What is OTT and How Will it Benefit Your Business?

Michael Strickler

Michael Strickler About The Author

Aug 27, 2020 8:55:00 AM



OTT media has become extremely popular over the last few years. One study performed at the start of 2020 found that there was a ratio of 1.64 OTT subscriptions per 1 household in the United States, and 1.32 subscriptions per 1 household in Canada. This figure underscores how prevalent OTT consumption has become among the general public. Of course, OTT's popularity boom means that many companies are now investing their resources into OTT advertising.

So, Exactly What is OTT?

OTT is short for over-the-top television. It refers to video content that is distributed to customers online, instead of over a cable network or through a satellite provider.

OTT content can be subdivided into 3 basic categories:

  • Ad-based video on demand (AVOD for short). In this OTT model, providers generate revenue by selling ad space to outside companies.
  • Subscription-based video on demand (SVOD). SVOD frameworks typically enable OTT providers to offer their customers an "ad-free experience," since their revenue comes from customer subscriptions.
  • Transactional video on demand (TVOD). Similar to "pay per view" cable offerings, TVOD models allow customers to pay for a specific piece of content instead of an entire service or channel.

Hulu provides an instructive example of what "hybrid OTT models" look like. It offers its customers two subscription options: one for $5.99/month, which includes ads, and another, ad-free plan for $11.99/month. Of course, some OTT providers (like Netflix) are purely SVOD-oriented, whereas others (like Roku) are largely AVOD-driven.

Why is OTT So Important?

OTT advertising has become an important piece in the marketing strategy for many companies since more and more consumers are accessing their preferred news and entertainment sources through streaming services and other OTT channels.

Even though traditional TV advertising is still effective in its own right, convenience is a big factor in the trend towards OTT media. Today's consumers want to have it all and have it right now. In other words, they want to access content whenever they feel like it, and on whichever device is currently in front of them. Interestingly, studies have found that the average consumer of OTT media owns at least three devices that can be used to access OTT content, subscribes to three different OTT services, and spends a greater amount of time watching OTT content than they do driving a car or talking to friends and family.

Another common expectation from consumers is that ads won't be too pushy or sales-driven. Many OTT users are more susceptible to content when it's delivered in a subtle, even personalized way. In fact, many providers offer advanced customization options to both users and advertisers. These options promote a highly personalized ad-viewing experience that keeps viewers engaged with sacrificing a golden marketing opportunity for outside companies.

Consumers generally view OTT media services as less disruptive to their overall experience. They also consider OTT content to be more personalized than other forms of media. OTT providers often benefit from high customer satisfaction levels and pass those benefits on to advertisers. In turn, advertisers are in a better position to incorporate OTT ads into overarching marketing campaigns. In fact, studies indicate that the launch of streaming and traditional ads in tandem may increase ad recall by 34%.

How OTT Can Help Your Business

As the above information demonstrates, OTT advertising can be a powerful marketing tool. Of course, this is not merely a theoretical concept; OTT can drive real-world results for your business, too. Here are just a few of the benefits that OTT advertising can yield for your company:

  • More interactions with your customers. Since OTT users are able to consume content on their own terms, OTT advertising allows you the opportunity to interact with prospects across a broad spectrum of times and places. 
  • A wider reach. An analysis from Roku projects that by the year 2025, about 60 million American households will use streaming channels to the exclusion of more traditional mediums. Of course, only time will tell if this prediction is accurate. However, an increasing number of consumers have already decided to "cut the cord" and use OTT providers instead of cable networks.
  • Increased ad engagement. Unlike traditional TV commercials, OTT ads are often "clickable;" in other words, consumers can directly click on ads for a redirect to the advertiser's landing page. This feature by itself prevents a lot of the friction from older forms of marketing that prospects would have to navigate in order to convert.

In the final analysis, OTT advertising can be a powerful weapon in your "marketing arsenal." It can offer a wider reach than other marketing channels, higher levels of user engagement, increased interactivity, and less "intrusiveness" into the lives of your target consumers. You should consider incorporating this marketing channel into your overall strategy. If you need assistance, reach out to an experienced media partner for help in developing and deploying this powerful tool.

Topics: Streaming & OTT