What is your OTT Strategy?

Over the top (OTT) media has become an increasingly popular source of news and entertainment for consumers. It’s on pace to make traditional television all but obsolete in the next several years. For example, note the following statistics:

  • 61% of Americans own a Smart TV.
  • 52% use OTT services.
  • 65% of viewers aged 18-34 use OTT media.
  • The average OTT customer owns three devices that can be used to consume OTT media.
  • The average OTT customer also subscribes to three different OTT services.

Clearly, OTT consumption is popular and trending upwards. Not surprisingly, many advertisers have jumped on the OTT bandwagon. However, success in OTT advertising requires a well-designed strategy to achieve the best results. 

What is OTT?

OTT is short for "over the top" and refers to content, services, or applications from providers delivered over the Internet, instead of through cable or satellite networks. OTT devices may include:

  • Smart TVs
  • Devices linked to specific OTT platforms, like the Roku Stick
  • Tablets or smartphones, since they can also access OTT content via downloadable apps

Some of the more well-known OTT providers include Hulu, Amazon, Disney, and Netflix.

What are the benefits of OTT advertising?

There are several advantages associated with advertising over OTT channels. For example, companies that invest in OTT advertising can reach their target audience at a wide range of times and locations, as opposed to businesses that exclusively advertise over traditional television. OTT advertising allows for a higher level of personalization; in other words, you can be more selective about which ads are viewed by a specific audience. 

What is OTT strategy?

OTT strategy is the overall plan to achieve key marketing objectives through OTT advertising. As with most marketing strategies, there are several moving parts that you must coordinate if you want your efforts to yield optimal gain. For example, you must decide which OTT advertising options to pursue. These include:

  • Addressable TV ads. Addressable TV advertising enables companies to target consumers of their video content on a very granular scale. For example, two households may watch the same program but view completely different commercials. One household may see ads from a local car dealership that wants to increase brand awareness while the other household may receive ads from a nationwide retailer. Addressable TV ads enable marketers to segment their target audience and ensure that their message is most likely to reach the right people.
  • Automatic content recognition ads. In a sense, these types of ads work in the opposite direction from addressable commercials. They identify the content that consumers watch on specific devices so that they can tailor ad creative according to the content, instead of the geographic location. For example, a company may design one set of ads for viewers that prefer to watch nature documentaries and another set for fans of action movies.
  • Connected TV ads. This advertising option enables companies to deliver specific marketing messages to consumers through OTT devices connected to the Internet. Personalized data points (such as purchasing history and lifestyle choices) can be incorporated into the ad delivery model. For example, advertisers may target a consumer that has his game console and smartphone connected to the same network by delivering video content to both devices at the same time.
  • Programmatic ads. These ads are delivered within the framework of a hyper-specific, automated, data-driven system. Advertisers buy "ad space" that promises to reach ideal consumers, and OTT providers (such as YouTube) deliver these ads to consumers with the highest potential value, per historical user data and analytics.

OTT pricing models

It's important to recognize that OTT providers typically fall into one of three main pricing model categories (or a hybrid of two or more such models). These pricing models are:

  • TVOD (transactional video on demand). With this model a user pays for a specific piece of content, rather than an entire streaming service like Netflix or Hulu. An example would be video content from Amazon or the Google Play Store. In the world of cable, a close analog would be "pay per view."
  • AVOD (advertising video on demand). In this model, the OTT provider receives revenue from paying advertisers. In some cases, this allows the provider to offer free service to customers. In other scenarios, the provider may offer a reduced rate for its service in exchange for a viewing experience that includes ads.
  • SVOD (subscription video on demand). SVOD OTT providers generate most or all of their revenue from customer subscriptions. They may limit the number of ads that customers view, or eliminate ads altogether. (Hulu, which offers a basic subscription plan with ads and a premium plan without them, is a prime example of the hybrid model that combines AVOD and SVOD pricing).

OTT strategies

Within the parameters of the pricing models listed above, there are several OTT strategies and tactics from which to choose. Three popular advertising strategies are:

  • Personalization. As advertisers compile and analyze more and more consumer data, they are in a better position to deliver ads that are hyper-specific to the consumer's geographical region, personal viewing habits, or needs and interests gleaned from other touchpoints.
  • Cross-marketing. OTT offers many opportunities for cross-marketing campaigns with other brands. Just as one example, a business that makes popcorn can spread brand awareness by partnering with Netflix on brief in-episode ads. Then again, many companies pay influencers on YouTube to endorse their product — in ads featured on the influencer's channel.
  • Retargeting. This strategy is especially powerful when a company leverages a fully unified and integrated marketing plan. Sometimes a consumer doesn't take any action on one ad, yet analytics indicate that the consumer may have demonstrated a spark of interest. In these cases, the advertiser can "fan the flames" of that interest by delivering retargeted ads to the consumer across multiple channels (organic search, display ads, other OTT channels, and so on).

In summary, an effective OTT strategy can help you to expand your reach, yield a higher ROI on your ad spend, and position your brand for sustainable success. However, unless you are already intimately familiar with OTT strategies, you'll likely need to consult with experts in OTT advertising to gain optimal results. If you do so, you won't regret it.

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