According to analysts, US cable, satellite, and internet TV providers lost a collective 2.3 million customers in the first quarter of 2023, which marks their worst subscriber losses so far. As streaming and on-demand platforms continue to expand their content and service offerings, the decision to cut the cord is a complete no-brainer.
TV advertisers follow the same trend — ad spend on these platforms increase by several billion dollars every year, and it’s projected to hit nearly $41 billion by 2027.
For advertisers, this new era of TV advertising means better targeting, greater value for their money, and higher conversion rates. But there are several things you should know about these new advertising mediums before you begin planning a campaign.
Connected TV (CTV) and Over-the-Top (OTT): The New Era of TV Advertising
CTV and OTT advertising are the new digital mediums for reaching TV audiences. They allow you to get in front of viewers who watch content on streaming or on-demand platforms like Hulu, Amazon Prime Video, and Netflix.
Unlike traditional television ads — which reach all viewers within a given geographic area regardless of their interests — CTV and OTT ads can be targeted to specific audiences based on demographics, interests, and behaviors. This allows you to target your campaigns more effectively and get the most out of your ad spend.
In addition to better targeting, CTV and OTT advertising also offer greater flexibility in terms of creative formats — from 15-second bumpers to interactive ads that allow viewers to take action directly from their TV screens. By leveraging these new formats, advertisers can create more engaging campaigns that are more likely to capture viewers’ attention and drive conversions.
CTV vs. OTT: What’s the difference?
While they may seem similar at first glance, you should be aware of some key differences when comparing OTT vs. CTV.
Both CTV and OTT advertising involve delivering video content and ads to viewers through internet-connected devices. These platforms allow advertisers to reach their target audience more effectively than traditional TV advertising, as they provide better targeting capabilities and advanced analytics.
The benefits of each are also similar — CTV and OTT platforms offer a more personalized and engaging viewing experience for users, who can watch their favorite content on-demand and across various devices.
Despite their conceptual similarities, CTV and OTT are different in the following ways:
- Platform: The primary difference between CTV and OTT lies in their ad platforms. CTV refers specifically to internet-connected TVs or smart TVs with built-in streaming capabilities. On the other hand, OTT encompasses a broader range of devices and platforms, such as smartphones, tablets, gaming consoles, and streaming devices like Roku, Apple TV, and Amazon Fire Stick.
- Content Delivery: CTV advertising is typically delivered through dedicated smart TV apps, while OTT advertising can be served across multiple platforms and devices. This means that OTT ads can appear on both connected TVs and non-TV devices, whereas CTV ads are limited to smart TV screens.
- Ad Formats: CTV advertising primarily uses video ad formats, similar to traditional TV commercials. OTT advertising also relies heavily on video ads, but it can also include display and interactive ad formats, depending on the device and platform being used.
- Targeting Capabilities: Both CTV and OTT advertising offer advanced targeting capabilities compared to traditional TV advertising, but OTT generally provides more granular targeting options. This is because OTT platforms collect more user data, allowing advertisers to target specific demographics, interests, and behaviors across various devices.
- Cost: OTT is generally cheaper than CTV advertising because it involves buying ads on multiple devices and platforms. While CTV advertising only involves “premium” programs, OTT platforms can offer more cost-effective ad formats like website and in-app placements.
- Quality: CTV ads are more expensive for a reason. The ad formats are more sophisticated and engaging than those used with OTT, which typically rely on lower-quality videos or still images. They’re also non-skippable, meaning they have longer runtime and can’t be ignored.
Why doesn’t everyone use CTV and OTT?
Research from the Interactive Advertising Bureau shows that over half of marketers consider CTV and OTT “top of mind” but only around 15% actually use it in their strategy.
There are several reasons why advertisers might be reluctant to embrace CTV and OTT advertising:
Lack of Familiarity
Many marketers are more accustomed to traditional TV advertising and may not fully understand the benefits of CTV and OTT. The unfamiliarity with these platforms can make it difficult for them to justify allocating resources to explore these advertising options.
Confusing Terminology
The language used in the CTV and OTT space can be confusing and inconsistent, with different vendors often using different terms to describe similar concepts. This can create uncertainty and confusion among marketers, making it challenging to navigate the landscape and make informed decisions.
Complex Technology
The technology behind CTV and OTT advertising can be complex and intimidating for those who are new to the space. Some marketers may feel overwhelmed by the technical aspects, such as programmatic buying, and might not be confident in their ability to effectively manage campaigns on these platforms.
Budget Constraints
Although companies that have adopted CTV and OTT advertising tend to spend significant amounts on these platforms, smaller businesses or those with limited budgets may find it difficult to allocate funds to explore these relatively new advertising channels.
Measurement Challenges
Measuring the success of CTV and OTT campaigns can be more complicated than traditional TV advertising. While these platforms offer advanced analytics and targeting capabilities, some marketers may struggle to determine the most relevant metrics and accurately measure campaign performance.
Fragmented Market
The CTV and OTT market is highly fragmented, with numerous platforms, devices, and content providers competing for attention. This fragmentation can make it challenging for marketers to develop a comprehensive strategy that reaches their target audience effectively.
Navigating the Challenges of OTT and CTV in the Future
As CTV and OTT advertising continue to grow and evolve, marketers need to be prepared to address the challenges that come with these platforms. Here are some strategies for navigating the future of CTV and OTT advertising:
- Stay informed. Keep up-to-date with industry news, trends, and best practices to stay ahead of the curve. Participate in industry events, webinars, and conferences to learn from experts and network with other professionals who are exploring CTV and OTT advertising.
- Embrace data and analytics. Leverage the advanced targeting and measurement capabilities offered by CTV and OTT platforms. Use data-driven insights to optimize your campaigns, improve ad performance, and maximize ROI. Ensure that you’re tracking the right metrics to accurately measure campaign success.
- Develop a cross-platform strategy. As the lines between CTV and OTT continue to blur, developing a holistic advertising strategy that encompasses both platforms is essential. Consider how your ads will perform across various devices, platforms, and content providers to ensure you reach your target audience effectively.
- Invest in creative storytelling. With the rise of CTV and OTT advertising, viewers have more control over their content choices than ever before. Invest in high-quality, engaging, and relevant ad creative that captures your audience’s attention and resonates with them emotionally to stand out in this competitive landscape.
- Partner with experts. Collaborate with experienced vendors, agencies, or consultants who specialize in CTV and OTT advertising. These partners can help you navigate the complexities of the space, provide valuable insights, and assist in developing and executing effective campaigns.
- Experiment and iterate. Don’t be afraid to test new approaches, platforms, and ad formats. Use the learnings from your experiments to refine your strategy and improve your campaigns over time. Be agile and adaptable to stay ahead in the ever-changing CTV and OTT advertising world.
By following these strategies, marketers can successfully navigate the challenges of CTV and OTT advertising and harness these platforms’ power to drive better future results for their businesses.
