What Is OTT Advertising: A Breakdown of Over-the-Top Ads

Streaming video is an increasingly popular and effective way of reaching modern viewers and is the ideal choice for brands that want to engage potential customers in the discovery phase of the consumer journey. Don’t believe us? Check out the latest stats on streaming audience behavior, engagement, and more!

Streaming video advertising provides an effective connection between a brand and an interested consumer through the trinity of sight, sound, and motion. Streaming also allows brands to optimize their ads with modern machine learning and future proof them with first party data.

Today, ad-supported services within the video landscape include some of the most recognizable names on the market, including Hulu, Tubi, Paramount+, Peacock, Discovery+, Pluto, and Roku, just to name a few.

As marketers, we know that video has been notoriously hard to measure compared to traditional display and search ads. But those days are behind us now.

Our proprietary technology enables high-precision measurement of the consumer response path. We’ve developed application-specific machine learning techniques to bring maximal rigor to a very data-intensive problem as our app ingests more and more data, the stronger its predictive capabilities become.

Here’s a breakdown of OTT advertising and how brands are buying, targeting, and measuring the success of their OTT video campaigns.

In the following blog article, we will discuss:

1. What Is OTT Advertising? [NEW Streaming Graphic]

2. Why Brands Are Investing in OTT Video

3. Where OTT Ads Display

4. OTT Platforms

5. How Do You Buy OTT Ads?

6. OTT Video Content Best Practices

7. OTT Audience Targeting and Measurement

8. Challenges of OTT Advertising

9. Best OTT Examples

10. The Future of OTT

 
1. What Is OTT Advertising?

 
OTT (over-the-top) advertising is advertising delivered directly to viewers over the internet through streaming video services or devices, such as smart or connected TVs (CTV).

The term “over-the-top” comes from the ability to bypass traditional TV providers that control media distribution, giving advertisers the ability to reach their audiences directly.

Going over the top allows media companies (and advertisers) freedom of movement without pre-planned broadcast schedules or geographic limitations.
 

Introducing the Streaming Landscape [Graphic]

 
We know the streaming landscape can be confusing and difficult to navigate, which is why we created a custom infographic for marketers.

The purpose of the graphic is to depict all the key touchpoints involved in getting a streaming ad in front of a viewer. 

While we recognize there exist more direct methods to simply get an ad onto a screen, most modern marketers see significant value in leveraging the intermediate infrastructure layers to ensure smart targeting, a high-quality ad experience, and an effective measurement and optimization feedback loop to inform tomorrow’s campaigns.

Those who partner with a performance-minded agency are in a unique position to see the entire streaming ecosystem and drive meaningful growth to their business. 

How to read the infographic

It all starts with the advertiser…

An “Advertiser” represents a type of product or service manufactured or provided by a particular company under a specific name. A brand or company can leverage advertising to establish connections and build relationships with new and recurring consumers. 

As it relates to streaming, advertisers have the option of self service or may partner with an agency.
An “Agency” (often a digital marketing agency) acts as an extension of an advertiser’s brand or marketing team, and brings things like aggregated buying leverage, preferential media rates, ad tech expertise, and publisher relationships that individual advertisers typically lack. 

There are a variety of ways to engage with streaming platforms including…

A “Demand-side Platform” (DSP) is an advertising technology platform that allows an advertiser to buy available advertising inventory with the help of automation. 

A “Supply-side Platform” (SSP) is an advertising technology platform used by publishers to manage, sell and optimize available ad inventory space on their websites and mobile apps in an automated way.  By using an SSP, publishers can show display, video and native ads to their visitors, and monetize their website and apps. 

“Data Providers” are companies who build and maintain profiles of users on the internet, so that advertisers and agencies can use those profiles (often grouped together in segments) for campaign targeting purposes.

An “Ad Server” is an advertising technology used by advertisers, publishers, ad networks, and ad agencies to manage online advertising campaigns and serve ads.

“Analytics and Optimization” include tools and technology used to collect and analyze data on streaming ad campaigns. These services can also be leveraged to improve overall performance and align a streaming strategy with other digital marketing channels and measurement platforms.

“Publishers” are streaming providers who offer an on-demand online entertainment source for TV shows, movies and other streaming media. This includes popular publishers like Hulu, Peacock, and Tubi.

Video streaming service “Aggregators” are services that scan multiple video streaming publishers to list movies and TV shows available on various platforms. These sites generally do not produce the content, but they often control a portion of the ad inventory and are thus key players in the value chain. 

And ultimately, your ad is displayed to the viewer.

“Viewers” are people who watch television, or people watching a particular program on a device where a streaming ad is shown.
 

2. Why Brands Are Investing In OTT Video

 
Just as streaming services are disrupting the traditional TV industry, OTT advertising is also reshaping the paid media landscape.

 

OTT Video Is a Viable Component of Performance Media Mix

 
Over the top video is a channel that can meet a wide variety of marketing and sales initiatives, thanks to growing capabilities in scaling, measuring, and data-driven targeting.

Many places talk about over the top in just the context of upper-funnel awareness or oversimplify OTT goals as being the same as TV goals. You can leverage OTT video as a full-funnel performance channel that does more than just build your brand; it can engage and move customers through the entire funnel.

“OTT can be a full-funnel performance driver. What makes Tinuiti unique is that our approach focuses on the right fit for each brand. This can include traditional goals of reach and frequency. Or it can mean digital measurement, programmatic, or sponsorship — it all depends on the brand’s needs,” explains Jesse Math, VP, Advanced TV and Video Solutions at Tinuiti.

 

Benefits of OTT video over traditional TV:

• Precise targeting that eliminates waste

• Enhanced ad relevance leading to increased engagement

• Build and supplement base campaigns with focused, complementary strategies: incremental reach, manage frequency, target competitors, focus on lapsed customers

• Improved accountability – quantify the effectiveness of TV; optimize future campaigns

 

OTT Stats: Viewership, Ad Investments, Apps Continue to Grow

 
Brands with advanced digital strategies are adopting OTT advertising as part of their performance mix because the future of TV is becoming more digital and data-driven.

OTT video stats show that viewing has gone mainstream in recent years, especially for younger audiences, whose viewing habits have shifted from cable viewing to streaming services and OTT apps such as Netflix, Hulu, Roku, Crackle, Plex, Pluto.TV, Vimeo, Vevo, and more.

 

 

A survey held in the United States in May 2020 showed that 70% of respondents aged 18 to 34 years old stated that they currently subscribed to a streaming service, compared to just 49 percent of those aged 65 or above who said the same.

Where viewership consolidates, so does ad spending. For 2020, the total ad spending number for OTT came in at $990 million. Increased growth is expected over the next few years, culminating in the $2.373 billion projected OTT ad spending in 2025, all indicating the signal that advertising on streaming services is growing at breakneck speeds.

Beyond growing OTT video viewership, over-the-top marketing platforms are becoming more sophisticated, giving brands full-funnel targeting and attribution capabilities that weren’t available just a few short years ago.

“We see OTT video as being ripe for two kinds of brands: TV advertisers that are looking to recapture some of the impressions and reach that are no longer available through traditional channels, and challenger brands that don’t have direct broadcast budgets but can play in the TV space for the first time through OTT. Consumers are moving to OTT channels and Connected TV. So brands need to start from the perspective that it can work; they just need to understand how to use it to their advantage,” Math says.

 

3. Where OTT Ads Display

 
Over the top video advertisements can display across a myriad of devices (such as Roku or connected TV) and streaming services (such as OTT apps).

OTT content delivery takes place on any device that streams video over the internet:

• Mobile devices
• Personal computers
• Smart TVs/Connected TVs
• Streaming devices (Roku, Amazon Fire TV, Apple TV)
• Gaming consoles

However, OTT ads don’t just “appear” on any of these devices — content delivery is facilitated through a number of OTT distribution channels.

AVOD, SVOD, CTV, vMVPDs, Linear TV, Advanced TV… What’s the Difference?

Here’s where things can get rather complicated. The streaming video landscape is complex and fragmented among devices, channels, platforms, and publishers.

It’s important to remember that the term ‘OTT’ is not a catch-all for the industry. Those who are super familiar with the concept are likely to use terms like AVOD/SVOD. Those who are somewhat familiar with the concept might substitute OTT with CTV, Connected TV or Addressable TV,.each of which are slightly different and don’t mean the same thing but are accessed similarly from an ad standpoint.

— Nii Ahene, Chief Strategy Officer at Tinuiti

On the surface, streaming video may seem like it’s all one channel. Underneath all of the streaming video, there are a number of competing business models (and devices) that determine how we access streaming content.

Here’s a breakdown of today’s most popular OTT distribution services and related terminology:

SVOD (subscription video on demand): streaming services that require a subscription (Netflix, Hulu, & Amazon Prime Video)

AVOD (advertising-based video on demand): streaming services that offer free, ad-supported streaming video (Crackle, Tubi, Vudu)

vMVPDs (multichannel video programming distributors): a streaming service provider that has paid-TV programming (AT&T Now, Sling, YouTube TV)

CTV (connected TV): a television device that is connected to the internet

Linear TV: traditional television that is broadcasted at a scheduled time (not OTT)

 

4. OTT Advertising Platforms

 
Brands that invest in OTT video do so using a variety of different OTT distribution channels:

• TV publishers
• OTT native services
• Streaming linear services
• OTT devices

 

While we won’t mention all of the platforms in this article, we’ll briefly dive into some of the more popular OTT channels / streaming devices that you’ve probably heard of, which include:

• Roku OTT Ads
• Hulu OTT Ads
• SlingTV Ads
• Vimeo OTT Ads
• Tubi OTT Ads
• Amazon Fire Advertising
• Twitch Advertising
• Disney Plus Advertising
• ESPN Streaming Advertising
• Peacock Advertising
• HBO Max Advertising
• Paramount+ Advertising
• Tubi Advertising
• Pluto TV Advertising
• DirectTV Now Advertising
• Crackle Advertising
• Vudu Advertising
• Freewheel Advertising
• Tremor Video Advertising

 

Roku Advertising

Roku is unique in that it is both a streaming device and platform. As of the fourth quarter of 2020, Roku reported a total of 51.2 million monthly active users in the United States. Not only is Roku popular with cord-cutters, but it’s also considered one of the pioneers and leaders in OTT advertising.

As of January 2021, Roku announced that it acquired distribution rights to all of Quibi’s programs.

 

 

Roku’s native ad platform offers 15 and 30-second ad spots in addition to interactive video, overlays, and sponsorships.

You can learn more about Roku’s advertising solutions here.

Hulu Advertising

Hulu’s on-demand streaming service has over 39 million viewers as of 2021.

Like Roku, Hulu also has its very own ad platform that includes a robust set of options for bidding, targeting, measuring, as well as different ad types.

You can learn more about Hulu’s self-serve ad platform and solutions here.

Sling TV Advertising

Sling TV is a live TV streaming service that started in February 2015 – the first such service in the world. With it, viewers can use their tablets, phones, and computers to watch the same live and on-demand programs that would normally be limited to cable and satellite TV. As of 2020, it’s reported to have over 2.21 million subscribers in the US alone.

Sling TV’s advertising model combines elements from traditional cable TV and that of more modern digital marketing techniques. Like traditional cable TV, brands are charged by impression and they can choose to advertise on a range of different networks with different content. Also, ads are not skippable, and cannot be fast-forwarded or blocked. 

But Sling TV also makes use of programmatic advertising, which allows brands to bid on desirable TV inventory in private auctions. This inventory is divided into live, linear, and on-demand programming. 

You can learn more about Sling TV advertising here.

Tubi TV Advertising

Not far behind Hulu is another major OTT channel: Tubi TV. With over 33 million monthly active users (worldwide) and content rights that span over 250 partners, Tubi’s ad platform offers 15 and 30-second ad spots that are non-skippable.

 

5. How Do You Buy OTT Ads?

 
Accessing OTT ads can also be complicated for newcomers, simply due to the fragmentation of platforms and the many different business models that distribute inventory.

In general, there are two ways brands buy OTT advertising: Guaranteed IOs (insertion orders) and Programmatic.

Guaranteed IO (insertion orders) buys are set-priced, set impressions, usually based on reach and frequency.

Data-Driven Programmatic buys are based on a real-time bidding environment that allows the advertiser and the agency to maintain control of targeting but does not guarantee set impressions or frequency.

Buying OTT Ads: Closed vs. Open Ecosystems

An important consideration for buying over the top inventory is what Math distinguishes as open versus closed ecosystems.

When you buy through Amazon OTT, for example, “you get access to all OTT inventory served through Amazon devices,” explains Ahene.

Open ecosystems, such as NBC Universal, enable brands to access inventory across multiple publishers.

“When planning your OTT buying strategy, the conversation is about open ecosystems versus closed ecosystems. Amazon is a closed ecosystem in terms of inventory, measurement, data, and buying entry points. For some brand initiatives, it might make sense to work within a closed ecosystem such as Amazon or Google to access their data and measurement. However, for others, it might make sense to buy programmatically from Universal to access inventory and reach audiences across multiple devices and channels,” Math says.

 

“The truth is that there’s no one platform that sells everything. Ad inventory in any given hour can be split among several publishers, which is why it can be difficult to stay close to your audience if your inventory is consolidated with a single publisher. There are trade-offs with each,” explains Math.

 

6. OTT Video Content Best Practices

 
OTT ads are essentially video ads, but for a much more advanced audience. OTT audiences expect top-notch ad experiences.

Here are a few best practices to consider when creating and deploying your OTT ads.

 

Make sure video can be formatted for multiple devices

 
When OTT ads are inserted into video segments, they can appear across multiple device types. Don’t assume that your ads will fit on a large screen TV. Identify sizing best practices so that your value prop and call to action is immediately apparent on all screen types.
 

Keep it 30 seconds or less for non-skippable ads

 
While you may want your ad to evoke the high-quality of a premium television channel placement, don’t fall into the trap of making it as long. Remember, OTT viewers have different expectations when it comes to streaming content. Keep it short and to the point (think 15 to 30 seconds) for non-skippables.
 

Leverage dynamic creative to deliver relevant, personalized experiences

 
The look, sound, and feel of your videos should reflect that of where your audience is. This can include the day of the week, time of the day, geo-location, weather, and behavior signals. All of these can be combined to inform the creative of your OTT content.
 

7. OTT Audience Targeting and Measurement

 
One of the powerful components of OTT is that it offers multiple layers of audience targeting.

Depending on the platform and your approach to buying OTT, you can target based on the provider’s audience data, or in some cases, with layering your own customer data.

Most of the larger OTT platforms allow you to target against:

• Interests and behaviors
• Demographics
• Location
• Custom audiences (based on your first and third-party data sources)

 

OTT Advertising Amidst Privacy-Led Industry Changes

 
With major data privacy-focused changes expected to heavily impact the ‘how’ of performance marketing targeting and measurement, many advertisers are seeking fresh solutions that allow them to shift some of their marketing dollars into areas that will continue to be highly targetable and measurable. 

In this moment of privacy, the TV screen is becoming one of the most targetable devices in an advertiser’s toolkit. Because the TV screen never had cookies or IDFA to begin with, their deprecation doesn’t affect TV screen targeting in the same way.

“Data is and will continue to be a big piece of the conversation going forward. With this ever-evolving space and with the way data is changing (and as we see cookies going away) first-party publisher data will be more important and deterministic data overall. Specifically in programmatic exchanges.”

– Kayla Yee, Account Executive, Sling TV at Dish Media

To learn more about how OTT stands out as a targetable and measurable opportunity amidst privacy-led industry changes, check out our recent blog post.
 

OTT’s Power Lies in Cross-channel Targeting

 
If you take a cross-channel approach to OTT, you can target and retarget the same audience across multiple channels and screens.

For example, with the right OTT strategy, you could reach your audience on their TV screens, then retargeted across OTT, audio, display, and more, creating a truly connected cross-channel ecosystem that moves the needle for your brand.

“You can literally take a unified approach across all screens. This means targeting the same segment on Facebook, Display, Programmatic Audio, and OTT. You can retarget people that have been to your website, reach them with your video across OTT, and then sequentially target them in audio and display effectively building a seamless experience around the customer,” Math says.

 

How to Measure the Success of Your OTT Investment

 
Like any digital channel, a measurement plan is key to determining the success of your investments, which means you need to take video completion and attribution KPIs into account.

One of the strong points of OTT is that of ad delivery: the video completion rate (VCR) for OTT ads is usually between 90% and 100%. This is because most devices and platforms feature non-skippable ads that are always in-view because they can’t be minimized or switched to a different a tab.

Attribution tracking can include visiting a particular website or landing page, downloading an application, or even in-store foot traffic.

The nature of OTT viewing means that most ads aren’t clickable; however, which means a third-party attribution solution is required. This can mean working with a company such as Nielsen or Oracle to track device IDs and across platforms as well as offline touchpoints (such as entering a physical location, like a store).
 

8. Challenges of OTT Advertising and How Tinuiti Can Help

 
Beyond being a very fragmented landscape with competing business models, OTT is still a newer channel with inherent challenges for any brand looking to make the leap to the big screen.

Transparency

“The number one way brands access OTT inventory is through a reseller or an aggregator,” explains Math.

“Unfortunately, this means that many brands are losing out on transparency because it’s difficult to determine whether their ads are showing on premium channels or less-than-popular segments. By using a partner like Tinuiti, on the other hand, brands have more control, transparency, and access to data with first-party OTT publisher partnerships.”

At Tinuiti, we own and operate all of our deals directly with virtually every TV and OTT publisher and platform. This gives us—and you—full transparency into each dollar spent, and the ability to granularly optimize for performance.

Measurement

Because OTT campaigns are delivered via television, there are challenges when it comes to attribution tracking.

Unlike other digital channels, tracking clicks or in-store traffic isn’t as straightforward and can require a third-party to understand the full impact of your OTT ads.

Tinuiti’s OTT partnerships and technology ensure that you are tracking post-OTT exposure in terms of digital performance (such as website visits and conversions) as well as offline impact (such as brick and mortar visitation).

Whether you’re looking to measure visits and sales on your website, foot traffic to your stores, brand lift, or something else, it’s not a question of if OTT will work for you, but how.

Media Planning & Targeting

Buying OTT media is one thing, but understanding how your OTT campaigns fit into your larger media mix to impact your audience’s decisions requires a sophisticated strategy helmed by subject matter experts.

The real magic of our OTT program lies in our strategic cross-channel approach, which unifies the data strategy with sequential messaging across your media mix. This cross-channel strategy enables a unified audience experience across all channels and screens, and a sequential retargeting strategy that surrounds the consumer and drives conversion.
 

9. Best OTT Examples

 

How Avocados From Mexico Is Using OTT To Create Disruptive and Effective Ads

Avocados from Mexico know a thing or two about Super Bowl snacks. In the two months leading up to the Super Bowl last year, Avocados from Mexico put 240 million pounds of avocado out into the market — the equivalent of a football stadium covered with 30 feet of guacamole or the amount of guacamole consumed during the Super Bowl. 

Super Bowl advertising has done wonders for Avocados from Mexico’s brand. Over the past six years, brand recognition is up from 23% to 55%, and they’ve been the only brand in the history of the Super Bowl to be in the top one and top two places as a top digital performer among all of the brands that participated in the Super Bowl.

Because of the COVID-19 pandemic, advertising in the 2021 Super Bowl looked very different this year.

“We think that the worst thing that we can do as an organization is to just continue to do things just because we have done it in the past. So we say, let’s try other things, let’s try other avenues. Let’s reinvent ourselves and discover other territories,” Ivonne Kinser, Head of Digital Marketing and eCommerce for Avocados from Mexico says.

 

“Based on our experience, our most disruptive campaigns have been those that overlap two or more different technologies. And I think the reason why technology, innovation, disruption is moving today at a much faster pace than it did in the past is because of that. Because there are more technologies and because marketers are discovering different ways to bring those together,” Kinser says.

One recent example of disruptive ad technology? OTT advertising. Kinser explains that she sees over-the-top (OTT) advertising technology as an evolution of traditional advertising and a great opportunity to personalize the ad experience for consumers.

“We can now target households based on the consumption habits of that specific household,” Kinser says, noting that personalization is more important than ever before — and first-party data lets advertisers use OTT to create more personalized ad experiences,” she says.

To learn more, check out Kinser’s full interview on Tinuiti’s podcast “OffMute”

 

How Bassett Furniture Evolved Their Media Strategy with OTT

 

 

Bassett is a well-loved brand that has been around for 120 years and understands the importance and necessity of new approaches to marketing that keep up with changes in the marketing landscape, as well as changing consumer needs.

Earlier this year, top brands and provocative thought leaders gathered last week for our annual Tinuiti Live virtual event. In one of the sessions, Bassett Furniture’s Director of Digital Marketing, Heather Petersen, explored the success that the American-made furniture brand has seen—and continues to see—through promotional and evergreen OTT advertising. 

With the far-reaching impacts of COVID resulting in a cut to Bassett’s media spend, they decided to go all-in on OTT, fully replacing their linear TV advertising initiatives. There was some early concern that with removing traditional television ads, there would be a decline in traffic to their brick and mortar stores, but that fear did not become a reality. 

Bassett will continue monitoring to determine if a return to linear TV advertising makes sense for their business goals, but as of now, they are continuing to enjoy the more cost-effective benefits of OTT, seeing no negative results from removing traditional.

You can view the session on-demand here to learn more about how COVID impacted Bassett’s advertising plan, with the switch to always-on OTT actually being an easier transition due to its necessity. They also discuss the importance of educating the decision-makers at your company to help them understand what changes you’re making, and what the anticipated effects will be.
 

10. The Future of OTT

 
OTT is disrupting the industry for good. As traditional TV continues to lose viewers, adults will use streaming apps and ad-supported OTT services like Hulu, Sling, and Pluto.

By adding this new channel to your media mix, you have an unprecedented opportunity to target new audiences in new ways — and to do so ahead of competitors who aren’t as ad-savvy.

As OTT viewership continues to explode, so will the opportunities for brands adopting OTT video to support their sales and marketing goals.

If you want to learn more, get in touch with one of Tinuiti’s OTT experts here.

Editor’s Note: This post was originally published in March 2020 and has been updated for freshness, accuracy, and comprehensiveness.