With lockdown audiences turning in droves to OTT, Marlene Grimm explains what this channel can and can’t do for advertisers.

The rise of over-the-top (OTT) streaming services is shifting power dynamics within the TV industry, giving audiences full control over what video content they watch and when. The growth of OTT has been accelerated by the COVID-19 pandemic, with the global content streaming market expected to double in size from $25 billion to over $50 billion this year, as audiences around the world stay home and look for on-demand entertainment. We expect to see the market settle to around $34 billion in 2023, but that still represents an annual growth rate of over 8%.

Brands – particularly those in the direct-to-consumer (DTC) space – were already experimenting with OTT advertising before the pandemic, and the accelerated expansion of the content streaming market has made the channel even more attractive. But there is still confusion about what OTT can and cannot do for advertisers and plenty of myths to dispel.

Myth one: OTT should replace linear TV advertising

One of the many benefits of advertising on OTT is that it targets audiences brands can’t reach through linear TV alone such as cord-cutters and cord-nevers. But that doesn’t mean advertisers should completely replace linear with OTT, as traditional linear TV advertising is still an incredibly effective channel for both brand building and performance. The real power of OTT becomes evident when it is used in conjunction with linear to deliver incremental reach. Brands new to OTT advertising can take small steps, designating part of their wider TV budget to OTT and employing a test-and-learn approach to see what works for them. On average, brands that are doing well in OTT currently assign around 10% of their linear spend to this channel.

Myth two: OTT can’t be optimised for performance

OTT comes under the umbrella of TV, which covers premium video content across a wide variety of platforms. Measuring and optimising for performance is just as viable with OTT as with any other type of TV advertising. In fact, the brands that are most successful with OTT are those that continuously measure campaigns to identify the genres, streaming services, times of day, and creative lengths that drive the highest levels of response, and then optimise accordingly. Measuring and optimising for performance is vital as response rates can vary dramatically between different publishers or OTT providers, and tactics that generate results for one brand may not work for another, even within the same vertical.

Myth three: OTT advertising is complicated and unscalable

Actually, this myth is partially true. The multiple platforms and fragmented nature of OTT can make it complex and difficult to scale if the right technology is not in place. Fortunately, the tech is becoming available to remove friction and enable scale, allowing distribution across multiple different OTT services with minimal resources. With the right tech in place, going live with OTT advertising is as simple as deploying a tag to track performance across all cross-platform campaigns – including OTT – in real time.

Myth four: Viewers don’t like ads on OTT content

When TV audiences have the option of paying a fee for ad-free content, or a lower / non-existent fee for ad-supported content, they are likely to take the most cost-effective option. A recent survey of US adults revealed some degree of subscription fatigue, with 76% willing to watch ads in in exchange for free video streaming. It’s not specifically ads on OTT that viewers don’t like, it’s irrelevant, repetitive or annoying advertising on any platform. This explains why it is vital for brands to target audiences effectively, and then continually measure and optimise campaigns in flight to ensure they are reaching receptive and responsive consumers. Brands need to monitor ad frequency as this can build quickly across multiple OTT providers, negatively impacting performance if a viewer keeps being served the same ad.

Advertising on OTT was already proving a popular and effective option for brands looking to reach new and larger audiences. This year – as we dispel the associated myths – OTT advertising will scale and TV will become performance driven, with brands continually measuring and optimising their combined linear and OTT TV campaigns to achieve the best results.