Understanding OTT Advertising and Its Brand Benefits

In recent years, Over-The-Top (OTT) advertising has gained significant attention in the digital marketing world. 

With the growing popularity of connected TV (CTV) platforms, advertisers have shifted their focus toward reaching audiences through streaming services, bypassing traditional cable and satellite TV. 

This article explores what OTT advertising is, how it works, and the key benefits it offers brands looking to enhance their advertising strategy.

Core Components of Over-the-Top Advertising

• Streaming Platforms: OTT advertising takes place on streaming services, which are typically ad-supported or offer a blend of subscription and ad-based models.
• Device Compatibility: OTT ads can be delivered to various devices, including smart TVs, tablets, smartphones, and desktops, giving advertisers access to a wide range of screen types and user behaviors.
• On-Demand Content: OTT platforms offer viewers the flexibility to watch content when they choose, making ads more relevant by reaching them at the right time.

How Does an OTT Advertising Work?

Over-the-top advertising is a form of programmatic OTT advertising, where automated technology helps deliver ads to the right audience at the right time. Here’s how it works:

• OTT platforms provide ad inventory filled with video or display ads based on user demographics, interests, and behavior.
• Advertisers target audiences using data on viewing habits, location, and other attributes for better ad relevance.
• Ads are delivered via connected TV devices before, during, or after content.
• Analytics track ad performance, offering insights into viewer engagement, conversion rates, and ROI.

Example:

A great example of digital advertising in action is Dove “Hard Knocks,” in Super Bowl LVIII (championship game of the National Football League).

Source

This 30-second ad shows a montage of young female athletes falling as they practice and compete in various sports. 

Dove, in partnership with Nike, reveals that 45% of girls drop out of sports by age 14 due to low body confidence. 

In result, post-Super Bowl analyses showed a 9.2% increase in women describing Dove as “trustworthy” and a 7.9% rise in “wholesome,” reflecting improved brand perception among female consumers.

How Digital Advertising Drives Brand Growth

As brands continue to invest in digital marketing, connected TV advertising offers a wide range of advantages that traditional TV advertising cannot match. 

Ad spending in the OTT video advertising market is expected to demonstrate an annual growth rate (CAGR 2024-2029) of 6.96%, resulting in a projected market volume of $268.00 billion by 2029. 

This growth underscores the increasing shift towards OTT platforms, where brands can leverage more targeted, flexible, and measurable advertising strategies.

1. Access to a Growing Audience

The number of viewers cutting the cord from traditional cable and satellite TV is rapidly increasing. OTT platforms are now mainstream, with millions of people using services like Hulu, YouTube TV, and Peacock. This shift in consumer behavior presents a huge opportunity for brands to reach an engaged audience that no longer watches conventional television.

• Expanding Reach: Digital advertising enables brands to tap into a broader demographic, including millennials, Gen Z, and other tech-savvy consumers who prefer streaming.
• Audience Fragmentation: Unlike traditional TV, OTT allows advertisers to reach specific niches within diverse viewer groups.

2. Precise Audience Targeting

One of the standout features of IPTV advertising is the ability to target viewers more precisely. With data-driven insights and advanced targeting options, brands can serve ads based on a variety of parameters.

• Demographic Targeting: Advertisers can choose their target audience based on age, gender, income, interests, and more.
• Geographic Targeting: OTT ads can be targeted based on the viewer’s location, whether it’s at a national, regional, or local level.
• Behavioral Targeting: Brands can track viewers’ previous behaviors and interests, ensuring that the ads they serve are highly relevant.

3. Higher Engagement and Interaction

Unlike traditional TV ads that are passively consumed, OTT ads often encourage a higher level of interaction. Streaming services frequently provide options for viewers to pause, skip, or replay ads, allowing advertisers to adjust their messaging for optimal engagement.

• Interactive Features: Many OTT platforms support interactive features, such as clickable ads that lead to additional content or promotions, further driving engagement.
• Increased Ad Recall: With fewer distractions, OTT viewers are more likely to engage with ads and recall the message, leading to better brand recognition and recall.

4. Cost-Effectiveness

Compared to traditional TV advertising, Internet TV advertising offers a more cost-effective solution for brands, particularly those with smaller budgets. Traditional TV ad placements, especially during prime time, can be prohibitively expensive. Digital advertising, on the other hand, provides flexible pricing models, such as cost-per-impression (CPM), cost-per-click (CPC), and cost-per-acquisition (CPA), making it easier for brands to optimize their spending.

• Lower Entry Costs: Even smaller brands with limited marketing budgets can access OTT advertising platforms and compete with larger brands.
• Efficient Spend: Over-the-top advertising allows for precise budgeting and better allocation of resources, ensuring advertisers get the most value for their investment.

5. Enhanced Measurement and Analytics

OTT platforms provide detailed performance analytics, allowing advertisers to track the effectiveness of their campaigns in real time. This data-driven approach enables brands to adjust their strategies quickly, optimizing campaigns for maximum impact.

• Performance Metrics: Advertisers can track key performance indicators (KPIs) such as click-through rates (CTR), conversion rates, engagement, and return on ad spend (ROAS).
• Real-Time Insights: With real-time data, brands can optimize their campaigns while they’re running, making necessary adjustments to maximize their performance.
• Attribution Models: OTT advertising offers sophisticated attribution models that allow advertisers to see exactly how their campaigns influence customer behavior, from ad exposure to conversion.

6. Multi-Screen Exposure

Smart TV advertising is delivered across various devices, allowing advertisers to reach consumers on multiple screens. Whether on a big-screen TV, tablet, or smartphone, brands can create cross-device campaigns that reinforce their message across different touchpoints.

• Consistency Across Devices: Multi-screen campaigns help maintain brand consistency and drive higher engagement by presenting a unified message across different platforms.
• Seamless Experience: CTV advertising offers a seamless viewing experience, whether the viewer is at home on their couch or on the go with their mobile device.

7. Flexibility and Control

On demand advertising provides brands with greater flexibility and control over their ad campaigns. Advertisers can choose when and where their ads appear, adjust messaging, and even set frequency caps to avoid ad fatigue.

• Ad Timing and Placement: Advertisers can determine when their ads are shown, whether during specific shows, times of day, or targeted events like sports games or holiday specials.
• Creative Flexibility: Over-the-top advertising supports a wide variety of creative formats, from 15-second video spots to longer-form content, giving brands the freedom to experiment with different messaging styles.

OTT Advertising vs. Traditional TV Advertising

The shift from traditional TV advertising to over-the-top advertising has been accelerating, thanks to the growing consumer preference for on-demand content. While both forms of advertising share similarities, they differ in key ways.

Wider Targeting and Reach

• Traditional TV: Ad placement is based on broad demographics, with limited targeting capabilities.
• OTT Advertising: OTT allows for precise targeting based on user behavior, demographics, and location.

Cost Effective

• Traditional TV: TV ad slots, particularly during prime time, are expensive and require significant investments.
• OTT Advertising: OTT ads are more affordable, allowing for more flexible pricing and better cost control.

Interactive Engagement

• Traditional TV: Viewers are less likely to engage with TV ads, often skipping or ignoring them.
• OTT Advertising: Viewers are more likely to interact with OTT ads, particularly with the option to click, pause, or replay content.

Measurement

• Traditional TV: Measurement is less precise, relying on general audience data and estimates.
• OTT Advertising: OTT offers detailed, real-time performance metrics that allow for data-driven decision-making.

Conclusion

Online video advertising is a valuable tool for brands to connect with today’s consumers in a more effective and cost-efficient way. With the targeting, flexibility, and performance tracking OTT platforms offer, brands can improve their marketing strategies and reach a more engaged audience. As media continues to change, using OTT advertising is essential for staying competitive in the digital world.