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A Quick Guide to CTV and OTT Programmatic Advertising

The programmatic advertising industry continually grows and evolves as new technologies penetrate the market. While not all new advertising methods achieve success, some have significant growth potential. One of the latest and fast-growing types of ads is OTT and CTV advertising.

What are these ads? Why do they appeal to advertisers? Is it here to stay or just a temporary fad? In this article, we’re going to answer these questions, and:

  • Briefly explain OTT and CTV advertising and the differences between them.
  • Point out and explain the pros and cons of these programmatic ads.

Let’s begin with an overview of Over-The-Top (OTT) and Connected TV (CTV) advertising.

What Is Over-The-Top (OTT) and Connected TV (CTV) Advertising?

OTT and CTV are often confused with each other, but these two advertising methods are not the same thing. Over-The-Top, or OTT advertising, refers explicitly to television content streamed over the internet without the need for traditional cable subscriptions. In other words, it means streaming TV content “over the top of” the more traditional network providers. OTT content can be consumed on laptops, tablets, TVs, smartphones, and other smart devices.

Connected TV, or CTV advertising, refers to a subset of OTT ads. They allow users to view ads on devices “connected” to the internet, such as Smart TVs, streaming devices, and gaming consoles.

OTT Media Sources

There are several OTT media sources, and the odds are very high that you’ve already heard about some of these platforms. These media sources can be broken down into three categories:

  • Programmatic. The ads are delivered through standard networks and DSPs with access to OTT media outlets, CTV platforms, and content publishers.
  • Platform Direct. The ads are delivered through streaming outlets like Amazon Prime Video, Netflix, Showtime, etc. They can also be delivered to CTV devices like Smart TVs, gaming consoles, Chromecast, etc.
  • Publisher Direct. These include streaming services like YouTube TV, Hulu, DirecTV, etc.

The Pros Of OTT And CTV Advertising

Why are so many advertisers adopting programmatic OTT and CTV ads? The benefits! Below, we briefly explore some of the primary and most appealing benefits of these ads.

Fast-Growing Global Audience

Many younger audiences no longer rely on television for entertainment. Statistics show that 21% of consumers have stopped watching cable television in the United States alone over the past five years. Instead, viewers globally are turning towards these streaming media platforms for entertainment.

More importantly, as more users adopt streaming over traditional television, the audience will continue to multiply. According to Pixelate, 72% of households are reachable through OTT and CTV ads. Consequently, advertisers can reach a much larger, broader audience through these formats.

Engaging And Impactful Ad Formats

Many OTT and CTV platforms allow advertisers to reach users through attractive and engaging ad formats. CTV ads may not be clickable, but they also can’t be skipped. Similarly, OTT ads can be skipped, but they can also be clicked on so users can immediately engage and interact with them. These ads can also be visually exciting. Combining the two formats can allow brands to create thrilling and engaging ad campaigns.

Excellent Viewability Rates

Although there’s no standard way to track campaign performance for OTT/CTV, studies show that these ads have extremely high viewability rates. According to the IAS, CTV ads have an average viewability rate of 93.3%, which is significantly higher than many other types of programmatic ads.

The Cons Of OTT And CTV Advertising

Just as there are several advantages to using OTT and CTV ads, advertisers need to be aware of a few disadvantages. Below, we look at a few of the more notable cons.

Different Platforms Have Unique Requirements

While not particularly unique to OTT and CTV advertising, it’s still a significant challenge. There are no universally accepted standards, and many platforms don’t even use the same methods to format or serve ads. Consequently, advertisers need to adapt their ads to each platform they choose to work with.

Certain Audiences Can’t Be Reached

Many OTT platforms and media outlets have limitations. For example, some can only be accessed from certain geographic locations and are similar to traditional television. Other platforms may have content restrictions, making them unreachable by advertisers.

Prone To Ad Fraud

Despite their growing popularity, programmatic OTT and CTV ads still experience significant issues with ad fraud. According to a study done by Pixelate in 2020, these ads have a 20% ad fraud rate. That’s an extremely high percentage and is enough to threaten brand safety and revenue generation.

The four main types of ad fraud currently prevalent in CTV are:

  • Server farms.
  • Fraudulent applications.
  • Spoofing ad inventory or misrepresenting non-CTV/OTT inventory as CTV or OTT.
  • Bot traffic.

Due to the high ad fraud rates, it’s absolutely critical for advertisers to work with and through reliable platforms and networks when running CTV and OTT campaigns.

No Standardized Measurement Tracking

At the moment, OTT advertising is where mobile ads were about ten years ago. Compared to many other types of advertising, OTT and CTV ads are still in their infancy. Unsurprisingly, that means there are still some areas in which it’s lacking, the most notable being the lack of standardized measurement and tracking options.

While several tracking options are available, including impressions, completion rate, visits, and reach, there are no standardized and consistent identifiers. That can make it harder to track viewability, identify invalid traffic, and judge the success of an ads campaign.

Conclusion

OTT and CTV advertising might be growing fast, but the technology is still relatively new. That said, it has incredible growth potential, and many advertisers are scrambling to try out these new ads. While it has many benefits, this young type of programmatic advertising still has some notable disadvantages. However, it’s clear that OTT and CTV ads have a lot of potential, and it’s an excellent idea for advertisers to adopt this latest technology if it suits their unique needs.

Filipe is a Senior Business Analyst focusing on Pricing & Yield at Softonic. As a Senior Business Analyst, Filipe is responsible for maximizing the revenue yielded from the traffic generated by all our properties, including rev•amp, Softonic’s new publisher monetization platform. Within rev•amp Filipe oversees the pricing strategy, as well as being on the constant lookout for opportunities to improve monetization capabilities.
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