Streaming viewership is growing every year. In fact, in 2020 some 2.13 billion people used over-the-top (OTT) video services worldwide. All of that viewership is a boon for OTT advertising, making this channel poised to be the next big thing.
How did the OTT boom happen in the first place? In the US, it may have started with the $217 average monthly cable bill. Lots of folks have cut the cord. They no longer watch cable or satellite TV, favoring OTT platforms for their daily entertainment. The number of cord-cutters is expected to exceed 55 million by 2022. That’s a lot of potential customers.
But before you put together your OTT advertising strategy, it’s helpful to understand how OTT works and how it can help your brand. Let’s get into it.
Over-the-Top from the Top
OTT refers to over-the-top streaming companies that are able to bypass traditional broadcast providers. In simple terms, an OTT platform allows you to view TV shows and movies on demand using the internet. For example, when you use HBO Max to watch White Lotus, you’re using an OTT platform.
OTT is a substitute for traditional broadcast, cable and satellite television. It allows viewers to stream content at any time to any device whenever they choose. It’s affordable and provides a wide variety of videos, movies and television shows that viewers can play on a smartphone, a connected TV (CTV) or even a game console.
There are three service types within the OTT market:
- Subscription video on demand (SVOD): Users have unlimited access to any of the videos in the library via a monthly, quarterly or annual subscription. Netflix, Disney+, and HBO Max are SVODs. In order to watch The Queen’s Gambit and other popular shows, you need a subscription, an internet connection and a device that supports OTT.
- Transactional video on demand (TVOD): Unlike SVOD, users do not have unlimited access. Rather, they are charged for content they want to watch. These charges are commonly known as pay-per-view. TVOD may also offer users the opportunity to buy the video as a permanent addition to their library, or they can rent a video that they can watch multiple times over a specified period. Apple iTunes and Amazon’s video store are examples of this service.
- Advertising video on demand (AVOD): With AVOD, the content includes ads. These ads allow the video sponsor to monetize the content. Users do not pay for the service; rather, they pay by viewing ads. AVOD services include Pluto TV, Dailymotion and All 4. Ad-based video monetization can be paired with either of the other two models for a hybrid monetization model. Hulu is one hybrid example, combining subscription and advertising.
The three types of OTT services differ in how they generate revenue. As mentioned, AVOD is the service type that relies primarily on advertising revenue. SVOD, since it is ad-free, makes money through subscriptions. TVOD generates much of its revenue through transaction fees. However, many TVODs operate as hybrids, so there may be ads included in their programming as well.
The benefit for AVOD viewers is that they can view content free or at a greatly reduced price compared to subscription services. It’s good to remember why viewers left traditional TV in the first place. Among the top reasons cited is the number and frequency of commercial interruptions. What makes AVOD work is that viewers don’t mind when the content is great and the ads are relevant and short.
The industry is evolving fast, so the acronym a platform uses today may not be the one they used last month. As technology and viewing habits evolve, and the demand for OTT content increases, there will likely be other OTT business models.
As you put together your marketing strategies, keep in mind that different platforms appeal to different audiences. Some platforms feature major production movies, others made-for-TV movies, while others may concentrate on series. Historically, premium content providers haven’t used AVOD. That’s rapidly changing. For example, Tubi, an AVOD acquired by Fox Entertainment in 2020, has purchased library content similar to the SVODs and will pursue the production of original movies and series in the future.
OTT Advertising vs. Broadcast Advertising
Television has generated revenue from advertisements for decades. However, in 2019, traditional ad revenue sharply declined — the largest drop since the Great Recession. This change coincides with the growing popularity of OTT. In recent years, every major network and media company has come out with some version of a video-on-demand service. CTV viewing habits are starting to more closely resemble traditional TV viewing. This is good news for VOD services. It means that viewers are using these services as more than just a supplement to regular TV. It may be their preferred way to view.
For advertisers, there are many advantages over broadcast television. For one thing, broadcast television follows a linear format. This means that content is presented on each station according to a predetermined schedule. This limits advertisers’ ability to target viewers based on demographics, location or even precise numbers.
Broadcast advertising uses Nielsen or Comscore rates to decide where to place content. Unfortunately, this data is limited. Perhaps the ratings indicate that a show is popular among the male demographic, ages 22-40. But that doesn’t provide insights into the personal preferences and other nuances that help customize advertising content and provide strategic direction.
OTT facilitates more robust targeting, including data at the individual and household level. For example, advertisers can personalize and customize messages based on education level, interests and other demographics. This means that multiple viewers can watch the same show and see different messages. OTT ads use the same advanced targeting techniques deployed in social media campaigns. Precise targeting eliminates waste and helps ensure the relevance that invites engagement. You’ll be able to speak directly to your customers. Also, OTT provides real-time metrics. If a campaign isn’t working, you can change it immediately.
With broadcast television, it was difficult to control the reach and frequency of ads. Some viewers experience ad fatigue after viewing the same ad dozens of times. Others would never see the ad at all. OTT affords you greater efficiency and allows you to control who sees your ad and when.
Best Practices for OTT
That sought-after 18-to-49-year-old demographic that everyone is targeting? They aren’t watching television nearly as much as previous generations. But when they do, they use OTT. If you want to reach your best customers, you’ll need to meet them where they are. OTT is clearly the advertising medium of the future.
Here are some of the best practices you should deploy to get the most from your OTT campaigns.
Shorter Is Better
Sixty-second television commercials used to be the norm. Today, that minute-long ad seems interminable. Keep your ads short and to the point. When you deliver value and respect the viewer’s time, your business will benefit. Thirty seconds is fine, but 15 seconds could be even better. You should, of course, experiment and find the sweet spot for your customers.
Format for All Devices
Don’t assume that your content will be viewed on a large TV screen. Make sure that your format works on all devices. Many people use tablets and even mobile phones to view content.
Audiences have come to expect that advertisers will personalize content for them. Make sure that you get to know your audience before you create your OTT ads. Your ads should speak directly to your audience, providing a personalized experience that builds trust and confidence in your products and services. Viewers become customers when they connect with the brand.
Pursue a Niche
Traditional television advertising generally caters to a broad audience. One size really doesn’t fit all. With OTT, you can pursue a niche strategy at a granular level, based on viewing patterns and demographics. Although the viewership may be smaller, your ad budget will reach more of the target audience. This allows you to stretch your ad budget further to target those who are most interested in your products and services.
Use Integrated Strategies
OTT should be part of a comprehensive and integrated strategy. Viewers use multiple screens, which means that you’ll want to display your ad on multiple devices. It’s easier to build brand awareness from a variety of touchpoints. In addition to paid advertising, your marketing strategies should include your website, blog and social media. Apply lessons learned in OTT advertising to your other digital channels — and vice versa. Integrated strategies tend to increase engagement and build enduring customer relationships.
Do not put all your eggs in the OTT basket. OTT is great, but you need more. Traditional marketing is not dead. Determine how OTT fits into your overall marketing strategy and continue to use and test other channels.
How To Know If OTT Is Working
With broadcast television, it was impossible to really know whether your advertising worked. You never knew who was watching what. That’s all changed. WIth OTT, you have line of sight at the user level. You can easily measure the effectiveness of every ad.
Before your OTT marketing campaign begins, collect baseline data. How are your existing marketing channels working? For example, for your website you should establish a baseline for site visits, click-through rates, conversion rates and impression level. As you run your OTT ads, check these metrics at frequent intervals — maybe two weeks and then again at 30, 60 and 90 days.
You can also segment your viewers into random, non-overlapping groups and conduct audience split tests. One group is the test group and the other is the control. In this way, you can test your ads against a placebo ad, for example, a public service announcement.
OTT can be one of your most effective channels. Make tweaks to your strategy as you begin to understand more about your audience. The beauty of OTT is that you’ll have real-time data that will enable you to react as quickly as needed. OTT allows you to build brand awareness, acquire new customers, drive conversions and deepen the connection customers have with your brand.
Find your OTT Partner
OTT ads provide individualized content, based on each viewer’s demographics, psychographics, interests and more. You’ll want to incorporate OTT ads as part of your comprehensive marketing strategy. Hawke Media is here to help if you’d like more information about how OTT advertising could boost your marketing efforts or are looking for a creative partner to produce OTT ads. Schedule your free consultation with a digital marketing expert today to learn more!
Pamela Fay is a business, financial, technology, legal and lifestyle writer, whose work is informed by over 20 years of strategy, leadership and organizational development consulting for Fortune 500 companies.
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