What is OTT?

Justin True

Justin True About The Author

Aug 3, 2020 10:59:00 AM

what-is-ott

OTT is becoming an increasingly popular entertainment medium. Research conducted at the start of 2020 found that there were 164 OTT subscriptions per 100 households in the United States, and 132 subscriptions per 100 households in Canada—a ratio of 1.64 to 1 and 1.32 to 1, respectively. With the rise of OTT, this medium has developed into a very attractive forum for businesses to market their products and services.

OTT stands for "over-the-top," and it refers to content that is delivered to consumers over the Internet instead of through a cable or satellite provider. 

There are 3 basic types of OTT content:

  • AVOD - "Ad-based video on demand," in which OTT providers generate revenue from commercials
  • SVOD - "Subscription-based video on demand," in which OTT providers generate revenue from customer subscriptions
  • TVOD - "Transactional video on demand," in which customers pay for a specific piece of content

Of course, within these 3 categories, there are also hybrid models, such as the two subscription options that Hulu offers: $5.99/month for the basic version with ads and $11.99/month for the ad-free viewing experience. Other examples of OTT providers include Netflix, Roku, Google Play, Disney+, Amazon Music, Sling, Tubi, Amazon Prime Video, and YouTube.

The Importance of OTT Today

While traditional marketing and TV advertising are still effective ways to reach, convince, and convert consumers, more people are using OTT media services. One of the main reasons why they are doing so is the level of convenience that OTT media offers.

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It's no secret that the consumers of today have much higher expectations than those of 30, 20, or even 10 years ago. People want to access content on their time and on their terms, without any period of waiting. This heightened sense of entitlement is revealed in studies that indicate the average OTT consumer owns three devices that they can use to watch OTT content; subscribe to three different OTT services; and spend more time watching OTT content than they driving or talking to their friends and family members.

At the same time, consumers are more likely to be susceptible to content when it's delivered to them in a way that isn't too aggressive or "in your face." The personalized nature of OTT content, and even the customization options that some providers offer in terms of advertising, play to this sensibility. Whereas consumers are quick to abandon a product or service when the quality isn't up to par with their expectations, the highly tailored experience that OTT providers give often keep customers coming back for more.

In short, consumers generally perceive OTT media services as less interruptive to their experience and more personalized than other information and entertainment channels. This results in increased customer satisfaction with such services, and a higher probability that viewers will be receptive to well-developed marketing from advertisers. Interestingly, research has shown that launching streaming and traditional TV ads in tandem increased ad recall by some 34%.

How OTT Can Help Your Business

There are several ways that OTT can help you to grow your business, reach out to more consumers, and maximize your marketing ROI. In this regard, a few of the benefits of incorporating OTT in your advertising strategy include:

  • More touchpoints with your customers. OTT advertising offers your brand the opportunity to "interact" with consumers at a wide variety of locations and times, as opposed to traditional TV advertising that is restricted by broadcasting limitations.
  • More opportunities to reach a wider audience. A study by Roku predicts that approximately 60 million American households will exclusively use streaming services by 2025. 
  • More ad-related interactivity. OTT platforms often allow consumers to directly click on ads and (depending on their level of interest) seamlessly continue their buyer's journey to a brand's landing page. This capability eliminates a lot of the friction associated with more traditional advertising.

Perhaps best of all, the majority of OTT users are not bothered by the placement of ads on their platform of choice. One study found that 72% of OTT users realize that there is a tradeoff between watching free content and having advertisers use their data to serve ads, and don't find commercials bothersome as long as they are relevant.

In summary, OTT media can be a highly impactful advertising channel for forward-looking businesses. If you want to keep up with the changing times and reach the widest possible audience for your product or service, then you must seriously consider leveraging OTT as part of your marketing strategy. 

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