The TV advertising industry is undergoing a rapid transformation. Consumers around the world are on their way to becoming “cord cutters” as they move away from linear TV (cable, satellite and broadcast TV). New delivery formats such as streaming and video-on-demand are capturing the market share. With this rapid audience development, it is important to understand the pros and cons of CTV (Hulu, Roku, Chromecast, YouTube) and аn OTT (Netflix, Amazon Prime, Peacock, HBO Max).
CTV and OTT consumption is skyrocketing
According to Comscore's "State of OTT" report, OTT services have grown significantly as a direct result of the COVID-19 pandemic. Hours of OTT content consumption has increased overall for both in-home and general viewership. In the US, 69.8 million consumers used OTT in April 2020, up 5.2 million from April 2019. On average, one consumer viewed 102 hours of OTT content, up 20% from the previous year.
Following this audience demand, companies have allocated the majority of their budgets to CTV and OTT advertising. Ad-supported OTT services grew 9% last year, while ad-free services grew only 5%. According to Pixalate, CTV and OTT ad spend grew by 70% between Q1 and Q3 2020.
This is not surprising since CTV and OTT advertising has a number of strengths and differentiations that appeal to businesses of all sizes. But CTV and OTT ads are not without their drawbacks most of which come from their differentiating features.
Given that CTV and OTT advertising is relatively new, business owners and managers may not understand these marketing platforms. Let's run through the pros and cons of using these platforms for maximizing benefit for any business.
Benefits of CTV and OTT Advertising
A wealth of targeting options.
Flexible and diverse targeting options are one of the main strengths of CTV and OTT advertising. This is the reason why companies prefer this format to traditional TV ads.
CTV and OTT provide companies with detailed targeting parameters based on various criteria. For example, advertisers can target consumers based on their location, searching and browsing habits, demographics, device, lifestyle, and more. With multiple targeting options, businesses can easily reach the most relevant consumers, increasing the number of views per ad.
More attractive and powerful ad formats.
In addition to extensive targeting options, these platforms offer advertisers more attractive and diverse ad format options. CTV ads are great for creating a viewing experience because they are hard to miss. On the other hand, the main advantage of OTT ads are that they have an actual clickable function (although QR codes on CTV might change this).
These individual advantages of each format must be considered when planning an advertising campaign. Combining both formats will allow businesses to achieve better results through advertising campaigns that are more attractive, exciting and functional.
Diverse and growing audience.
Another strong side of CTV and OTT advertising is the audience. Advertisers can now reach out to people who have already turned off traditional television or never had it (a younger audience). According to a Comscore report, 21% of CTV home consumers in the United States have "cut the cord" in the past five years. Another 21% of those who watch CTV at home are so-called cable networks (those who have not had a cable/satellite TV subscription in the past five years). By 2022, the number of home consumers is expected to be almost a quarter of their total number in the United States.
Directional and Trackable results
Finally, CTV and OTT ads have more accurate tracking and many measurement options. Advertisers can use software platforms to collect and analyze all kinds of statistics and data in order to measure the exact result of each advertising campaign. The exact efficacy of a campaign can be determined, so that improvements can be made after each activation round.
Not only does CTV and OTT offer important front-end data like VCR, impressions, CTR (when applicable), but we are also able to track attitudinal changes. Via a pre- and post-exposure study, we can determine if the campaign changed minds, grew awareness, moved someone down the funnel and more.
Disadvantages of CTV and OTT Advertising
CTV and OTT advertising formats also have some limitations. Here are the most notable ones.
Advertising format restrictions.
Unique features, like interactivity and non-skippability, also have their downsides. In the case of CTV ads, the skip-free ad makes it more disruptive, but such ads cannot be clicked. In the case of clickable OTT ads, the fact that the viewer can miss them is considered a disadvantage. That's why a combination of both formats and using the strengths of each will be the most effective for any advertising campaign.
Multiple platforms with different requirements.
The lack of generally accepted standards across CTV and OTT platforms regarding ad formats and technologies is seen as the other side of the coin. "The platforms don't speak the same language, whether it's formatting ads, ingesting ads, or just communicating what the brand is advertising against," said Lexi Pike, product marketing manager at Brightcove.
No access to certain audience types.
These platforms have content restrictions. Certain types of live streaming content, such as local news, sporting events and prime time shows, are still reserved for more traditional TV content delivery models. This makes the audience of such content inaccessible. However, with the rapid growth of CTV and OTT platforms, we expect this adaptation to be implemented soon.
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