The Future of TV Advertising – Pros and Cons of CTV and OTT

 

 

The TV advertising market is also going through rapid transformations. Consumers around the globe are increasingly “cutting the cord” and giving up cable, satellite and broadcast TV. New content delivery formats such as streaming and video on demand are taking over this market share, talking about CTV and OTT. 

With rapidly growing audiences, it is important to understand the pros and cons of both platforms. CTV being Apple TV, Roku or Chromecast, and OTT being Netflix, Amazon Prime, Disney Plus, etc.

 

CTV and OTT consumption is booming

According to the ‘State of OTT’ report by Comscore, OTT services saw exceptional growth since the start of the COVID-19 pandemic. Consumption of OTT content grew by both total households and total hours. In the US, 69.8 million homes used OTT in April 2020, an increase of 5.2 million homes compared to April 2019. The average home viewed 102 hours of OTT content, which is a 20% increase from the previous year.

 

Following the audience demand, businesses are also allocating larger portions of their budgets towards CTV and OTT advertising. Ad-supported OTT services grew 9% last year, while non-ad-supported services grew only 5%. According to Pixalate, CTV and OTT ad spend rose 70% between Q1 and Q3 of 2020.

 

To show in graph the increase in ad spend from q1 to q3
Ad spend increase from Q1 2020 to Q3 2020 (Pixalate)

 

This comes as no surprise as CTV and OTT advertising have a number strengths and distinctive features, attracting businesses of all sizes. But CTV and OTT ads are not without shortcomings, which derive from their distinctive features.

Considering CTV and OTT advertising is fairly new, business owners and managers may lack the understanding of these marketing platforms. Let’s learn the pros and cons to best utilize these platforms to their maximum benefit.

 

Advantages of CTV and OTT advertising

  • Rich targeting options.

Rich, flexible and diverse targeting options is one of the main strengths of CTV and OTT advertising. This is also the reason why companies are choosing this format over advertising on traditional television.

CTV and OTT provide businesses with granular targeting based on different criterias. For example, advertisers are able to target consumers based on location, internet browsing and web search habits, demographics, device, lifestyle and more. With multiple targeting parameters, businesses can easily reach their most relevant consumers, maximizing each ad view.

  • More engaging and powerful advertising formats.

Along with extensive targeting capabilities, these platforms offer advertisers more engaging and diverse advertising format options. CTV ads are well-suited to create an immersive watching experience as they are unskippable. On the other hand, a major advantage of OTT ads is that they are clickable.

These individual advantages of each format must be considered when planning the advertising campaign. Combining both formats would allow businesses to achieve better results by executing ad campaigns to be more engaging, immersive, responsive and functional.

  • Different and rapidly growing audience.

Another major strength of CTV and OTT advertising is the audience. Advertisers can now reach people who have  already cut the cord to traditional TV, or never had begin with (younger audience). According to the Comscore’s report, 21% of CTV households in the United States cut the cord within the past five years. Another 21% of CTV viewing households are so-called cord nevers (households with no cable/satellite subscription in the past five years). By 2022, the number of cord-cutting households is expected to make up nearly a quarter of total U.S. households.

  • The ability to accurately track and measure the results of an ad campaign.

Finally, CTV and OTT ads have more accurate tracking and the abundance of measurement options. Advertisers can utilize programmatic platforms to gather and analyze all kinds of stats and data to measure the precise result of every ad campaign.

 

Disadvantages of CTV and OTT advertising

Naturally, along with a number of major strengths, CTV and OTT advertising formats also have some limitations. Here are the most notable ones.

  • Ad format limitations.

The unique features such as clickability and being unskippable, also have their downside. In the case of CTV ads, being unskippable makes them more immersive, but such ads are not clickable. With OTT ads, which are clickable, the fact that they can be skipped by the viewer is considered a disadvantage. This is why combining both formats and utilizing the strengths of each format would be the most effective towards your advertising campaign.

  • Multiple platforms with different requirements.

The absence of universally accepted standards across CTV and OTT platforms in terms of ad formats and technologies is considered as a downside. “Platforms aren’t speaking the same language, whether that’s ad formatting, ad ingestion or simply communicating what a brand is advertising against,” noted Lexie Pike, product marketing manager at Brightcove.

  • No access to certain types of TV content audience.

And, of course, these platforms have content limitations. Certain types of live streaming content, such as local news, sports events, and prime time shows, still remain the prerogative of more traditional TV content delivery models. That leaves the audience of such a content mostly out of reach. However with the rapid growth of CTV and OTT platforms, we can anticipate for this adaptation to come to fruition soon.

 

CTV and OTT Summary

Experts and analysts already call CTV and OTT advertising the “ad market star of 2021. Even though these new ad formats do have limitations, the huge benefits and opportunities they provide to advertisers are indisputable. Thanks to previously unseen targeting capabilities, access to different audience groups and innovative ad formats, CTV and OTT advertising will undeniably attract more advertising budgets and keep growing its market share.

 

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