The term ‘OTT’ is becoming increasingly prevalent in today’s rapidly evolving media landscape. But what is OTT? OTT, or Over-The-Top, describes a streaming media service that delivers movies, TV shows, and other content directly over the internet. This means that you don’t need to subscribe to a traditional cable or satellite TV service to access this content.
In the marketing world, OTT meaning extends beyond content delivery–representing a new frontier for advertising. So, what is OTT marketing? It’s the practice of serving ads via these streaming platforms, allowing advertisers to reach their target audiences in more precise and data-driven ways than traditional TV advertising. How does OTT work for marketers? Essentially, it allows for targeted, measurable, and interactive advertising that can be fine-tuned in real-time, much like other forms of digital advertising. It’s a game-changer in the advertising industry, redefining what it means to connect with audiences through the power of video.
As the name suggests, OTT (Over-the-Top) content is any kind of content delivered over the Internet without a traditional cable or satellite TV subscription. This could include anything from catch-up TV and on-demand movies to web-based audio and video content.
The great thing about OTT content is that it offers users a lot more choice and flexibility than traditional TV packages. You can watch what you want when you want and on whatever device you want. This is mainly due to this distribution channel’s ability to leverage the internet to provide content rather than traditional cable or radio-centric methods.
What is OTT (Over-the-Top)?
OTT, or “over-the-top,” refers to delivering audiovisual content over the Internet without needing a traditional cable or satellite television subscription. This type of content is typically accessed through apps or websites on smart TVs, smartphones, tablets, and other internet-connected devices.
Some examples of popular OTT services include Netflix, Hulu, and Amazon Prime Video. These services offer a wide range of content, including both traditional television programming and exclusive, internet-only content.
One of the key advantages of OTT is its convenience and flexibility. With OTT, users can watch their favorite shows and movies anytime, anywhere, and on any device. In addition, OTT subscriptions are often more affordable than traditional cable or satellite TV packages.
Overall, OTT is a major disruption to the traditional television industry and changes how we consume audiovisual content. It offers a convenient and flexible alternative to traditional TV but also brings its own set of challenges for both content creators and consumers.
OTT content can be viewed on various devices supporting streaming capabilities. This includes smart TVs, computer devices, smartphones, tablets, and more. One can also view OTT content whilst training on “Smart Treadmills,” which have started appearing in gyms. The variety of devices it is available on means that OTT-delivered media has a very large audience.
In the past, scheduled programming would announce timings for individual programs through a TV guide or ads between different contents. Through OTT, the user can choose whatever media they wish to stream. One can also be recommended content personalized to their liking based on their preferences and activities within the OTT website/device.
Given that the choice dynamic has shifted in favor of consumers rather than producers, another thing to note is that users have the freedom to choose what they want when they want it. A Netflix user does not need to wait till a certain hour to view their favorite TV show or film. They can labor through a hard day’s work and at the end, flop onto the couch and watch whatever they’d like. Consequently, OTT replaces what we know as linear content scheduling.
What is OTT Advertising?
OTT advertising is a form of digital advertising that uses internet-connected devices to deliver targeted ads to consumers. OTT stands for “over-the-top,” which refers to the delivery of content (in this case, ads) over the internet, without the need for a traditional cable or satellite TV subscription.
How Does OTT Advertising Work?
OTT advertising works by serving targeted ads to consumers based on their online behavior. Advertisers can use data from a variety of sources, including social media, search engines, and website visits, to target their ads to the right people. When a consumer sees an ad on an OTT device, it is typically in the form of a pre-roll ad, which is an ad that plays before the main content. These ads can be skipped after a certain amount of time, but they cannot be blocked unless the user has a 3rd party ad blocker installed on their device.
What Are the Benefits of OTT Advertising?
There are many benefits of OTT advertising, including:
OTT devices are in nearly 60% of American households, which gives advertisers a wide target market to reach. Most media consumers are flocking toward OTT devices and platforms for their consumption needs; read below for more information regarding OTT-related statistics.
OTT advertising allows advertisers to target their ads to specific consumers based on their online behavior by use of behavioral targeting. This may be subject to the user accepting/rejecting cookies upon visiting the OTT site.
OTT ads can be seen multiple times by the same consumer, which increases the likelihood of them taking action due to frequent exposure.
What Are the Challenges of OTT Advertising?
There are a few challenges to consider when it comes to OTT advertising, including:
Some consumers may use ad blockers, which prevent ads from being seen. This can be perilous for platforms that depend on monetization for revenue.
As mentioned previously, OTT ads can be skipped after a certain amount of time.
There is a lot of competition for attention on OTT devices, so advertisers need to make sure their ads are well-crafted and relevant.
What’s the Future of OTT Advertising?
The future of OTT advertising looks bright. Ad spending on OTT is expected to grow at a rapid pace in the coming years, as more and more advertisers shift their budgets to this effective and efficient form of advertising. Here are some interesting stats about the outlook of the OTT industry:
- An estimated 3.3 billion people will view an OTT video in 2025.
- 3 billion people will be using messaging apps by 2022.
- Skype users will hit 2.4 billion users by 2024.
- The number of active mobile devices will increase by 2 billion to hit 18.2 billion by 2025
- Global smart TV ownership will exceed 50% in 2026.
- Global average wifi speeds have doubled from 2019 to 73Mbps in 2022.
OTT Ad Spending
- OTT video ad spending will almost double from $34 billion in 2020 to $63 billion in 2025.
- Podcast ad spending will double from 2019 to 2024 and surpass $2.4 billion.
- (Non-OTT) Broadcast TV ad spending is set to remain stagnant at $65 billion/year for the foreseeable future.
Cord-Cutting Culture Making Way for OTT Media
Cord cutting is a growing trend, especially among millennials. More and more people are ‘cutting the cord on cable TV and opting for OTT providers such as streaming services like Netflix, Hulu, and Amazon Prime. The reasons for this trend are that streaming services are much cheaper, offer more options in terms of content, and also give more flexibility and convenience to consumers than cable TV.
Advertisers will be delighted with the cord-cutting trend as OTT advertising is far more efficient and effective than traditional cable and radio forms of advertising. Additionally, as mentioned before, this means the ability to target more and more users through the extended reach that OTT platforms offer. However, for OTT websites, personalized targeting may take a hit as third-party cookies are slowly set to be phased out by Google in 2024.
Consumer behavior itself has changed quite a lot since the ’80s and 90’s when the ubiquitous VHS player burst on the scene; It would allow users to watch shows at times better suited to themselves, and to fast forward through ads and watch their favorite shows without having to wait. Since then, OTT media has evolved thanks to the increased number of screens at our disposal, the ample infrastructure (increased bandwidth) required to stream content and the vast stockpiles of content to watch or listen to.
It is official, the shift from traditional media channels to OTT is now in full swing; this means it is important to keep a finger on the pulse of this industry in order to plan one’s marketing strategies. To make the most of this ongoing trend, keep in mind that:
- Consumers now have the autonomy to choose OTT rather than cable-based media channels
- OTT content consists of more than just video, it also encompasses audio, messaging and voice calls as well.
- Continually growing infrastructure such as internet speeds is facilitating the pace of “Cord-cutting Culture” as more people shift to OTT platforms
- Growing the OTT target market is good for advertisers, but as more and more advertisers shift their focus onto OTT, the competition is bound to increase ad costs.
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