Watching TV used to mean flipping through channels and sitting through endless commercial breaks. But those days are fading fast as audiences cut the cord in favor of streaming services — and advertisers are following suit.
OTT (over-the-top) and CTV (connected TV) have revolutionized how brands reach viewers, offering data-driven insights and innovative ad formats that traditional TV can only dream of. As the streaming landscape evolves, understanding how OTT and CTV advertising works — and how to make the most of them — is key to staying ahead.
In this guide, we’ll break down everything you need to know: the key features of these digital channels, user adoption, ad formats, and industry trends. Stay tuned!
OTT vs. CTV
Viewers today have more choices than ever, and so do advertisers. Linear TV refers to the traditional, scheduled programming delivered via cable, satellite, or broadcast networks. OTT refers to content streamed over the internet, most often via CTV. In short, OTT is the content, CTV is the device, and linear is the old-school way of watching TV.
What is OTT (over the top)?
OTT is an overarching category that encompasses any video streaming on the internet including on connected TV devices, mobile devices, computers, tablets, and gaming consoles. While some OTT and CTV content is streamed live, much of OTT and CTV are available on demand.
What is CTV (connected TV)?
CTV refers to any TV that streams video via the internet, whether it’s a smart TV with a built-in internet connection or a TV that connects separately through streaming sticks or gaming consoles. CTV is a device that streams OTT content.
Growth and adoption of OTT/CTV
Today’s “cord cutters” and “cord nevers” are causing the slow downfall of linear TV. This year will see the number of non-pay TV households surpass that of those with paid linear TV subscriptions.
There are now 238 million CTV users in the US — that’s nearly 70% of the population. And the amount of time these users will spend watching CTV this year will come close to 3.5 hours.
OTT/CTV providers
OTT/CTV video streaming services can be supported in a few different ways: a subscription model, an ad-supported model, or through a hybrid approach.
SVOD, or subscription-supported video on demand, is supported via a monthly subscription fee. Subscribers pay in order to access a library of content (a classic example would be Netflix).
AVOD, or ad-supported video on demand, lets publishers monetize their content with advertisements while making content free to viewers. Ad-supported video on demand can feel like traditional linear TV advertising with its commercial breaks. FAST (free ad-supported streaming TV) is a popular subcategory of AVOD, with 117 million viewers in the US alone.
Hybrid models (i.e., ad-supported SVOD) include a mix of ad-supported video along with a (lower) subscription fee. An example would be a streaming service that offers a low subscription (or even free subscription) for ad-supported video streaming, but also gives viewers a chance to opt-in to a premium, ad-free subscription for a monthly fee. Some streaming platforms offer their own content ad-free, but play ads during licensed content.
While all three types of video streaming services are currently booming, the growth of ad-supported models is outpacing that of subscription-based ones. This presents a huge opportunity for advertisers to grab the attention of their audiences while it’s on the big screen.
OTT/CTV ad insertion techniques
As advertisers look to maximize reach and engagement in the OTT and CTV space, the way ads are inserted into content plays a crucial role.
What are ad pods?
Ad pods are commercial breaks for OTT/CTV inventory. Ad pods are made up of ad slots, and play back to back ads just like traditional television. You can think of an ad pod simply as an ad break.
What are ad slots?
Ad slots are individual ad placements within an ad pod. They can vary in length. An ad pod is made up of multiple back-to-back ad slots.
Since ad pods are made up of multiple ad slots, publishers have multiple opportunities to monetize their inventory, which increases the value of their ad breaks.
OTT/CTV advertising trends
The OTT and CTV landscape is evolving at a rapid pace, driven by shifting viewer habits, advancements in ad technology, and growing advertiser demand for premium digital video inventory. As cord-cutting accelerates and streaming platforms continue to expand, brands are recognizing the value of OTT and CTV as essential components of their media strategies.
The result? CTV ad spending is seeing double-digit annual growth, with over $33 billion total spent on CTV advertising in the US alone.
Advertisers value CTV because it provides a premium, brand-safe environment for delivering high-impact ads. As more and more brands get into CTVv, programmatic direct deals will grow in popularity as a method for purchasing this premium inventory. These pre-packaged deals offer advertisers curated CTV inventory with precision targeting to reach their campaign goals.
OTT and CTV advertising presents dynamic opportunities for brands to connect with audiences in innovative ways. Staying informed about industry trends and adopting best practices will be crucial for success in this evolving landscape. From ID-less ad targeting to new measurement solutions, the future of OTT/CTV advertising is full of opportunities.
