How Over-The-Top is Shaping the Advertising Landscape

Four years ago, Apple CEO Tim Cook predicted, “the future of TV is apps.” He was right. By 2020, it’s projected that streaming content via the internet or apps—known as Over-The-Top media—will account for 80% of all internet activity.  

Over-The-Top (OTT) Defined 

If you’re among the 33 million cord-cutters or 189 million users who subscribe to a digital streaming service in the United States, you can bet you’re consuming Over-The-Top (OTT). Over-The-Top is the delivery of long or short-form film and TV content via the internet and apps like Netflix, Hulu, or HBO Go. It’s one of the hottest trends in digital media and allows users to opt-out of traditional cable or satellite pay TV services like Comcast or Time Warner.   

How do you access OTT services? The term “Netflix and Chill” likely conjures up images of a millennial streaming content on their TV, laptop, or smartphone—but these only constitute a small slice of the OTT-device pie. Other less popular OTT devices include PlayStation, Google Chromecast, Roku, and Apple TV. 

What Does it Mean for Basic Cable? 

Many industry experts agree that OTT has contributed to the decline in popularity of traditional, basic cable. For example, Deloitte’s recent report, The Future of the TV and Video Landscape by 2030stated that “We see digital platform companies as the major disruptors in the future TV and video market. By contrast, broadcasters and content producers face the greatest pressure for change.”  

To maintain large market shares, cable companies have begun adapting. Industry giants are making plays left and right to establish or purchase their own streaming services. Disney recently announced the arrival of its hotly-anticipated Disney+ streaming app after acquiring popular streaming-service, Hulu. NBC Universal announced plans to launch a new streaming service uniting their multiple channels under one umbrella. Viacom, formerly known as MTV networks, recently took control of streaming service Pluto TV. The list goes on and on and on… 

The Explosion of OTT Advertising 

Advertisers are pouring more money into OTT than ever before. When OTT’s ad revenue forecast was exceeded in 2018, projections were revised for 2019 OTT ad earnings—resulting in an estimated 39% growth to $3.8 billion in 2019 and 31% growth to $5 billion by 2020. Why is OTT advertising so popular? Because of its lengthy list of perks including:  

  • Exposure. Unlike cable’s on-demand services, which allow viewers to record content and fast-forward through commercials, OTT ads cannot be skipped. They must be viewed to completion for a user to reach his or her desired content. 
  • Analytics. Many OTT platforms provide data analysis services. Advertisers can track ad engagement and performance in more nuanced ways than was possible with linear TV ads. 
  • Visuals. OTT advertisements are also 100% viewable—they expand to fit the full size of the user’s screen. 
  • And More! Other benefits include more flexible budgeting, higher quality creative, and better audience targeting.  

Advertisers aren’t the only ones profiting from OTT. During the era of cable TV, niche TV providers only received a small slice of a subscriber’s monthly cable bill. Now, they have the power to target users directly and charge more for their content. 

Making the Most of OTT 

If you’re an advertiser looking to take advantage of all OTT has to offer, consider following these steps to get started:  

  1. Determine Audience Criteria and Targeting. Targeting capabilities vary depending on what OTT inventory you use, so consider how your targeting parameters might affect your audience or KPI for a given campaign.  
  2. Decide Where to Buy OTT. Advertisers can purchase OTT inventory through publishers or platforms. Purchasing from a publisher enables companies to promote their ads besides specific content categories while purchasing through a platform allows advertisers to access a broader range of content.  
  3. Create High-Quality and Customized Assets. When designing ads for OTT, it’s important to remember that everything from picture, sound quality, call-to-action, and more need to be created with the big screen in mind. Advertisers should also keep in mind that most OTT ads don’t have a click-through option.  
  4. Understand Data Performance. Learn how to understand and measure campaign performance. Neilsen and Comscore recently introduced a consistent set of gross rating point (GRP) metrics that advertisers can use to compare OTT to linear TV. 

Want help getting started? U.Group’s media capabilities include OTT, and we’d love to help you figure out how it can work for you. Contact us here.    

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