Grigoriy Misilyuk
Anna VintsevskaThe rise of cord-cutters and streaming platforms has given a great push to the programmatic advertising landscape. As a result, we are now witnessing the rise of OTT (Over-The-Top) advertising. As a result, the global OTT advertising market is expected to reach $207.5 billion this year. In this article, we will dive deeper into this topic. You will discover how OTT advertising solves the challenges of fragmented viewership and offers unparalleled targeting precision, making it a game-changer for brands looking to maximize their ad spend.
What is OTT advertising?
Let's start with a definition of OTT advertising. Over-The-Top advertising refers to the delivery of ads through streaming platforms that provide video content directly to viewers over the Internet. This method bypasses traditional cable or satellite services. Such an approach to advertising relies on advanced targeting capabilities, which allow advertisers to reach specific audiences based on demographics and online habits. OTT can cover a wide range of media. In particular, such ads can appear on connected TVs, mobile devices, and personal computers. What is really important about OTT is the fact that such an approach efficiently combines the broad reach of television with the precision of digital advertising. Therefore, OTT has become a powerful tool for reaching cord-cutters and tech-savvy consumers.
How does OTT advertising work?
OTT advertising can work in different ways. In each case, it goes about a multi-step process. For sure, the description of such an approach wouldn't be complete without a step-by-step description of the OTT process. Here is its detailed breakdown.
Audience research
Marketers start the OTT advertising flow by analyzing the audience's demographics, preferences, and viewing habits. Data becomes a vital resource, providing essential information about potential viewers, their interests, and ways to engage them.
Developing compelling ads
OTT marketing relies on visually captivating and message-driven ads that align with audience's interests and needs. The key to keeping viewers engaged is providing them with tailored content.
Selecting a platform
There are a variety of platforms that can be used for OTT advertising. In particular, marketers can promote their ads via such popular platforms as Hulu or Amazon Fire TV. They also often use specialized TV marketing platforms to streamline access to premium, ad-supported services.
Purchasing ad inventory
Advertisers rely on demand-side platforms (DSPs) to get the most profitable and tailored ad inventory. Diverse programmatic advertising helps them find the most promising ad placements, as well as optimize ad bidding for maximized impact.
Audience segmentation
While crafting an OTT advertising campaign, it is very important to ensure efficient audience segmentation. The audience can be divided into segments based on behavior, interests, and demographics. The more efficiently the marketers handle such segmentation, the more precise targeting and ad personalization they can achieve.
Setting up campaign parameters
It is important to define campaign goals, ad schedule, and budget. One of the most critical tasks for marketers is aligning ad placements with the audiences' peak viewing times for maximum visibility.
Launching and delivering ads
Advertisers activate campaigns and deliver ads seamlessly across chosen OTT media platforms. As a result, the viewers can see the ads directly in their streaming content.
Monitoring campaign performance
Advertisers track the campaign's efficiency by tracking key performance indicators (KPIs) like view-through rates, website visits, and conversions. It is also beneficial to use a tailored analytical toolset at this stage.
Continuous campaign optimization
It is also vital to adjust audience segments, creative elements, or schedules based on real-time insights that enhance performance and ROI. Insights from continuous monitoring and regular campaign reviews are essential for this stage.
Benefits of OTT advertising
OTT advertising is an extremely popular marketing approach nowadays. It works and brings marketers several important benefits. Each essential advantage of OTT advertising deserves more attention. Here is an overview of the key OTT ad benefits.
Precise targeting allows advertisers to minimize wasted spend
With OTT platforms, marketers gain access to multiple layers of audience targeting, which allows advertisers to reach the right viewers with unparalleled accuracy. Advertisers use provider audience data and other insights on viewers to refine their campaigns based on:
Interests and behaviors
Demographics
Location
Custom audiences.
There is also an option of embracing a cross-channel approach to OTT, which enables advertisers to create connected ecosystems. For instance, advertisers can target viewers on TV screens and retarget them through OTT, audio, display, and other digital channels. As a result, the chances of delivering the ad and its message to the target audience grow significantly.
Resilience against industry-specific privacy changes
Privacy regulations are constantly shifting. That's why many traditional targeting methods may become less effective in a relatively short time. Meanwhile, OTT advertising shows great resilience to such changes. Unlike cookies or device-specific identifiers like IDFA, TV screens have always operated without significant privacy limitations. With television as an important element of targeting, OTT proves to be a privacy-safe and measurable solution for advertisers navigating the dynamic regulatory landscape. First-party and deterministic data from publishers play an increasingly vital role. It allows for precise targeting while staying compliant with privacy standards.
Support for focused advertising strategies
OTT ads leverage data to tailor content to individual viewers. As a result, advertising strategies become more focused on user preferences and engaging for the audience. With advanced targeting based on demographics, behaviors, and preferences, OOT resonates with audience needs and increases campaign efficiency. In addition, OTT ads can be enhanced by adding features like interactive elements that encourage viewer interaction. Such an approach also has a positive impact on viewer engagement. Advertisers can also rely on frequency capping to prevent ad fatigue. The key point here is using the right toolset and developing the most precise advertising strategy possible.
Enhanced brand safety
OTT advertising allows companies to ensure their brand safety. Businesses use contextual targeting and transparent reporting to control where their ads appear and avoid placement in inappropriate or low-quality environments. By using real-time reporting, advertisers can ensure that their campaigns remain aligned with brand values. This level of control helps maintain brand integrity and build trust with audiences.
Support for complex advertising strategies
OTT advertising is very flexible, providing companies with tools that allow them to achieve full-funnel performance. In particular, advertisers can build focused strategies targeting various objectives. The list of such goals includes:
Incremental reach
Competitor targeting
Reg-engaging lapsed customers
Efficiency management of ad frequency.
This flexibility allows brands to move customers through the entire marketing funnel.
Enhanced accountability and measurability
Traditional TV ads often lack precise performance metrics. Meanwhile, OTT advertising provides detailed insights into campaign effectiveness. By relying on such an approach, advertisers can consider a great range of metrics, such as viewer engagement, click-through rates, demographic data, and ad completion rates. Ideally, all these insights can be available to the marketers via a single campaign management platform. Greater transparency allows for more effective and adaptable campaigns, with ongoing adjustments that maximize performance and steadily enhance ROI.
Types of OTT ads
As has been already mentioned, OTT advertising comes in various formats. This means greater campaign flexibility and enhanced outreach. There is a great diversity of OTT ads, but some OTT advertising approaches are especially common. Here is a list of the most popular types of OTT ads.
Pre-roll ads. These are the advertisements that play immediately before the main content begins. They can be often encountered on video streaming platforms. Pre-roll ads typically range from 10 to 30 seconds. They are designed to capture the viewer's attention quickly, creating a meaningful first impression.
Mid-roll ads. Quite often, when a viewer is watching the content, a mid-roll ad can appear after a set duration of viewing. While such ads may be irritating for some inpatient viewers, they are still very important for OTT advertising. They are typically displayed at natural breakpoints and may range from 30 seconds to several minutes. The key benefit of such an ad is that it can capture the attention of a viewer who is already engaged by watching the streamed content.
Post-roll ads. As long as there are pre-roll, and mid-roll ads, post-roll ads are also very relevant to programmatic advertising. Such advertisements are shown to the viewer after the main content concludes. They can range from a few seconds to several minutes. Post-roll ads also provide a great opportunity to leave a lasting impression on viewers.
Banner ads. These are small, static, or animated visuals that appear at the top or bottom of the screen during streaming. Such ads don't disrupt the viewing experience. Typically, such ads serve as a subtle way to deliver a brand message. While attracting less attention than pre-, mid-, or post-roll ads, banners still serve as efficient OOT advertising tools.
Interactive ads. Such ads encourage audience interaction with clickable elements, quizzes, and other engaging features. They grab attention and make brand messages more memorable. Viewers can actively participate rather than passively watch. This increases engagement and creates a stronger connection with the brand. As a result, customers are more likely to recall and respond to the ad.
Overlay ads. These are the advertisements that appear over the streaming content without interrupting the playback. For example, a viewer can watch a movie and get a small and clickable ad window on the screen. Upon clicking on the ad, the viewer will be redirected to a landing page or page with additional information on the promoted product or service.
Shoppable ads. Shoppable ads elevate interactivity by allowing viewers to purchase products directly within the ad. They feature integrated links, buttons, or QR codes that lead customers to a checkout page in just one click. This seamless shopping experience facilitates impulsive purchases and can bring solid benefits to platforms like online marketplaces. By shortening the buyer’s journey, these ads drive immediate conversions and boost sales. They also provide valuable data on consumer behavior. With such information, brands can efficiently refine their targeting and optimize future campaigns.
Types of OTT platforms
Now, let's proceed with an overview of the most common types of platforms used in OTT advertising. They operate under different business models, each catering to varying audience preferences. And each of these platforms can be applied by advertisers differently to deliver the right messages to the right viewers. Each notable OTT platform type deserves to be discussed in more detail.
Subscription-based video on demand (SVOD)
These are the services that require users to pay a recurring subscription fee in exchange for unlimited access to a library of movies, TV shows, and original programming. In most cases, SVOD platforms do not fit OTT advertising. The point is that they often focus on providing ad-free experience. Notable examples of subscription-based video on demand platforms are Netflix, Hulu, and Amazon Prime Video.
Advertising-based video on demand (AVOD)
AVOD platforms provide free access to content, helping companies to generate revenue through advertisements instead of subscriptions. AVOD platforms allow users to watch movies and shows without paying. However, the experience they provide is not ad-free, which makes AVOD platforms a very popular option for OTT advertising. Overall, such systems benefit both viewers who are looking for free entertainment, and advertisers seeking a broad audience reach. Some notable examples of AVOD platforms are YouTube, Crackle, and Pluto TV. There are also hybrid platforms that provide both AVOD and SVOD options, allowing users to choose between ad-supported or ad-free plans. For example, Hulu applies a hybrid model.
Transactional video on demand (TVOD)
A TVOD platform follows a pay-per-view model, where users rent or buy individual movies or TV episodes. Such an approach is also very popular when it comes to streaming sports events, such as boxing or MMA matches. Unlike subscriptions, users pay only for what they watch. This makes it ideal for new releases and special events. Platforms like Amazon Prime Video, iTunes, and Google Play Movies offer TVOD services. Rentals usually have a set viewing period, such as 48 hours. Purchased content remains accessible permanently. TVOD solutions are often used for OTT programmatic advertising.
Premium video on demand (PVOD)
PVOD takes TVOD a step further by offering early access to movies or shows before they become available on standard streaming or physical media. This model is often applied to newly released films. It allows viewers to watch high-profile content at home instead of in theaters. An important aspect of PVOD platforms is that they often come at a higher price than traditional rentals. Platforms like Apple TV, Amazon Prime Video, and FandangoNOW provide PVOD options for blockbuster films and exclusive releases, catering to audiences willing to pay a premium for early access. The options for running OTT advertising campaigns at such platforms are typically very limited or absent at all.
How to build an effective OTT advertising strategy
There is no universal panacea for companies struggling with crafting an OTT strategy. However, there are certain practices that work. While experts can offer valuable insights, here’s a streamlined guide to help you understand the essential steps involved.
Define your campaign goals. It is important to determine the demographics and the interests of your target audience. Clear goals will help you shape an effective strategy tailored to the target viewers' preferences.
Segment your audience. Group all viewers based on their interests, behaviors, location, or demographics.
Select the right OTT platforms. Choose a streaming platform that perfectly fits your needs. Collaborate with advertising professionals to make such a vital choice properly.
Develop engaging ad content. Create high-quality, compelling ads that drive the viewer's engagement. Personalization and a comprehensive approach to crafting your ads are vital during this stage.
Find the best ad placements. Use ad exchanges or access OTT platforms directly to buy ad placements on the platforms that fit you most.
Schedule your campaign. It is essential to align ad schedules with peak viewing times for your target audience. This will help you maximize your campaigns' visibility and impact.
Constantly monitor campaign performance. Control your OTT campaign's performance. Pay attention to key performance indicators (KPIs), such as impressions, view-through rates, clicks, and conversions.
Optimize your campaign. Use the data from your monitoring efforts to improve your data strategy. Adjust your targeting, tweak ad content, or shift your schedule to enhance engagement and improve ROI throughout the campaign.
How to purchase OTT ads
Many global platforms are open to OTT advertising. In addition, there is an abundance of tools, including AI-driven platforms, that help advertisers in this process. Even brands with smaller budgets can take advantage of OTT advertising. While different platforms offer different conditions for purchasing OTT ads, there are common tips that will help advertisers in this process. Here’s a straightforward guide to help you navigate the process.
1. Define your strategy
Before diving into ad purchases, outline your campaign’s objectives. Try to get answers to the following questions:
Who is your ideal audience?
What specific actions do you want your viewers to take?
How will this campaign support your overall marketing efforts?
What tools or resources do you need to implement your strategy effectively?
2. Choose your OTT platform or advertising provider
Decide how you want to purchase your OTT ads and select a suitable platform. You may purchase ads directly from the streaming platform, connect with streaming services in a controlled environment, or automate the purchase of ads with programmatic advertising solutions.
3. Create compelling ads
It is important to find the right ads that fit the OTT platform. You can use programmatic advertising platforms to purchase such content from publishers. Also, be sure that your ad is tailored for an OTT platform. While OTT ads are similar to TV commercials, they require optimization for specific devices and formats. Consider the viewing experience by adapting your ad to a smartphone or a large TV screen. Also, be sure to choose ad formats that best align with your message.
4. Plan your targeting practices
OTT advertising provides advanced targeting options similar to digital advertising. While purchasing an OTT ad, you should already develop a strategy for targeting. Key options include:
Retargeting
Lookalike Audiences
Contextual Targeting
Geolocation Targeting
Time-of-Day Targeting
5. Deliver ads to viewers
Once your target audience is defined, your OTT platform will serve your ads with the most relevant content. With programmatic OTT advertising, a Demand-Side Platform (DSP) will automatically bid on available ad inventory based on the audience’s value. The highest bid secures the ad spot. The process occurs in real time, which means that you can dynamically optimize and adjust your ads. Mind that the speed of bidding is very important for delivering relevant content to your audience at the right time.
How much does OTT advertising cost?
The cost of OTT advertising varies depending on numerous factors. The most important ones are the platform, the type of ad, and OTT targeting options selected. On average, OTT advertising can range from $20 to $50 per CPM (Cost Per Thousand Impressions) for standard ads. Mind that premium placements, such as ads on high-demand channels or during specific high-viewership events can cost significantly more. Rates on platforms like Hulu or Roku can reach $30 to $50 per CPM for general inventory but could spike to over $100 per CPM for exclusive or prime-time spots. It is important to mention that the cost of OTT in advertising also largely depends on several other important factors, such as demographics, geographic location, device type, and time of day. For example, ads targeted at a specific region or niche audience may cost more due to the increased precision in targeting.
Another important metric that is often used when it comes to calculating the price of OTT advertising is a CPM or CPC (Cost Per Click) model. When it comes to the CPM model, advertisers pay for every 1,000 impressions their ad receives. In this approach, clicks on the ads are not counted. This model is very important for brand awareness campaigns where the goal is to reach a broad audience. Meanwhile, the CPC model might be a better option for performance-based campaigns. In this case, advertisers only pay when viewers take a specific action, such as clicking on the ad or visiting the landing page.
OTT advertising examples
OTT advertising is a powerful tool for performance marketing. Many brands leverage it to engage audiences in creative and compelling ways. Let's explore some of the most notable examples of successful OTT advertising.
MNTN
MNTN is a performance marketing company known for many successful campaigns, including the one that features Ryan Reynolds. The campaign shows how MNTN makes performance marketing easier. Reynolds, as MNTN’s Chief Creative Officer, spices the ad up by bringing humor and creativity. The campaign connects with businesses shifting from traditional TV to digital-first advertising.
Rumpl
Rumpl embraced OTT advertising with an engaging commercial promoting its stylish and ultra-warm blanket made from recycled materials. This ad instantly captures the adventurous spirit, making it a perfect fit for outdoor enthusiasts looking for comfort on the go.
Replacements
For those who appreciate elegant dining table decor, Replacements delivers a fantastic example of a well-structured OTT ad. It follows a classic approach: presenting a relatable problem, offering a solution, highlighting the value, and wrapping it all up in under 30 seconds. As a result, this campaign boosts the audience's engagement without overloading the viewers.
1Password
Here is another successful example featuring Ryan Reynolds. It seems that Ryan has a knack for making ads entertaining. This time, it’s for 1Password, a top-tier cybersecurity password manager. The ad is witty, engaging, and straight to the point. As a result, the viewers easily remember the brand and its benefits.
Fabletics
Fabletics uses OTT advertising to showcase its trendy and functional activewear, seamlessly blending style and performance. The ad features real customers and influencers putting the gear to the test, which reinforces the brand’s reputation for quality and affordability.
HelloFresh
HelloFresh makes meal prepping easy, and its OTT ad drives that message home. The spot highlights how busy individuals can enjoy fresh, home-cooked meals without the hassle of grocery shopping. With vibrant visuals and a relatable storyline, this ad easily captures the viewers' attention.
Measuring OTT advertising success
How to measure the efficiency of an OTT advertising campaign? As long as OTT digital advertising operates within the digital marketing ecosystem, its effectiveness is tracked using familiar performance metrics and KPIs. Here are the key metrics to understand while launching an OTT advertising campaign:
Ad impressions. Here it goes about a total number of times your ad is displayed to viewers, indicating campaign reach.
Cost per completed view (CPCV). The average amount paid for each ad that is watched in full.
Cost per acquisition (CPA). Measures the cost of acquiring a customer through a purchase, signup, or other conversion action.
Return on ad spend (ROAS). An essential metric that evaluates how much revenue is generated for every dollar spent on advertising.
Audience reach. The percentage of unique viewers who have been watching your ad.
Frequency. The average number of times an individual viewer sees your ad, ensuring optimal exposure without oversaturation.
Gross rating point (GRP). A popular metric that quantifies how much of your target audience has viewed your ad, which helps you assess the overall campaign impact.
Cost per point (CPP). A metric that evaluates the efficiency of your ad spend by calculating the cost of reaching your target audience's one percentage point.
Cross-screen engagement. A metric that tracks how audiences interact with your ad across different devices, such as smart TVs, mobile devices, desktops, and tablets.
Target rating point (TRP). A different version of GRP, which focuses on the percentage of your intended audience that has seen your ad, ensuring precise targeting.
Analyzing these metrics is crucial to the companies aiming to refine and optimize their OTT campaigns. All such data brings valuable insights and ideas for improving the OTT approach. In addition, there is already an abundance of useful tools helping companies automate the retrieval of OTT campaign metrics. By storing all such information in one place and reviewing it from a single dashboard, advertisers gain excellent levels of control over their advertising campaigns.
Consider TeqBlaze your trusted partner
To reach optimum efficiency in OTT advertising, partner with TeqBlaze. We employ broad and deep expertise in the adtech domain to deliver top-quality services to our customers. In our practice, we helped one of our customers develop a leading KPI-driven supply-side platform for OTT in advertising. The solution seamlessly connects with various advertisers serving them unique and relevant content for their over-the-top ad campaigns. We also helped a company that specializes in targeting and advertising through Connected TV implement a supply-side platform+ad exchange that streamlines their operations. We are ready to support our customers with a wide range of other services, ranging from helping them develop custom platforms for OTT advertising to providing tailored solutions for programmatic advertising. In particular, we can provide a special suite of services for tracking the efficiency of ad campaigns and optimizing it. Our expertise spans different domains of programmatic advertising, including the OTT sphere.
Final word
Over-the-top (OTT) advertising is a vital trend in the modern advertising domain. Such an advertising approach proves to be a powerful tool for reaching highly engaged audiences with data-driven campaigns. Some of the crucial benefits of OTT ads are advanced targeting, flexible ad formats, and a variety of OTT advertising platforms. While managing an OTT advertising campaign, tracking its key metrics, and finding the best ad placements may be challenging tasks, proper software solutions will come in handy. Teqlbaze is ready to use its advanced tooling and strong adtech expertise to aid you. Contact us to leverage the full power of OTT advertising.
