics and capabilities.

 

CTV enhances the value of other media placements when a multi-channel advertising campaign is implemented. This in turn strengthens the customer journey. Advertisers can create this journey by selecting other forms of ads, such as display ads, to be served to a user sometime after the same user has watched a CTV ad. This is important as users who are exposed to follow-up ads will be familiar with the brand and can be encouraged to interact further. The ability to tie in other media efforts to your TV buying strategy gives CTV a competitive edge in today’s digital world.

 

If you are interested in CTV/OTT or other forms of digital advertising, please fill out this contact form. We will be happy to discuss a plan that works for you.