While people are watching just as much content on TV as ever, the way that we are consuming digital media is changing. Increased bandwidth has opened up a new world of possibilities to enjoy our favorite shows. Streaming video has grown from a niche pursuit with low resolution options to the preferred method for consuming content on TV.
The number of people abandoning traditional cable and dish services is on the rise, and there are two main ways of watching online content: Over the Top (OTT) and Connected TV (CTV). These two content strategies use different methods and devices to connect you to your content.
The world is changing
At the turn of the century, cable services dominated the TV industry. Cable providers charged a premium for their exclusive services, which included a dedicated box connected to the TV set. Now, technology is starting to replace this technology with digital services that are located directly on the internet. Other strategies use devices that connect the TV to the internet, but regardless of the method, the trend for watching video content in your living room is moving online.
As broadband becomes standard in every home and the bandwidth that most homes can access expands to levels that can accommodate HD streaming, new providers are moving in to take advantage of the technology.
Content providers like Netflix and Hulu are becoming increasingly popular, offering a different way to enjoy streaming content. These companies allow subscribers to view content directly on any connected device. They aren’t limited to TVs, but display on smartphones, tablets, and computers as well.
Netflix was the original disruptor in this industry, and as of the third quarter of 2020, had 195 million subscribers. More households are adopting these new services while dropping traditional TV services. The market is also expanding the number of companies directly competing with Netflix, with Apple and Disney both recently launching their own similar services.
What is Over the Top (OTT)?
Services like Netflix are systems and services that subvert or “go over the top” of the traditional closed TV infrastructure. The moniker, OTT means that the content is served over the normal system. While you may be paying your internet service provider, they are not giving you access to content, the streaming service is.
Popular services include:
- Amazon Prime Video
What is Connected TV (CTV)?
The term connected TV refers to a television that is directly connected to the internet via an ethernet connection or WiFi. So CTV refers to a specific device, while OTT refers to content. The TVs will most often use apps to access content.
Most new televisions are smart TVs, meaning they come ready to connect to the internet out of the box and have their own media platform. Once connected, a smart TV doesn’t usually need any other external components to stream media.
There are also some devices on the market designed to facilitate OTT services. They aren’t required, as any device connected to the internet can take advantage of OTT, but the added apps and functionality makes these devices convenient. TVs that are too old to have smart capabilities can use separate OTT devices to become connected and stream content.
Popular devices for OTT include:
- Android TV boxes
- Amazon Fire TV
- Apple TV
Gaming consoles like the Xbox, Playstation, and Nintendo Switch are designed to play their own media on the TV, but they also have built-in apps to connect the TV to the internet and stream content.
Bringing advertising online
Some OTT services, like Netflix, run on a subscription model and don’t rely on ads for revenue. Others, like Hulu, use both ads and subscriptions to generate revenue.
With both CTV devices and OTT services so popular, they are often seen as the future of advertising. The number of homes adopting these devices is growing, and they make it easier to target younger generations who are more likely to cut the cord.
Because the services are so affordably priced (and sometimes free), many users are willing to accept ads to continue accessing their favorite content. Unlike with recorded programming, where the advertisements can be skipped, users are forced to watch the videos in OTT services when they are presented. These services currently offer much higher completion rates than other forms of media.
Most OTT services are accessed via a CTV device. By using connected TVs in advertising, it is possible to reach more people that were unreachable through commercials using the traditional cable services model.
Advertising to a CTV audience offers superior audience targeting. There is much more control over who sees an ad and how many impressions they are exposed to. These platforms are built to make it easier to measure campaign results directly — where traditional media only saw results indirectly with rises in sales. Here, the link between ad and buyer is much closer.
With OTT, advertisers have access to metrics that show the results of their efforts on a more granular level. There are also more complete reporting tools that demonstrate how a campaign is received and verifies that it was aired.
Some key metrics include:
- Impressions ordered vs. aired
- Video completion rate
- Impressions by date
- Impressions by day of the week
- Impressions by network
- Impressions by day
- Impressions by device
- Click rate
However, this new technology is still being developed. Because it isn’t as mature, marketers aren’t as sure how to choose the correct platforms. There can be significant audience overlap. The metrics for each of these services are also different and may not interact with each other, making it hard to compare services.
As the technology continues to evolve, we are finding new and innovative ways to access the content we enjoy. While traditional TV providers are struggling, consumers are flocking to digital-first services and accessing them through their smart devices. The most widely used OTT services allow anyone to stream media anywhere, on any device. For the best experience though, most people prefer to watch their content on a specific connected device. These strategies are opening up new avenues for advertisers to reach new audiences, and offer powerful marketing tools if the nuances of the platforms can be understood.
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