Taking first place by a landslide, OTT easily wins advertising trend of the year. However, actually defining OTT and incorporating this powerful new tool into your strategy is much harder to decide.
What is it?
The acronym OTT stands for “over-the-top” and refers to streaming media services that reach viewers directly over the internet instead of through traditional cable. Connected TV devices such as Roku, Amazon Fire Stick, or even your XBOX game console provide OTT streaming through well-known services such Netflix, Hulu, and Prime Video.
For example, watching Netflix on a smartphone app or even in an app on your smart TV counts as OTT. Connected TV devices then are often the medium through which viewers reach OTT services.
Among Netflix and Hulu, there are numerous other streaming services, such as fuboTV and Sling TV, that already exist. However, companies like Disney, Comcast, and more are all introducing their own streaming platforms. With many of these existing and new OTT services, advertisers are presented yet another medium for reaching viewers.
If you are wondering if advertisers have already begun advertising on OTT platforms, the answer is a resounding yes, and the number of advertisers is only growing.
In the first quarter of 2019, Roku’s platform alone double the number of ad impressions served on their platform as compared to the prior year, and Roku announced that it predicts revenue for the year to be over $1 billion with about two-thirds of this revenue coming from ads, according to AdAge.
The Growth of Cutting the Cord
Every day, more and more advertisers are adding OTT to their marketing mix. This shift is occurring not only because OTT is a powerful advertising tool. It is also fueled by advertisers’ premium target audiences moving off cable.
This trend has effectively been labeled cord cutting as many viewers are “cutting the cord” with their cable provider in favor of the ease and experience of OTT services. According to eMarketer, the number of cord-cutters in the US, defined as “adults who have ever cancelled a pay TV service to continue without it,” will grow by 32.8% in 2019 to 33 million. At the same time, the number of subscriptions to OTT video services will rise to 170 million. This is qual to 51.7% of the US total population.
Additionally, the audiences on streaming platforms and CTV devices reach Millenials and Gen Zers. These two groups tend to be harder-to-reach and more sought after demographics for advertisers.
According to Nielsen, “out of total day viewers watching content aired across five networks on live TV, 7% are between the ages of 25 and 34, while 19% of connected device viewers are in the same age bracket.”
Both the audience quality and the popularity of these services are major factors drawing advertisers and brands to OTT advertising.
Traditional TV Advertising Versus OTT Advertising
Naturally then, advertisers have adopted OTT advertising as an integral part of their digital advertising strategy. The advanced analytics and captive audiences in OTT presents a fantastic opportunity for advertisers, and while OTT ads tend to be shorter than traditional TV ads, the ability to provide targeted dynamic ad insertion and advanced analytics such as geolocation, demographic data, and device information are attractive for businesses looking to advertise to specific viewers.
Often the biggest question advertising agencies get from business and brands is, “Should OTT replace my traditional TV budget?”
The simple answer is no. It is more about finding the right channel at the right time. Traditional TV advertising is still a powerful tool to reach your target consumer. However, OTT is a powerful addition to your digital advertising mix. When done well, it is a perfect compliment to a strong traditional TV strategy. In fact, 2 in 3 viewers consume content across both linear and digital platforms, according to Xander’s latest white paper.
To learn how “over-the-top” advertising can be incorporated into your advertising strategy, reach out to Adventure Ad Agency. If you want to learn more about the latest trends in Advertising and more useful information, check out more of our blog or contact us!