What is OTT Advertising? Everything You Need to Know

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Today, US consumers prefer over the top video services like Hulu and Netflix over traditional TV. In fact, 50% of US households with Wi-Fi now stream OTT content directly on their TV for an average of 2 hours. Experts forecast that the number of US OTT viewers will rise to 170.1 million. 

This translates to 51.7% of the US population

To support streaming services, marketers are serving video ads to devices via OTT advertising. 

Read on for more information!

What Is OTT Advertising?

Want to know what is OTT advertising

This refers to a delivery mechanism which allows digital marketers to serve ads to a target audience. Although OTT advertising is like TV ads, the delivery of ads is through streaming media. For instance, streaming boxes, Smart TVs and HDMI sticks. 

At the moment, over the top advertising is currently limited to free-to-watch streaming services such as Hulu and YouTube. 

OTT Advertising: How Does It Work?

Today, it is clear that there is strong OTT advertising. This is largely driven by the popularity and ever-increasing OTT viewers. Experts project that ad spending in OTT will reach $40 billion by 2020. 

Want to know how OTT advertising marketing works? It all starts with audience segmentation. In OTT advertising, targeting is not based on content but on the audience. By doing so, marketers are able to deliver richer and more precise targeted ads to the audience.

Simply put, they take the IP address of the user and match it with their data preferences. Unlike in PPC where users fill out their information, OTT ads work through segmentation. 

This process is deterministic down to the individual level. Thanks to new technology, data collected on viewership levels is typically matched to the individual. To deliver cross-media ads and analytics, there is a lot of work to be done. 

Benefits of OTT Advertising

Over the top advertising offers lots of benefits to the advertising technology. You have targeting dynamic ad insertion and advanced analytics. As such, marketers have been able to offer shorter ads. 

Want to know the benefits of OTT advertising? 

Keep reading! 

Strong Targeting

With OTT, marketers can select demographics, geographic locations, and topics to advertise on. This is not possible with traditional TV ads. As such, they get to reach the target audience.

Minimize Expenses  

Unlike TV ads where marketers get locked to a contract, OTT advertising allows for flexible budgeting. As such, marketers are able to buy some impressions for a specific audience. 

High-Quality Ads 

OTT platforms deliver high-quality content in 4K. Marketers can leverage this technology to deliver high-quality ads too. 

Insightful Data

OTT platforms provide useful data such as IP, location and even device type. Marketers can use this data to offer different types of ads by targeting. 

Local and International Reach

A vast majority of OTT platforms offer global viewership. This translates to a larger reach than traditional TV or other platforms. 

What’s Next for OTT Advertising?

Well, OTT advertising agencies need to leverage audience insights to deliver richer targeting. Doing so will improve personalization and deliver high-quality ads to the audience. With the rise of powerful ad blockers, server-side ad insertion technology also needs improvement. 

We hope the information we have shared with you on OTT advertising and how it works can help you develop smart strategies and target your audience.