BlogOTTSep, 14 20227 minute read

What is OTT advertising? A beginner’s guide to over the top

You’ve nailed linear — but now everyone is talking OTT advertising, and you need to get up to speed. Don’t worry, you’re not alone, and you’re in the right place.

Let’s take a little tour through OTT advertising basics and how to get started with over the top.

  • What is OTT advertising?

  • Why OTT advertising is an ideal marketing channel

  • How to get started with OTT advertising

  • OTT ad campaign in action

  • Best practices for OTT advertising

What is OTT advertising?

OTT advertising is any ad delivered directly to viewers via a streaming video service over the internet. 

It all started around 2010 with the emergence of the smart TV, which enabled content delivery via the internet, or over-the-top (OTT). This marked the beginning of the slow migration from traditional cable or satellite TV to streaming video content. 

Now, roughly 30% of TV viewing is on streaming and the thousands of smart TV apps like Netflix, Amazon Prime Video, Hulu, Pluto, and Peacock (compared to 37% on cable TV and only 25% on broadcast). 

But OTT doesn’t just mean TV on the big screen — OTT refers to video streaming on any device with an internet connection. Many viewers also tune in to OTT content via smartphones, tablets, desktops, and laptops. 

Types of OTT advertising

There are a variety of programmatic advertising formats that can be seen across these devices, including:

  • Video ads

  • Display ads

  • Pop up ads

  • Sponsored ads

  • Interactive ads

Related Content: CTV vs. OTT: Is There a Difference?

Why OTT advertising is an ideal marketing channel

A recent report shows that U.S. advertisers are starting out 2022 hot and heavy on OTT, with a combined spend of $1 billion per month. And that number only stands to grow, with analysts projecting CTV ad spend to reach nearly $30 billion in 2025

But why are marketers flocking to over-the-top advertising? The benefits of OTT include some FOMO-inducing value props like: 

  • Enhanced audience targeting. Advertisers can hyper-target consumers based on granular data, including things like demographics, behaviors, interests and location (similar to social platforms).

  • Personalized ad experiences. Advertisers can recreate the kinds of personalized relationships with consumers they enjoy across other channels by tailoring ads for individual people — and delivering them in an addressable fashion, on a one-to-one basis. 

  • Real-time optimization. OTT provides faster data insights on both audience and performance, allowing marketers to make better, more informed decisions.

  • Attribution metrics to better understand return on ad spend (ROAS). Advertisers can use impression metrics in conjunction with other data points — like site or in-store visits and ‘point-of-sale’ — to understand actual business outcomes across the entire marketing funnel. 

At its core, OTT is a full-funnel, performance channel, with the power of the TV screen, which 46% of consumers said was the most memorable

This makes it the perfect platform to drive both top of funnel lift metrics (like brand awareness, perceptions, familiarity, favorability, and purchase intent), as well as bottom of funnel metrics (e.g. location attribution, site attribution and conversion, offline sales lift, and foot traffic).

Related content: 4 Benefits of OTT Advertising You Don’t Want to Miss

How do I get started with OTT advertising?

Similar to how social platforms like Facebook and Instagram democratized social media advertising, OTT is doing the same for streaming content. This means anyone can run OTT ads, even if they don’t have a huge ad budget.

With that said, there are thousands of streaming apps and OTT platforms to choose from. This fragmentation of the OTT marketplace can make it hard to understand where to start. 

How OTT ads are bought and sold

First, you need to understand how OTT ads are typically bought and sold — there are two primary ways: 

  1. Direct publisher partnerships. Advertisers work directly with a walled-garden like Hulu, which controls the entire process and sets their own prices.

  2. Programmatic: This provides access to a network of OTT ad inventory from a variety of publishers, where advertisers can bid in real-time and often secure prices lower than direct partnerships.

Madhive offers an example of programmatic OTT advertising. When you work with Madhive, we provide access to inventory from hundreds of premium channels, the ability to target consumers across those channels, and granular measurement against a variety of KPIs and metrics.

The Madhive platform powers OTT streaming efforts for many of the major broadcasters, including Fox and Scripps, as well as brands and agencies. 

What advertisers need to get started

To get started with OTT advertising, an advertiser needs to pull together:

  1. Ad creative with standard specifications for the different platforms and devices

  2. Targeting parameters / who they’d like to reach

  3. Decide how to customize messaging across devices 

  4. Pick clear KPIs for measuring success 

  5. Allocate a budget — CPMs (cost per thousand impressions) on OTT range from $10-50, depending on device and format 

Once these key ingredients are in place, it’s easy for the advertiser or their partners to execute, measure and optimize the campaigns in an OTT platform like Madhive. 

Case Study: OTT ad campaign drives traffic in store for CBD products

When you execute OTT ads well, they drive impressive results — like a recent shoppable OTT campaign Madhive powered did for retailer Neiman Marcus and CBD skincare brand Cannaluxe. 

To promote the launch of Cannaluxe’s new line at Neiman Marcus, Madhive ran a cross-device OTT campaign to drive both brand awareness and direct response sales in a premium environment.

The campaign drove more than 10M impressions across premium publishers including Fox, ESPN, FX, AMC, Bravo, The CW, Food Network, Bravo, and HGTV. The creative included advanced QR code technology from Flowcode, which had a 96% video completion rate (VCR) and a 4% click through rate (CTR) — nearly 400% higher than the average CTR on Facebook

Overall, the campaign drove more than 150,000 shopping sessions across NeimanMarcus.com and Cannaluxe.com. In addition to ecommerce, Madhive leveraged its purpose-built Audience Forecaster tool to optimize household ad exposure and target households local to the twenty one Neiman Marcus stores carrying Cannaluxe’s products. This drove an influx in foot traffic to physical stores.

The campaign also used Madhive’s real-time optimization capabilities on CTV, allowing Cannaluxe to double down in high-performing markets like Texas, which drove 3.4x sales than other DMAs. The Texas market accounted for 51% of all sales overall.

Check out the full case study: Hyper-local CTV campaign generates serious holiday sales for CBD skincare brand

Best practices for OTT advertising

If you want to see performance like Cannaluxe, there are a few OTT best practices to follow. OTT ads should take video to the next level with highly personalized experiences.

  • Format for multiple devices. The same way your ads and content on Instagram are different than Facebook, OTT ad campaigns should be made specifically for the different devices you want to reach people on. 

  • Sequential storytelling. Understand the strongpoints of different devices. For example, streaming TV can provide a premium environment to serve as a solid first touchpoint for brand awareness. Mobile devices can serve as a key avenue for connecting bottom-of-the-funnel outcomes like site visits. 

  • Make it captivating. These days, people are bombarded with ads everywhere. Make sure your creative stands out. One solid approach is to include cultural trends that are currently driving internet conversations. 

Final thoughts on getting started with OTT advertising

We managed to cover a lot for one article, but this 101 crash course is only the tip of the iceberg on OTT. One thing’s for certain — OTT advertising is one of the fastest growing channels in the industry, and it presents a huge opportunity with better performance and growing demand.

Want to get more familiar with OTT advertising? Here are a few more resources to up your game: