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Digital Video Breakdown: OTT Defined

Comments  /  Rachel Glasser

What is OTT?

Over-the-Top (OTT), or Connected TV (CTV), is an internet connected TV or device used to watch streaming video and TV content outside of cable or traditional broadcast stations. Currently, 51 million U.S. households have an OTT device and that number is expected to grow 28% by 2021, making OTT a channel marketers should consider.

Is OTT replacing linear television?

In short, no. While there are households cutting cords in favor of “skinny bundles”, 91% of cable subscribers also have OTT. OTT should be looked at as an extended and duplicated reach channel. It functions similarly to linear television in that ads are 100% viewable in content that consumers choose to watch. Unlike linear television though, channel surfing during commercial breaks isn’t an option, leading to an average 97% completion rate.

Is OTT Broadcast or Digital?

There is some debate over what media “bucket” buyers should put OTT in. Where does it fit on a flowchart? Does it live in the broadcast world or the digital world? How is OTT evaluated in relation to a traditional or digital media buy? There are no definitive answers to these questions, because OTT could be considered either type of media. It literally straddles the fence.

When it was in its infancy, broadcast buyers looked at OTT as an extension of a TV schedule, or another channel on a buy. Budgets were allocated accordingly. However, a lack of proven results and higher CPMs than linear TV caused OTT to shift to digital buyers, who quickly took the lead. With OTT’s CPM-based sales model, its ability to target in some capacity, and the lure of post-buy reporting, OTT came naturally to many digital buyers. Planners carved out a portion of digital display budget and diverted those funds to OTT. However, without the ability to take an action or measure a CTR, digital buyers found themselves in a similar situation as TV buyers, questioning how to effectively evaluate OTT’s success.

What is the future of OTT?

As a media agency, we must consider how our target audience consumes media, and try to reach them through those channels. Consumers follow content and OTT allows them to access that content on demand. In 2017, OTT devices accounted for 29% of all premium video ads, which is a 34% increase year over year. Meanwhile, the shift of OTT from desktop to mobile and other devices is growing: desktop’s 27% share of premium video ads in 2017 was down 15% year over year. OTT is clearly having an impact on video content delivery and will only continue to grow.

As we look ahead to 2018, traditional and digital buyers should be working together to help standardize OTT reporting and buying. We will need to adjust expectations in terms of targeting capabilities, available data, and evaluating ROI. Let’s consider the benefits of OTT before dismissing it as a medium that has not fully developed yet: OTT generally delivers 100% viewability, it is DVR-proof, brand-safe and fraud-free. Once we adjust the way we think about OTT and how it fits in with the overall media strategy, categorizing OTT as TV or digital becomes less important than finding a way to utilize the medium effectively and staying ahead of the evolving streaming video trends.