OTT vs. TV: What you Need to Know

Alex Abbott

Alex Abbott About The Author

Mar 24, 2021 10:45:00 AM

 

OTT vs. TV: What you Need to Know

Over-the-top (OTT) advertising has made its way into marketing standards, especially with everyone streaming at home these days. The coronavirus pandemic has caused a spike in viewership earlier than predicted and accelerated existing video streaming trends. The newly updated forecast predicts viewership to rise to 222.0 million by 2024, instead of 210.4 million as previously expected.

While TV is still going strong, each platform’s approach is very different. It's best to use both as part of your marketing strategy, and doing so efficiently requires a great understanding of the differences between OTT vs. TV.

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OTT vs. TV

OTT and TV’s major difference is that OTT jumps over traditional cable TV and directly serves the viewer content via the internet. Think streaming services. Traditional TV instead goes through a cable provider to reach audiences. 

OTT is most helpful when targeting advertising to specific audiences because OTT ads show on Smart TV screens or streaming devices. Marketers create individualized content to target a specific audience rather than displaying the ad to millions with the hope of reaching a handful.

Connected TV (CTV) refers to the streaming devices used to watch TV content, like smart devices, gaming consoles, or HDMI sticks. Advertising through CTV almost guarantees you’ll reach more than one person, unlike mobile video streaming that typically has one viewer. As of 2020, the number of connected TV’s hit 70 million and is still growing. A majority of households in the U.S. now have at least one CTV.

What are TV Ads?

Screen Shot 2020-11-23 at 10-37-18 AM-pngMost people are familiar with TV ads, but it's important to cover all the basics. TV remains one of the strongest forms of advertising and continues to reach millions of people each year. Aside from its incredible reach, TV ads have a high impact on viewers. Sixty percent of consumers are likely to make a purchase after viewing an ad on TV compared to around 40% that see ads online or on social media.

 TV has two types of inventory (local and national) and three buying approaches to TV:

  1. Remnant: Advertisers buy spots the week before or week of, target a particular network-rotation, with no guarantee your ad will run, as it can get outbid.
  2. Non-preemptible: Advertisers buy spots a quarter before airing and target particular network-rotations with a guarantee to run.
  3. Upfronts: Advertisers buy spots in the spring (6-12 months before airing), targeting by program with a guaranteed number of impressions. 

Along with strategically using the three buying approaches, advertisers often refer to Nielsen ratings and the cost of reaching 1,000 viewers (CPM) to make their final decisions. 

TV advertising is great for reaching a large audience per ad and has proven to be an excellent multi-sensory channel for reaching many people at once.

What are OTT Ads?

OTT is a newer platform that's quickly gaining speed due to how successfully it targets specific audiences. Its buying process differs significantly, even between providers. Take, for instance, Hulu and YouTube. Hulu charges by the length of your ads at 7, 15, or 30 seconds. Whereas YouTube doesn't charge unless viewers watch more than 5 seconds of your ad. 

Marketers must keep ads under at least 30 seconds. Fifteen-second ads are the most common because they are less expensive to make and still highly effective

The key with OTT advertising is that your ads are brief and more direct. The idea is not to use OTT to increase awareness of your brand while resonating with the viewer.

How OTT Ads are Changing the Game

Screen Shot 2021-03-19 at 10.24.49 AMOTT ads are increasingly important as more users incorporate streaming into their lives. Streaming services heavily disrupted standard TV viewership when they were initially introduced. The market is currently slowing, indicating that OTT is further establishing itself in American lives, especially with the influx of competition. As of 2017, 61% of Americans between 18 and 29 watched TV through streaming services, while only 31% used cable. Of people between ages 50 and 64, 10% used streaming services, while 70% used cable. 

Companies can strengthen their ad strategy by using both OTT and TV to their advantage. A multi-platform marketing strategy reaches more consumers where they are.

Use the Right Mix of Both

OTT is steadily becoming a more popular form of consuming content and ads, but TV advertising isn't backing down. The key is to have the right mix of both to maximize your marketing efforts. To make sure you're using both to their full potential, work with a media partner who has extensive experience with OTT and TV. 

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Topics: TV Advertising, Streaming & OTT