The TV/Video landscape is changing rapidly and there’s not a one-size-fits-all solution for how to include over the top (OTT) in the video mix.
What is Over-The-Top Video?
Over-the-top (OTT) video is any Internet-based television or movie content streamed on a device that can connect to a TV or is within a TV itself (i.e., smart TVs). More than two-thirds of U.S. households have one or more connected devices, a reach that mirrors the 67% of households that have access to a subscription-based streaming service.
OTT Through Connected Devices:
The fastest growing connected devices are Smart TVs, with game consoles and smaller devices like Apple TV, Roku, and Amazon Fire providing alternative options to stream OTT video onto TV sets.
OTT Through Streaming Services:
OTT viewership is currently dominated by the “big four” apps – Hulu, Netflix, Amazon Video and YouTube TV – which account for 78% of total time spent viewing OTT video. Other popular OTT apps stream content from traditional TV or cable TV networks like CBS, ESPN and HBO.
Looking ahead, the OTT industry is expected to become more competitive, with many new streaming services announcing launch plans. Media companies like Comcast/Warner Bros., Apple, and Disney plan to launch branded apps later in 2019 or early 2020.
Why Marketers Should Consider OTT Advertising
For brands, the increase in OTT content options should lead to larger audiences that spend more time streaming, which provides more opportunities to advertise. Additionally, the increased ad inventory supply should help keep pricing competitive. So, why consider advertising through OTT video?
- OTT provides incremental reach. OTT can complement a traditional TV buy to reach audiences that aren’t watching cable or satellite TV. Why this all matters? 35% of total OTT viewing households do not subscribe to traditional TV
- 19% of OTT viewing households are cord-cutters (previously subscribed to traditional TV)
- 16% of OTT viewing households are cord-nevers (never subscribed to traditional TV)
If the target audience is under 34 years old, including OTT is required for effective reach, as fewer than 50% of households under age 34 can be reached with a traditional TV buy (see chart below).
2. OTT reduces ad waste. Advanced TV technology, which allows advertisers to purchase OTT ad inventory through software that layers on targeting data, is more mature in the streaming space than traditional TV. Any OTT-purchased inventory may include advanced targeting capabilities to reach specific audiences based on first-, second- or third-party data. This precise targeting eliminates wasted impressions that occur when purchasing on a broad demographic.
3. OTT can improve measurement. For performance advertisers, the digital nature of OTT advertising unlocks advanced measurement capabilities compared to traditional TV. Technology companies can attribute online conversion metrics to OTT ad exposures through device ID measurement. For example, say an individual is served a: 15 ad when viewing OTT on a connected TV and the next day makes an online purchase on the OTT advertiser’s website from their computer. Device ID measurement can associate one user to both devices and attribute that sale to the OTT view.
If Streaming OTT Video Is Becoming The New TV, What Does It Mean For Advertisers?
Streaming OTT video has become mainstream in the U.S., with over half of all U.S. households (or about 64 million homes) engaging with OTT each month. As new devices, services and content become available, OTT video is increasingly being used as a replacement for traditional TV.
Advertisers should recognize the shift occurring in TV media habits and evaluate their video ad buys accordingly. Including OTT advertising in the video mix can help reach desired audiences (especially those who are not watching traditional TV like cord-cutters and cord-nevers), eliminate media waste through advanced TV targeting, and provide improved measurement.