What is OTT (Over-the-Top) Advertising?

The era of cable television is slowly coming to an end. They are slowly losing their market to streaming media in terms of reach and convenience. Video views on over-the-top (OTT) gadgets grew by 51.7 % in 2018, and the number is expected to continue raising.

According to a study by Allied Market Research, “the global OTT market is projected to reach $332.52 billion by 2025, growing at a CAGR of 16.7% from 2018 to 2025

Subsequently, traditional TV ads can offer a piece of their original content. Streaming is the new style of watching TV. OTT advertising may be the death of TV commercials.

What is OTT (Over-the-Top) Advertising? 1

What is OTT Advertising?

The term OTT is used in relation to any gadget or service used in streamlining digital content to a TV or similar device. Here is a list of common devices;

  • Game consoles
  • Smart TV (in-TV apps like HBO Go and Netflix)
  • Streaming Boxes (Samsung Allshare Cast, Amazon Fire TV, Apple TV).
  • Internet-enabled smart blue-ray/DVD players
  • HDMI sticks (Amazon Fire TV Stick, Chromecast, Roku).

OTT Advertising is similar to traditional TV; the only difference is that it is streamed to the media through OTT platforms. This technology is expected to make a big difference for marketers in both worlds in 2019 – the advantages of programmatic, and the growing reach of streaming services.

Ad revenue is expected to shoot to 60% from 45% over the next 10 years, with OTT. Early adopters of OTT advertising and AdTech pioneer are looking at impressive returns in the future.

A study carried out by eMarketer reports that “Connected TV (CTV) and OTT ad spending are expected to reach nearly $11 billion by 2021, up from nearly $7 billion in 2019.”

What is Connected TV (CTV)?

CTV is defined as TV sets connected to the internet through wired or wireless networks. While CTV is often confused with OTT, there are some differences. 


OTT and CTV have become an increasingly popular means of serving ad messages. 

CTV is an umbrella term and comprises of both, smart TVs and IPTVs as well as OTT devices linked to traditional TVs making them internet enabled. 

In the present day, OTT content can therefore be delivered through devices like smartphones, ipads, tablets, and computers.

Advertisers try to make up for the low or affordable subscription costs of popular OTT platforms like Amazon Prime, Netflix, Hilu, Roku, YouTube, etc through advertising. 

OTT offers complete viewability and ensures brand safety since ads are delivered on-demand. 

CTV, on the other hand, helps to reach customers who are hard to get through traditional advertising means. Additionally, it offers great targeting capabilities. Further, CTV results are quantifiable and you can measure them by checking the video completion rates.

Will there be Ads on Netflix?

Premium subscriptions such as Netflix are likely to continue being ad-free. OTT Advertising will be common in free-to-watch platforms like The Young Turks, Cheddar, Newsy and Crackle.

For individuals interested in Netflix-like content (documentaries, movies, and series) there are other choices such as Roku and Tubi.TV, among other country-customized platforms. The platforms offer free to watch Hollywood content (ad-supported) for their subscribers.

The growth and success of OTT advertising were recently reported after Hulu earned more than $1 billion from ads for its first time, and Roku’s business doubled last year.

There are very many companies currently competing for advertising opportunities. The competition is speculated to get stiffer with years with the growth of technology.

This strategy will allow producers of OTT platforms to serve their non-paying audience. By leveraging their advertising power, they can reduce the cost of their devices and keep a number of their contents free.

Why is OTT Popular and What Are Its Benefits?

Large Reach

A few years ago, OTT could not have boasted of a large reach as one of its strengths. However, it has developed over the years, and it is speculated to have 197.7 million monthly OTT users by 2022 in the US, with the number being 170.1 million in 2018. With the current data, it has more users than other platforms.

Strong Targeting

This is among the greatest strengths of OTT. As an investor, you can select the topics, geographic areas and demographics to advertise your products. This is not achievable in traditional TV, so it is definitely an upgrade. Reaching the correct audience leverages your advert. It increases the efficiency of your advert and saves resources that would have otherwise been used advertising for the wrong market.

What is OTT (Over-the-Top) Advertising? 2

A lady shopping for shoes after seeing an advert

Powerful Analytics

It is vital that you understand the performance and validity of the advertisement you are using to reach out to your clients. Many OTT platforms provide data analysis for their products. At the bottom are OTT Platforms that only give information on data and impressions. Most OTT platforms offer different types of data and can subdivide the information by placement or targeting.

Flexible Budgeting

When running any type of business; your greatest goal is to minimize the expenses and maximize the output. OTT ability to track the number of views and targeting makes budgeting flexible. That is, a limited number of impressions can be bought for a specific audience to maximize efficiency and minimize costs.

High-quality Creative

Lastly, it is possible to create quality videos to use on the OTT platforms. The latter is designed to stream quality content to viewers. Businesses can take advantage of this to deliver high-quality videos and deep messages that may not be otherwise easily conveyed to the audience.

OTT is the Only Reasonable Alternative for Traditional TV Commercials

It is right to say that the shift from traditional TV has not been bad so far. The cable TV audiences are now referred to as cord shavers, nevers, or cord cutters.

Nevers. These are people who have no interest in the medium. This group has never paid for premium channels or TV Subscriptions. However, at one point they will access media through various streaming services such as Hulu, Netflix, HBO Go or Amazon Prime.

Cord shavers. This group regularly pays for TV subscriptions, but for some reason, they have decided to cut down on their plans. Despite keeping some of their TV channels; they are constantly checking out streaming services.

Cord Cutters. As the name suggests, this group have completely cut down their subscriptions and may have shifted to streaming services.

The only way advertisers will recover their lost revenue and reach out to all these groups is through OTT advertising.

A study by Pew Research Center showed that 61% of Americans aged between 18 and 29, access TV through streaming services; only 31% use cable services. A small 5% watch TV through a digital antenna. The statistics for ages 50-64 on the same are; 10%, 70% and 15% correspondingly.

How Are OTT Ads Delivered?

Delivery of OTT is determined by how the platform communicates with OTT devices – for example through Video Player-Ad Interface Definition (VPAID) tag or Video Ad Serving Template (VAST) – and the ad-insertion method. They can be served as Client-side ad insertion (CSAI) or server side (SSAI). (PS: All these terms are explained after this section).

This is the general order of content delivery from OTT;

  1. The target audience is created. The audience is created based on the user’s subscription data. Sometimes, they could be enhanced with some household info. This could include first, and third-party data, which is inclusive of specific shows watched on the platform and the preferred categories.
  2. Campaign pushing. Audience matching begins. The audience is then matched to certain TV’s subscriber lists on different OTT platforms. The ads are then pushed, downloaded, and protected by the OTT gadgets.
  3. Ads Display on OTT Platforms. At this juncture, OTT gadgets are connected with VAST or VPAID tags depending on the platform.
  4. Reporting. After the campaign, the OTT operator sends ad-exposure results and produces the reports for the advertiser. Basically, the campaigns are improved with first and third party data entry.

OTT Ad-Insertion Methods

Client-side ad insertion (CSAI)

Client-side ad insertion (CSAI) is the traditional method, where ads are directly loaded to the OTT box before displaying them to viewers. CSAI does not provide an effective way to display ads to the audience, and it is a bit vulnerable to hackers. However, it still has the lead position in the OTT gadgets within the advertising industry.

SSAI and Stitching

Unlike CSAI, SSAI ads are served as a smooth stream. This process creates (in real time) a mix of ads and the core content streamed to the customer’s gadget frame-by-frame. Since ad blockers have no way of discerning which frames are or not ads, SSAI is considered the most effective way of dealing with ad-blocking soft wares.

SSAI allows a perfectly smooth experience for live feeds too. It “stitches” the content with ads eliminating the annoying pauses between ads and actual videos. If view-ability measurements and clickable ads are necessary, (through the support of VPAID tags); the abilities can be later added on the client’s side.  This will require an additional advanced development on the OTT producer’s side.

Stitching is a step ahead from a viewers end, but it imposes a certain limitation on the advertiser’s side.

How to evaluate the success of OTT platforms?

Like any form of digital advertising, a valid measurement plan is one of the most important steps in determining the success of your advertising efforts.

This means that you also will need to consider attribution KPIs and video completions as well.

In an OTT platform, one of the strong benefits is ad delivery.  Unlike other internet-based video platforms, video completion rate (VCR) for OTT based platforms are between 90% to 100%.

OTT platforms have non-skippable ads; this means the user will have to view it without any provision to minimize or skip.

Attribution tracking includes visiting a particular landing page and downloading an application etc.

In general, OTT ads are not clickable, so the marketers have to optimize it to track the different IDs across various devices.

Tags Used for Communicating With OTT Devices


VAST Tags addresses the player on how to go about the ad – how will it show up? Can they skip it? How long will it be displayed? Where is the ad located (ad server information) etc.


Video Player-Ad Interface Definition (VPAID) tags are an upgrade of VAST tags; they make the ads interactive and adds viewability measurements. This explains why most companies are choosing VPAID tags over VAST tags.

Challenges of OTT Advertising

As explained in the previous paragraphs, OTT advertising has loads of advantages over traditional TV advertising. However, they are still have a few technology hitches that need to be fixed to name OTT as the king of advertisement officially;

  1. At the moment most of the OTT and smart TV inventory available programmatically can only be found in the OTT or smart TV manufacturers.
  2. Right now, there is no support for measurement and third-party ad serving.
  3. OTT is still very fragmented. As a result, it lacks guidelines and industry-wide standards.
  4. OTT still lacks some capabilities that the web has. It lacks flash and cookies support, which limits the advertiser from targeting viewers properly and attribute conversations.

Also, some tags from other platforms may be incompatible with OTT platforms due to its closed nature; resulting in measurement discrepancies.

  1. VPAID is an improvement of VAST. It was created to facilitate rich ad experiences, e.g., interactive media ads. However, due to the nature of OTT, it is impossible to implement executable ad units.

Ad servers and the device’s communication is limited to VAST advertising tags, designed by IAB for regulation of serving video ads.

Future of OTT advertising

The world of OTT has paved the way for numerous opportunities. This technology allows brands to directly buy from OTT content providers based on the viewer information and genre of the program.

After that, the advertisements are done programmatically. In an OTT platform, advertisers will have full access to viewing information such as age group, demographic data etc. Using this information allows them to target their ads more effectively.

Free OTT services that don’t have a database of paid subscribers rely more on external sources of data such as Google ad targeting and matching services.

In addition, you could make use of the information obtained through browsing history, cookies etc. to give a more personalized touch to your campaign.

In the coming years, OTT platforms will pave the way for unlocking the next level of flexibility for the advertisers to reach out to their audiences.

Final Thoughts

As a business person, you want to stay abreast with the changes around the world. The advertisement department is currently going under a serious revolution that has significantly changed the business world. OTT advertisement is slowly taking over the traditional TV advertisement. By 2022, the OTT platforms are speculated to have accrued a total of 197.7 million monthly subscribers. Besides the large audience, OTT platforms have other advantages like;

  • Powerful analytics
  • Strong Targeting
  • Flexible Budgeting
  • High-quality Creative

There are still a few lapses that need to be addressed on the OTT platforms, but there is no doubt it is the next big thing!

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Alvin is the Founder and CEO of MobileAds.com. He is a go-getter, and adventurous guy who believes in working smart to gain success in his business ventures and in life. He also founded RichMediaAds.com and MobileLanders.com.