What is OTT (Over-the-Top) Advertising and How Does it Work?

Digital Marketing Media Buying

Lital Castel 26 March 2023

The online video streaming industry is growing at a rapid pace, and the introduction of new services and features is helping it keep up with the changing times. Newer offerings like virtual reality, 4k resolution, and 360-degree videos have come as a result of this ongoing evolution, opening up new opportunities for advertisers as well. 

With more than 50% of digital video viewers watching content over OTT services, it’s not just traditional TV that should keep an eye on this new trend. If you’re also looking to take advantage of the benefits of OTT Advertising, here’s what you need to know about it. 

Video ads are one of the most effective types of ads because of their ability to engage viewers through the combination of visuals, sound effects, music, and action. Although previously harder to measure than traditional image ads or search ads, they’re now catching up with the help of modern tech advancements such as machine learning. They are becoming easier to measure, and OTT video is also increasing in scalable opportunities and data-driven targeting. 

What is OTT Advertising?

OTT (“Over the top”) Advertising – sometimes known as Streaming TV Advertising –  is targeted advertising directly to viewers through online video streaming services. This is primarily done on mobile and TV-connected devices. Examples of OTT Advertising include Netflix, Amazon Prime, YouTube, Hulu, HBO Now, and more. These platforms allow users to watch their favorite shows and movies on demand. And, with the rise of these video streaming services, it has become easier for advertisers to reach out to their customers via video ads – and do it well.

The term derives from the ability to bypass traditional TV providers typically in control of media distribution, thus affording advertisers the ability to reach their audiences directly. The process of “going over the top” of traditional media companies provides advertisers with more freedom to deliver digital marketing ads outside of the realms of rigid broadcast schedules and geographic restrictions. 

How Does OTT Advertising Work?

OTT platforms like Amazon Prime, Hulu, and Netflix host content on their servers. They then distribute that content through their app or website, where users can watch it whenever they want. Some platforms like Netflix and Amazon charge a subscription fee, while other streaming platforms like YouTube offer free video content. In order to keep their servers running and provide an uninterrupted user experience, these platforms often work with advertisers in order to generate money. 

Advertisers purchase ad space from these video streaming channels and then sell their products or services through them. To do this, they create short video ads that are displayed at various points – mostly before the show starts playing but often at intervals throughout. The placement of the ads is chosen strategically so as not to drastically interrupt the viewer experience. Often, the ads encourage the viewer to interact with them and click on them. 

Why is OTT Advertising Important?

Brands should care about utilizing OTT Advertising in their marketing campaigns for a number of reasons:

• It allows advertisers to tap into the growing market for video streaming.
• It gives them a chance to grow their business with a new channel that their competitors may not be tapping into. 
• OTT Advertising allows advertisers to interact with potential customers more engagingly because they can provide more information to viewers through these video ads. 
• Advertisers are able to monitor their ROI more accurately, as OTT ads can be tracked through the same platforms that host the video streaming services. 

Benefits of OTT Advertising

There are many benefits to utilizing OTT Advertising compared to traditional TV advertising. 

Here are just a few of them:

Cost-Effectiveness: OTT advertising is much more cost effective than traditional media, as it eliminates the costs associated with the production and airing of advertisements.

Targeted Advertising: Allowing brands and businesses to target specific audiences based on their interests and demographics ensures that your ads reach the right people.

Increased Reach: With this type of advertising, you can reach an incredibly wide audience as these platforms are streamed across multiple devices.

Improved Engagement: Consumers are much more likely to engage with ads they come across while streaming than they are when watching television due to the interactive nature of this medium. This increases the chances of success for your campaigns.

Measurable Results: OTT advertising allows brands and businesses to measure the success of their campaigns in real time and make adjustments accordingly for maximum efficiency and impact.

Types of OTT Video Ads

There are several different types of ads that can be used across OTT and streaming services, each with its own unique advantages. These include:

• Pre-Roll Ads: These ads appear before the main video content begins and typically run between 15 seconds and one minute long.

• Mid-roll Ads: These appear during the break in the main video content, usually between two to four minutes long.

• Post-Roll Ads: These are displayed after the main video concludes and provide an opportunity to engage viewers one last time with a call-to-action (CTA) or product offer.

• Branded Takeovers: These allow for more creative ad units such as short videos, interactive HTML5 games, polls, and quizzes.

• Native Ads: Native advertising allows ads to be seamlessly integrated into relevant content, increasing user engagement and providing viewers with an unobtrusive, non-intrusive experience.

Measuring OTT Ad Campaign Performance

Measuring the success of an OTT ad campaign requires tracking and analyzing multiple metrics from different sources. 

Here are some of the key metrics brands can track when measuring OTT ad performance:

• Reach – How many people have been exposed to the ad?

• Viewability & Retention Rate – How many people have viewed the entire advertisement?

• Engagement – How many people interacted with elements within your ad, such as clicking links or sharing content?

• Conversion Rate – What percentage of viewers went on to purchase or sign up for what was being advertised?

• Time Spent Viewing – This can indicate your creative’s effectiveness at capturing and retaining viewer attention.

• Unique Views – These provide insights into the total number of viewers who interacted with the ad. 
• Completion Rate – This gives an indication of how many users watched the ad for its full duration and then chose to complete an action. 

Tips for Optimizing OTT Ad Performance

Once you have tracked your OTT ad performance metrics, there are several steps you can take to optimize your ads for maximum success.

Here are some tips for optimizing your OTT campaigns:

• Leverage Dynamic Creative: Using dynamic creative enables you to tailor ads based on viewer data such as demographics and location. Doing this will increase the effectiveness of your campaigns.

• Use A/B Testing: A/B testing allows you to compare two versions of an ad so you can see which one performs better and make adjustments accordingly.

• Utilize Programmatic Advertising: Programmatic advertising allows brands and businesses to automate their ad campaigns, saving time and effort while delivering successful outcomes.

• Target Niche Audiences: Focusing on smaller, niche audiences can be a great way to drive more meaningful results from your campaigns, as these audiences are more likely to engage with the content they encounter while streaming.

• Monitor Trends & Insights: Keeping an eye on trends and insights in the OTT space is key in ensuring that you’re creating relevant ads that target viewers in the right way at the right time.

Key Takeaways

OTT advertising is a powerful tool for reaching today’s streaming audiences and can be used to generate higher ROI than other forms of digital advertising. To make the most out of this type of advertising, brands should consider leveraging the knowledge and expertise of a digital media buying agency that specializes in OTT campaigns. With their professional help and expertise, you can ensure your campaign objectives are met efficiently, effectively, and cost-effectively.

FAQs (Frequently Asked Questions)

Lital Castel

Lital is Moburst’s Content Manager & Email Marketing Specialist. She specializes in coming up with engaging ideas and research to capture the trendiest topics in the digital and mobile marketing world. She is passionate about productivity and optimizing your day, but you can probably find her playing video games while cuddling with her dog on the couch to wind down at the end of a long day.

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