When watching a video-on-demand service like YouTube or Apple TV+, you may notice video ads that seem specifically tailored to your tastes. They may even be for the same brands you see in banner ads online. This is called over-the-top advertising (OTT advertising), which can be more tailored to a target audience than traditional TV ads.
As a business, you can leverage OTT media to your advantage. OTT advertising campaigns offer precise targeting unmatched by other video ad formats, inspiring many businesses to allocate marketing budgets to OTT campaigns.
What is OTT advertising?
Over-the-top (OTT) advertising is a type of streaming video advertising served directly to viewers, bypassing third-party intermediaries like TV stations. Unlike ads on cable TV or satellite TV,OTT ads are distributed over the internet.
OTT ads reach audiences through streaming devices like smart TVs, streaming sticks, web browsers, gaming consoles, and mobile apps. They’re managed by OTT advertising platforms specializing in precise video ad distribution and targeting.
Unlike traditional TV advertising, OTT advertising lets you personalize ads to a specific audience. When you watch a traditional TV network like CBS or NBC—broadcast through the airwaves or by cable—you’re watching the same commercials as everyone else in your market. When you watch streaming services like Pluto TV or Amazon Prime Video—through a device like an Amazon Fire TV stick or a Roku-powered smart TV—you’re seeing over-the-top advertising that can be tailored specifically to you.
While you and your neighbor might watch the same streamed show, they may see an ad for oven-baked pizza while you’re shown the designer handbags you’ve been eyeing online.
OTT vs. CTV vs. VOD
When exploring OTT ad campaigns, you may encounter terms like CTV and VOD. These concepts are integral to making OTT advertising work. Here’s what they mean:
Over-the-top (OTT)
OTT refers to delivering video content and ads directly over the internet, bypassing traditional cable or satellite providers. Examples of OTT services include streaming platforms like Netflix, Hulu, and YouTube TV, where viewers access streaming content through internet-enabled smartphones, tablets, laptops, and smart TVs.
Connected TV (CTV)
Connected TV (CTV) refers to the device used to watch content—specifically internet-connected television sets used to stream digital content. This includes smart TVs and external devices like Roku, Amazon Fire Stick, and Apple TV. These devices operate as OTT platforms by streaming internet-based video content to the TV screen.
When you stream Hulu on a smart TV, you’re watching OTT content on a CTV. If you stream Hulu on a laptop, it’s still OTT content, but not through a CTV.
Video on demand (VOD)
VOD lets users select and watch video content at any time, without a set broadcast schedule. VOD can be accessed on an OTT platform, like YouTube or Max, or through a cable on-demand service (meaning it doesn’t require an internet connection). VOD content includes movies, TV episodes, and sports highlights available on demand.
Types of OTT ads
When you buy OTT ads through an OTT advertising platform, you’re given several options for disseminating your content to viewers. Here are popular streaming formats and how they incorporate OTT ads:
- Subscription video on demand (SVOD). SVOD ads appear on premium video platforms where users pay a subscription—think Netflix, Disney+, or Max. These subscription video platforms often feature few or no ads, usually limited to pre-roll ads before a show or post-roll ads after it.
- Advertising-based video on demand (AVOD). AVOD platforms are ad-supported, similar to traditional TV. OTT video ads appear similar to standard TV commercials, called mid-roll ads, playing periodically throughout the programming. Video streaming platforms that use the AVOD model include YouTube, the ESPN website, and lower-tier services on streamers like Hulu and Peacock.
- Transactional video on demand (TVOD). TVOD lets users pay a one-time fee to rent or purchase content and is much less likely to contain over-the-top ads than AVOD video streaming content.
Best practices for OTT advertising
- Take advantage of OTT targeting capabilities
- Focus your OTT ad spend on premium channels, when possible
- Invest in interactive ads
- Keep an eye out for OTT ad fraud
To fully reap the benefits of OTT advertising, approach your OTT campaign strategically. Here are four digital advertising tips for businesses exploring the world of OTT marketing:
Take advantage of OTT targeting capabilities
CTV advertising operates on a fundamentally different model than traditional TV advertising. As an internet advertiser, you have more precise targeting abilities on OTT devices than traditional TV advertisers have on broadcast, cable, and satellite TV. This level of precision extends across device types. You can run precisely targeted ads whether your viewers are watching on a mobile app or streaming to their television screen.
With this in mind, leverage the data and analytics offered by an OTT service to pinpoint where your target audience consumes and engages with content. Then allocate your budget accordingly for maximum impact.
Focus your OTT ad spend on premium channels, when possible
When it comes to CTV OTT advertising, it can be worth spending extra for quality ad impressions. Securing ad placements on premium OTT channels (e.g., ad-supported Hulu), rather than lower-tier OTT inventory (e.g., an agency placing your ad in random web videos) ensures that your ads play in a brand-safe environment.
Invest in interactive ads
Diversify your OTT campaign with a mix of ad formats, like overlay ads on streaming TV content, pre- and mid-roll ads, and interactive YouTube ads. Offering a diverse ad inventory and leveraging different formats can make your advertising work more effectively.
Keep an eye out for OTT ad fraud
Unfortunately, fraud is an issue in the OTT ad industry. Scammers loop videos on unattended internet-connected devices. To protect your investment, work with reputable OTT inventory providers who offer verification tools to ensure your ads reach real viewers, delivering authentic, high-quality impressions.
An example of effective OTT advertising
As brands increasingly shift to digital marketing, there are many OTT advertising examples of brands reaching new audiences with targeted video ads. For instance, Allbirds, a sustainable footwear brand, has run short, visually engaging ads on streaming platforms to showcase its eco-friendly products and unique brand story.
In designing its OTT campaign, Allbirds carefully selected streaming platforms and ad placements to target a demographic interested in sustainable lifestyles. The videos feature people enjoying urban outdoor activities (in Allbirds shoes, of course), helping the brand resonate with those looking for comfortable, sustainable footwear for city living. These ads encourage viewers to visit Allbirds’ website, driving traffic and sales.
OTT advertising FAQ
What are the challenges of OTT advertising?
The challenges of OTT advertising include choosing the right platforms, rooting out ad fraud, and managing a budget to maximize your return on ad spend (ROAS). By focusing on trusted, premium channels and taking care to clearly define your audience, you can get the most from your OTT ad strategy.
What does OTT mean in advertising?
In advertising, OTT stands for “over-the-top” and refers to the process of distributing video ads directly to consumers watching movies, shows, and web videos. This is possible because the ads are served over the internet, rather than being sent to a TV station to run in a pre-planned commercial break.
What is OTT vs CTV advertising?
OTT stands for “over-the-top” and CTV stands for “connected television.” The term OTT applies to any device that streams video over the internet, including smart TVs and streaming sticks, but also mobile apps, web browsers, and more. CTV refers only to televisions, and those televisions connect to the internet through either internal software or third-party hardware.
