What's the Difference Between CTV and OTT Advertising?
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Pathlabs Marketing |
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October 11th, 2023 |
Some concepts, such as programmatic, are challenging to grasp in digital advertising.
Among these concepts are Over-The-Top (OTT) and Connected Television (CTV), which are particularly perplexing. While many discussions touch on these superficially, diving deeper reveals their distinctions are not so clear-cut.
This blog post aims to shed light on the differences between OTT and CTV.
What’s the Main Difference Between OTT and CTV?
Over-the-top (OTT) refers to the delivery of video streaming content via the Internet, bypassing the need for traditional cable boxes or satellites.
Connected television (CTV) represents a category of TV devices with internet connectivity that can access and display this video streaming content.
OTT video streaming content can be displayed on multiple devices connected to the internet, including mobile phones, laptops, tablets, and desktops, in addition to connected TV devices.
To simplify:
OTT: Think of it as a model where video streaming content is delivered to various devices via the internet.
CTV: Consider it a category of TV devices equipped with internet connectivity to display OTT video streaming content.
“Traditionally speaking, OTT refers to advertising on long form content (think streaming) that is delivered specifically through hardware connected to a TV. This hardware could be gaming consoles like an Xbox, or streaming devices like a Roku or Firestick. Over time, this industry has shifted from OTT, referring to a channel delivered over specific hardware, to just the channel itself.
Thus, OTT video streaming content can be displayed on multiple devices connected to the internet, including mobile phones, laptops, tablets, and desktops, in addition to connected TV devices, and doesn’t necessarily need to be delivered through a device like those mentioned above. ”
Understanding OTT Advertising
What Is Over-the-Top (OTT)?
Over-the-top, often called streaming TV, is the delivery of video streaming content to user devices via a connection to the internet.
OTT advertising involves placing ads in front of users who are streaming OTT video content on their internet-connected devices.
How Did OTT Come About?
Before OTT emerged, people primarily watched video content from their traditional linear TVs at home. These television sets connected to set-top cable boxes or satellites to access and display this content.
OTT has revolutionized this conventional approach. With OTT, the same video content, such as TV shows and movies, is delivered to users, however, without cable boxes or satellites. Instead, this content is streamed via the internet to user devices, going “over the top” of the traditional linear TV model.
Various devices like smartphones, laptops, tablets, desktop computers, and connected TVs can access and display OTT video streaming content. These devices use the internet to connect to OTT streaming service providers, which provide the actual long-form video content for display.
OTT Services and Platforms
Prominent OTT video streaming service providers include:
Netflix
Amazon Prime Video
Hulu
Disney+
Peacock (by NBC)
HBO Max
Paramount Plus
The way advertising teams field OTT ads varies. Many work with OTT service providers to establish direct deals, while others leverage self-serving platforms to buy OTT ad space and place ads.
Companies and services that offer OTT advertising options are:
The Trade Desk
Amazon Ads and DSP
Hulu Ad Manager
NBC Ads
StackAdapt
Benefits of OTT Advertising
Reaching Cord Cutters
Cord-cutting is the phenomenon where users transition from using the linear TV model to fully embracing streaming, using internet-connected devices to display OTT content.
Statista reports that in 2023, Streaming TV/OTT is more prevalent than cable and broadcast. This means audiences are “cutting the cord” more than ever, making OTT a prime space to place ads and begin targeting users.
Video On Demand and Cross-Device Reach
OTT offers users a more responsive video consumption experience than linear TV. Users aren’t limited to watching video content from their homes and don't have to rely on a broadcast schedule to watch what they want.
With OTT, users just need a device and the internet, which allows them to access this video streaming content wherever and whenever they want.
This increases the amount of time users spend watching OTT content on their devices, creating more opportunities for ad placement. Additionally, advertisers can reach users across different devices, creating additional touchpoints for engagement.
Drawbacks of OTT Advertising
Technical Adoption
Adoption of devices that connect to the internet and access OTT video streaming content has been widespread. However, many audiences still primarily watch linear TV and don’t engage with OTT streaming content on their devices. Morning Consult Pro, for instance, reports that 39% of baby boomers and 26% of millennials and Gen Xers still adhere to the traditional TV model. This maintains traditional TV as a channel certain campaigns must include.
Tracking and Attribution
Users viewing OTT content on multiple devices create more touchpoints within the marketing funnel that advertising teams must track. If they field an OTT ad that appears on a mobile phone, desktop, and CTV, they will need a robust mechanism to determine how each impacts ultimate user action.
OTT Subscription Prices
For users, it can become quite expensive to access OTT services. In fact, MNTN research reported that the average user spends a collective eighty-plus dollars a month just to subscribe to their favorite OTT services like Netflix, Hulu, and Peacock. This high price deters certain users from accessing OTT content, limiting opportunities for advertising teams. Breaking Down CTV Advertising
What Is Connected TV (CTV)?
Connected TVs are television devices that connect to the internet and can display OTT video streaming content. In CTV advertising, teams target ads specifically to users on these CTV devices while they stream video content.
CTV Devices
The following are considered CTV devices.
Smart TVs
Televisions with built-in internet connection, allowing users to plug the device into the wall, connect it to the internet, and stream video content.
Streaming Sticks and Devices
Add-on devices for non-internet-connected TVs, providing internet connectivity to display video streaming content.
Gaming Consoles
Devices with built-in internet connection that allows video game playing and streaming video content.
Advantages of CTV Advertising
High Potential Market
According to Statista, 88% of American households own at least one connected TV. With so many users engaging on these devices, this creates an attractive opportunity for advertisers to tap into.
High Engagement Opportunity With Video
A significant portion of CTV ads use video as the primary medium. When advertisers skillfully craft this video ad content to be immensely engaging within an ultra-short period, it can effectively draw users' attention. This is, however, easier said than done.
Limitations of CTV Advertising
CTV Only Emcompasses TV Devices
CTV only encompasses TV devices that connect to the internet and can stream OTT video content. While these devices have broad reach, some advertisers may still require targeting other devices or channels to meet their goals.
Tech Investment
CTV devices and add-ons can be quite expensive, especially fully integrated smart TVs and game consoles. This, too, creates a barrier for advertisers to reach specific audiences.
Creative Development
As mentioned, the primary medium for CTV ads is video. This content must have visual quality and effectively represent the brand in sixty, thirty, fifteen, or even six seconds. This creative development can be challenging and expensive, often requiring additional partnerships or deals.
Comparing CTV vs OTT Advertising
Programmatic Ad Buying
Programmatic buying works similarly in both CTV and OTT advertising. Advertisers can use programmatic technologies to buy ad space and place ads, while many also directly work and negotiate with OTT providers for ad deals.
Content Delivery and Distribution
Content delivery and distribution differ between CTV and OTT. CTV involves video streaming content delivered only onto internet-connected TV devices, like smart TVs. While with OTT, this content can appear on a broader range of devices, including mobile phones, tablets, and computers.
Advertising Inventory and Access
According to Clear Code, a significant portion of CTV and OTT ad inventory buying occurs through direct deals or private marketplaces due to limited inventory supply. This makes it harder for smaller teams to access prime inventory. Nevertheless, more self-serve platforms like Hulu Ad Manager have surfaced, permitting teams a path of entry.
Targeting and Personalization Capabilities
Platforms that deploy and track CTV and OTT ad campaigns have robust targeting and personalization capabilities. Advertisers can specify their target audience profile, and the platform will deliver ads to users that match the demographic, geographic, and behavioral data specifications. Furthermore, teams can serve different versions of ads to certain audience profiles.
Ad Formats and Interactivity
OTT advertisements typically offer more flexibility with ad formats and interactivity. They can appear on multiple devices, varying in size and length. Moreover, on devices like phones and laptops, users can often click on OTT ads and continue to navigate different web pages.
In contrast, CTV ads have more limitations. They typically occupy the entire CTV device screen and do not allow as much interaction afterward unless the user picks up another device to continue down the funnel.
Measurement and Analytics
Teams use measurement and analytics tools in both CTV and OTT advertising, as they want to know how their campaigns perform. Luckily, the technology used to run these campaigns track performance metrics, providing insight into user engagement and ROAS. However, the availability and granularity of these metrics may differ based on the tracking mechanism applied and the devices the ads appear on.
Which Is Better, CTV or OTT?
The choice between CTV and OTT advertising hinges on the specific campaign objectives and target audience. Some teams opt for CTV when they want to place ads in premium locations, directly reaching users at home, while others prefer OTT to extend their reach across multiple devices and platforms.
Ultimately, it's best to consider what you want the user to do after seeing the ad. If your goal is to leave a positive impression and boost brand awareness, CTV might be a suitable choice. On the other hand, if you intend to engage users and guide them further down the marketing funnel, you may want to explore different devices or alternative channel strategies.
The Future of CTV and OTT
CTV and OTT will likely continue to see widespread adoption due to this convenient model of streaming video content via the Internet, replacing the reliance on cables, satellites, and other hardware.
We can particularly anticipate the following developments in this field:
Heavy Competition Among OTT Providers
Currently, there are over 300 OTT service providers. As these providers continue offering users TV series, movies, and other video services, we can expect intense competition. We may witness consolidations, with larger OTT service providers like Netflix and Amazon Prime acquiring other services. Alternatively, we may see new OTT streaming services come about.
Device Innovations
Twenty years ago, we had no idea about the complex device technology we would have access to today with CTV and OTT. Looking into the future, these devices will continue to evolve and integrate, potentially making the current distinctions between OTT and CTV obsolete and necessitating updates to these concepts.
Integrations of Different Technologies
AI technologies will likely play a significant role in CTV and OTT advertising. These technologies can enhance targeting, personalization, and content recommendation, ultimately providing users with a more tailored and engaging experience.
Conclusion
Understanding the nuances between OTT and CTV advertising is essential in the digital advertising landscape. OTT delivers internet-based video content to various devices, while CTV targets specific internet-connected TVs for displaying OTT content. Each has its benefits and drawbacks, and the choice depends on campaign goals and audience behavior.
OTT advertising reaches cord-cutters and offers cross-device reach, but faces challenges in technical adoption, tracking, and subscription costs. CTV advertising targets a high-potential market, excels in video engagement, and offers robust targeting capabilities but is limited to TV devices and requires tech investment and creative development.
Future trends suggest fierce competition among OTT providers, evolving device technologies, and the integration of AI for enhanced personalization. The choice between CTV and OTT should align with campaign objectives and user engagement goals, recognizing that success varies based on context and strategy.
