As a result of the Covid-19 pandemic, the number of people streaming content in their homes has increased significantly. In the US, for example, 72% of all households can now be reached through in-stream OTT (over-the-top) advertising.

On top of this, viewing times have increased too. People are now watching streaming services as much as traditional television channels. In 2020, YouTube recorded a 90% increase in the number of people watching its content on TV screens for more than 30 minutes.

As consumer behaviour changes and audiences move online, advertisers are following. OTT advertising spend rose by 70% last year, making it a staple of everyday life for both marketers and spectators.

What is OTT Advertising?

OTT advertising is delivered to internet users through video streaming services and devices.

While OTT ads are similar to television ads in terms of format, they are more sophisticated because they offer data-driven targeting and personalisation.

In the same way that streaming has disrupted traditional broadcasting, OTT ads are disrupting TV advertising. OTT, which stands for over-the-top, indicates the fact that these ads sidestep traditional channels to reach audiences directly.

What are the Benefits of OTT Advertising?

Like TV advertising, OTT ads are a great way to build brand awareness for your brand. But they come with other benefits and uses too.

1. They’re More Cost-Effective

OTT advertising costs less than traditional cable or satellite advertising. Plus, because you’re not limited by set schedules or pre-defined geographic locations, less of your advertising spend is wasted on presenting ads to irrelevant audiences. So this means you get more bang for your buck too.

While some streaming platforms offer set impressions for a set price, platforms like Hulu offer a self-serve bidding system similar to that of Google Ads. A $500 investment is enough to launch a campaign. This means OTT ads are accessible to smaller brands, including those who can’t afford to run a TV campaign.

2. Better Targeting

Targeting options vary from platform to platform, but most of them allow you to build an audience based on demographics, location, device, interests and behaviour.

This means you can present your OTT ads to relevant audiences, which is more likely to boost conversions, brand awareness and recognition. According to eMarketer, 58% of advertisers say the biggest benefit of OTT ads is their targeting capabilities.

3. Dynamic Ad Options

You can automatically change your ad’s content depending on who is viewing it. Providing a personalised experience is more likely to influence your audience’s behaviour and should improve the overall outcomes of your campaign.

With the help of technology like device fingerprinting, website retargeting and IP retargeting, it’s also possible to retarget your audience across a variety of channels. So if someone checks out your website, you can present them with an ad when they turn on their smart TV.

Brands who invest time in creating custom audiences and personalised content can use OTT ads to improve performance at any stage of the sales funnel.

4. Higher Engagement Rates

Of course, with improved targeting and personalisation, your OTT ads are going to engage more viewers than traditional television ads. But there’s much more to it than that.

Many television ads aren’t actually seen, because viewers are too busy checking their phones, making tea or going to the bathroom. In fact, 29% of TV ads aren’t considered viewable as there’s nobody in the room when they’re on.

On the other hand, OTT ads fully engage viewers because they are short and non-skippable. On most platforms, ad blockers don’t work either.

As OTT advertising gains traction, platforms are continually improving their advertising features too.

Challenges of OTT Ads

Because OTT ads are relatively new, there are some teething problems associated with the medium. Here are some of the challenges you should be aware of.

Limited Tracking

Reporting lags behind other online platforms and, according to eMarketer, these measurement challenges have stifled investment in OTT ads in recent years.

Tracking is difficult because OTT ads aren’t clickable and, unlike web browsers, OTT devices can’t use cookies or tracking pixels to track your audience and attribute conversions.

This means advertisers can’t track the journey of their users like they would with PPC ads on Google or Facebook. They can’t always see where their ads are appearing either.

While there are advanced tracking options available, like the device fingerprinting and IP retargeting mentioned above, these require extra effort to implement and only offer limited insights.

Recent research suggests that 57% of the homes embracing connected TV own at least three streaming devices. On top of that, each member of the household uses multiple streaming services – each with their own account or profile. Right now, there is no tracking tool to unravel these complex scenarios and tell you exactly who has seen your ads.

Fragmented OTT Providers

In Tubi’s latest audience insights report, two-fifths of marketers said they were unclear about how streaming-based advertising worked. This isn’t surprising because there are lots of different ways to do it.

Right now, there are more than 300 OTT streaming services available in the US. While the likes of Netflix are ad-free, many others offer OTT advertising options.

You can advertise on free-to-watch news platforms like Crackle, Cheddar or Newsy. Then there are streaming services for TV series and movies, like Tubi, Hulu and Roku. There’s also live TV options like YouTube TV and Sling.

Because there are so many platforms all using different business models, things can get confusing and complicated for advertisers.

How Are OTT Ads Delivered?

OTT ads are presented to viewers through streaming services or devices like HDMI sticks, smart TVs and game consoles. There are two ways these ads can be added to streaming content and your options will depend on the platform you choose to advertise with.

OTT Ad Insertion Methods

  • Client-Side Ad Insertion (CSAI): With CSAI, OTT ads need to load on a user’s device before being played. This can lead to buffering, freezing and, perhaps, a frustrating experience for viewers. Because these ads are separate from the content being streamed, ad blockers may also work on them.
  • Server-Side Ad Insertion (SSAI): With this insertion method, ads seamlessly become part of the core content. There’s no freezing, buffering or ad blocking with SSAI. Large OTT providers, like Hulu and Sling, use SSAI – which is also referred to as ad stitching.

Before choosing your OTT ad provider, it’s worth investigating which ad insertion method it uses.

How to Get Started with OTT Advertising?

This process will vary depending on the ad provider you choose but, usually, there are the five steps involved in launching an OTT ad campaign.

1. Create Your Ad

Most platforms, like Roku and Tubi, accept ads that are 15-30 seconds long, so you’ll need to keep your video short. Although you should check each platform’s individual ad specs for ideal length, size, aspect ratio and file size. You may also need to include a branded companion banner.

It’s also a good idea to create a variety of videos to target different personas and demographics, as well as people in different stages of the sales funnel

2. Tag Your Videos

Make sure your video looks good on any device and use VAST tags so different video players will know how to handle your ad. This is particularly important if your ad will be used across multiple ad servers.

Some platforms also facilitate VPAID tags which provide better performance tracking. They also allow you to add interactive features and extra personalization to your ads.

3. Create an audience

You can choose the age, gender, location and interests of the people you would like to target. In some cases, you can also choose the genre of shows they watch or even a specific TV programme that you’d like to target.

Once you’ve created your audience, your chosen platform will start matching your audience with real-life users.

4. Ads Start Running

Your ads will be displayed across your provider’s OTT platforms. Your VAST or VPAID tags will interact with the platform’s video player to ensure your ad appears correctly.

5. Reading Your Reports

Most OTT providers send back data on impressions and costs, which is then put into a report for advertisers. They sometimes include third-party data too. Your VAST and VPAID tags may be able to collect extra information on ad interactions, such as mutes, pauses, full screens, replays and completion rates.