What is OTT? How Connected TV Advertising can Help Reach a New Generation of Viewers

Connected TV Represents A Changing Space

It’s no secret that more and more people are choosing to ‘cut the cord’ by cancelling their subscription to traditional cable TV service. In fact, “cord-nevers” is a term describing a new generation of TV viewers who have never paid for cable TV and who instead rely on other video providers and streaming services to access their favorite movies and shows.

Often, these viewers are opting for Connected TV, a system that delivers “over-the-top” (OTT) video content, or content that is streamed via an app or website over a broadband network that isn’t owned by the video provider itself. OTT content can be viewed on a Smart TV that facilitates the delivery of internet-based video content, or it can be streamed through a separate device that connects to a TV such as an Xbox, Playstation, Roku, Amazon Fire TV, Apple TV or Chromecast.

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How Viewers Watch on Connected TV and OTT Devices. Source: Centro

According to the Leichtman Research Group, 69% of US households watch video via Connected TV. Furthermore, a total of 78% of viewers feel that streaming OTT content is a better or equal experience to traditional TV service. Statistics like these make it no surprise that the top OTT streaming services (Netflix, Amazon, Hulu) are dominating screen time by allowing users access to nearly unlimited content at lower cost subscriptions compared to traditional cable. Traditional TV ratings are declining and the major networks have been looking for new ways to reach a larger audience and monetize their content.

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Reach Keeps Growing Against all Demos. Source: Centro

 

OTT Advertising & Benefits of Connected TV

As Connected TV first became prominent, advertising opportunities were somewhat limited, as non-ad-supported platforms like Netflix and Amazon dominated the market. However, as more content providers are added to the mix, supply for ad placements on Connected TV has begun to surge. For example, in the first half of 2017, ad-supported hours streamed on Roku devices grew to 2.9 billion hours, which is a 76% increase compared to the first half of 2016.

Now that the inventory is there and more viewers are willing to watch ads in exchange for lower subscription costs, the benefits of OTT advertising are becoming clear.

Enhanced Targeting Options

Compared to traditional TV which generally only allows for targeting based on basic demos or designated cable zone geographies, Connected TV provides more household addressable targeting options. Instead of buying TV spots that are delivered to thousands of households with viewers in or outside of the target audience, OTT allows you to buy impressions and serve different creative messages to different households.

Premium, Brand-Safe Environment

Connected TV ads are shown to viewers who are typically watching full episodes, live TV, and other live or long-form HD-quality content. There is a reduced risk of fraud because it’s typically closed, controlled ecosystem.

One Hundred Percent Viewable

As opposed to desktop or mobile, in-stream video ads on Connected TV run full-screen, just like traditional linear TV ads — and skippable ad options are limited. This means advertisers will see very high completion rates and don’t have to be concerned with viewers skipping their ads. There is currently no established industry standard or measurement solution for viewability on Connected TV, but ad placements tend to be 100% viewable because there is no player to minimize or scroll past nor is there an opportunity to click to another tab like with desktop or mobile.

Less Clutter, More Memorable Ads

Beyond the opportunity to run in-stream video ads of standard lengths like :15s and :30s, interactive versions can also be run with select partners to drive stronger ad recall and engagement metrics. Furthermore, ad pods are shorter than live TV, leading to fewer “commercials” airing and more memorable ads.

Reach Multiple Engaged Viewers

Unlike the one-to-one experience of desktop and mobile, Connected TV often reaches multiple co-viewers in a household. Furthermore, these viewers are typically more actively engaged because they have to select their content of choice as opposed to traditional TV where viewers often tune in to content that’s already airing.

It’s Time for Marketers to Designate More Ad Dollars to Connected TV

Viewers’ means of watching may have changed, but their appetite for video content is still growing. Marketers are in an ideal position to refine video campaigns and include Connected TV in their mix to deliver messages in a premium video environment that marries the branding power of TV with the more addressable targeting capabilities of digital video. With the number of households currently using Connected TV continuing to rise, brands should tailor their approach now to capitalize on this trend and avoid missing out on the opportunity to follow the viewers’ lead.