Сable TV with a fixed program and ad you can’t skip is our past. In the United States, the percentage of people who have never used cable television, have turned it off or are going to do so shortly is 64%.
According to Comscore’s “State of OTT” report, the number of OTT services has grown significantly since the start of the COVID-19 pandemic. The consumption of hours of OTT content has increased in general for both home and available viewing. In the US, 69.8 million consumers were using OTT in April 2020, up 5.2 million from April 2019. On average, one consumer viewed 102 hours of OTT content, a 20% increase over the previous year.
And it makes sense because we have CTV, YouTube, Netflix and, eventually, the Internet, which allows us to see what we want wherever we do it. First of all, let’s see what CTV and OTT are.
WHAT ARE OTT, CTV AND SMART TV?
These three terms are easy to confuse. Their meanings are similar and differ precisely in the technical component.
OTT is a service providing video over the Internet to all devices. The abbreviation OTT means “over the top”, which means that content is provided not by cable or network but by the Internet. Content that initially made it onto TV screens via broadcast, cable, or satellite became available online. According to the forecast of Statista, in 2021, 30% of the world’s population will use OTT video, especially in countries like Australia, Canada, Germany, Italy, the UK, and the US.
OTT includes authenticated apps, AVOD, MVPD, TVOD and SVOP.
- Authenticated Apps are streaming apps owned and operated by a cable or TV network and make streaming content available.
- AVOD (“Advertising-Based Video on Demand”) is free video content, where consumers need to sit through advertisements. You can see AVOD in action when watching YouTube or a free streaming service.
- MVPD (“Multichannel Video Programming Distributor”) is a service that distributes or provides multiple television channels. The customer subscribes to a package with several channels — for example, providers in the US like Comcast, DISH, DirecTV, or Verizon, AT&T.
- TVOD (“transactional video on demand”) is the opposite of subscription video, where consumers pay for each type of content. For example, Apple’s iTunes, Sky Box Office and Amazon’s video store.
- SVOD (“Subscription Video on Demand”) SVOD is like a traditional TV channel's package for a fixed price per month. The difference is a consumer can search and reach needed content. For example, HBO, Disney and Netflix all are SVOD types.
The last four are the main models for monetising OTT services. Some sources think that subscriptions have already reached their potential maximum, so it is expected that the monetisation services will grow at an even faster rate in the coming years.
CTV stands for “connected TV”, an ecosystem of devices connected to the Internet: Smart TVs, game consoles and Set-Top-Box (TV box).
- Smart TVs is a TV with a connection to the Internet. Allows you to connect to various streaming platforms or services by installing certain apps or watching video content via a browser app.
- Game consoles are new era game consoles connected to the TV screen and internet streaming services.
- Set-Top-Box (TV box) is a cable box that connects a TV to the internet and gives access to streaming services.
ADVANTAGES OF CTV OVER CABLE OVER TV?
The first version of the familiar television we used to watch was invented almost 100 years ago, and it’s expected that now it doesn’t fit the high-speed and demanding modern world.
For comparison: traditional television broadcasts 12 minutes of advertising every hour. At the same time, the same ads are watched by the entire audience of the channel without considering demographic data and interests. Also, CTV-customer can search and choose exciting content. For marketers, CTV allows targeting narrow segmental circles, which results in personalised and relevant advertising that meets the interests of a specific audience, does not irritate it, and, as a result, most often leads to the performance of targeted action.
From the advertiser’s point of view, the rise in consumption of online video content opens up new perspectives in TV advertising. It is not surprising since CTV and OTT advertising has many strengths and differentiators that appeal to businesses of all sizes. For example, CTV has a low advertising noise, very high inspection rates (for videos up to 10 seconds, almost 100% of inspections), the possibility of deep analytics and it does not annoy users.
ADVERTISING OPPORTUNITIES
The main ad format on CTV is video, including in-stream, out-stream, pre-roll, mid-roll and banners. Video ads are the most impressive video format because they quickly engage the audience and retain attention as they cannot miss them. On the other hand, the main benefit of OTT ads is that they can click on them, and the user can interact with the advertisement.
There are three terms in OTT and CTV advertising:
- Addressable TV Advertising
It can show advertisements to different families, even when they are watching the same program. Advertisers can go beyond large-scale traditional TV ad purchases with targeted advertising and focus on relevance and engagement. - Connected TV Advertising
Video advertising delivered through any content streamed from a video provider via a device connected to the internet. - OTT Advertising
Video advertising delivered through any content streamed from a video provider’s app on a TV via a device connected to the internet.
ADVANTAGES AND DISADVANTAGES OF ADVERTISING ON CTV AND OTT
Rich targeting options
One of the greatest strengths of CTV advertising is its many targeting features. It is starting from geolocation and Internet searches to preferences in the genres of the content being viewed. Companies can easily reach the most relevant consumers with many targeting options by using the best and most engaging video formats and increasing the number of views for each ad.
100% visibility
Of course, video ads, unlike TV ads, can be skipped by clicking on the cross. But this task is not the easiest one, since if the user is watching content on the TV, then click on the cross in the right corner using the remote control. And since targeting advertising meets the audience’s interests, the desire to skip advertising is much less.
Deep Data Analysis
CTV and OTT ads have more accurate tracking and many measurement options. Advertisers can use software platforms to collect and analyse all kinds of statistics and data to measure each ad campaign’s exact outcome. Advertisers can show metrics on the perfect ad side, such as ad completion rates and the viewers’ actions after viewing ads, such as website visits and conversions. It helps improve the quality of advertisements in the future and optimise them in the present and test new creatives.
Of course, there are some disadvantages of CTV and OTT advertising too. Using this type of ads restricts advertisers in the context of displaying advertisements. For example, advertisements will not broadcast on local news programs, official sports broadcasts, or live broadcasts of state-owned media. There is also a limitation on ad formats in CTV and OTT, such as in the case of a CTV ad, a pass ban makes it more exciting, but it cannot be clicked on. In clickable OTT ads, the fact that the viewer can skip them is considered a disadvantage. That’s why these two formats often use together to maximise the diapason of the audience. All these disadvantages are likely to be eliminated over time because now these ads formats at the peak of their development.
RESUME
To summarise, ads on CTV will be broadcast only on the big screen (via the Internet). OTT advertising can appear on a large screen and a smartphone or tablet in the corresponding applications/sites.
The prospects for advertising are broad and limitless. The advantages allow for the displacement of traditional TV advertising in the future. With it, you can close all the gaps in cable TV and make ads available to 100% of the audience.
