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differences between CTV and OTT Advertising

Understanding the Differences Between CTV and OTT Advertising

In recent years, streamed television content has become an exciting opportunity for digital campaigns. As you integrate streaming TV into your digital strategy, it’s important to understand how this type of content fits into the digital media landscape. A good starting place is to understand the differences between over-the-top (OTT) and connected TV (CTV).

These two terms are sometimes used interchangeably or confused with each other. This is likely because they do refer to related aspects of digital advertising for television. OTT and CTV work in tandem to deliver ads on a connected TV device. Understanding the differences between the two will help you to speak confidently about CTV advertising and choose a DSP that offers the functionality you need. And, it will enable you to expand your agency offerings and create digital campaigns that reach their full potential.

What is Over-the-Top (OTT)?

OTT is the term that describes the delivery of TV content through the internet and over the standard, closed TV system. Viewers don’t need to subscribe to a traditional cable or satellite provider to be able to watch television content via OTT. This means that OTT programming includes all content that is streamed over the internet.

OTT video content is delivered in a streaming or video on demand (VOD) format. Some popular OTT services include Netflix, Hulu, Crave, and Amazon Prime. Lots of well known entertainment conglomerates are now launching their own OTT services. For example, Disney’s OTT service called Disney+ launched in 2019, and in 2020 NBC Universal launched their OTT service called Peacock. 

It’s important to emphasize that users do not need a subscription to a traditional cable or pay-TV service to access OTT content. As long as they have a device, like a mobile phone or smart TV, they can stream OTT over the internet. 

What is Connected TV (CTV)

CTV is the term describing any type of TV that is capable of streaming digital video. This includes Smart TVs as well as TVs that use a device to facilitate the delivery of streaming video. Internet connected devices like Roku or Chromecast and gaming consoles like Xbox and Nintendo Switch all enable a TV to stream digital video—making it a connected TV. The key to understanding CTV’s role in OTT content is to understand that today, lots of OTT content is viewed via CTV.

The rise of CTV has led to a phenomenon known as “cord-cutting.” This term refers to the pattern of viewers cancelling their subscriptions to cable or satellite television services, or dropping paid television channels. It can also refer to viewers who are reducing the number of hours of subscription TV viewed in favour of TV content that is served via the internet. Cord-cutting can be mostly attributed to flexibility and consumer control. Streamed content is generally cheaper (sometimes even free), making it a more economical choice when compared to traditional cable or satellite, and this has consumer appeal because you can watch what you want, when you want.  

The Differences Between CTV and OTT

To gain a really strong understanding of OTT and CTV, let’s dig into their key differences in more detail. By understanding what differentiates OTT and CTV, we can better understand what role both of them play in the programmatic advertising landscape. 

CTV is a subset of OTT, which includes apps and services that don’t require subscriptions to traditional cable or pay-TV service. This means that OTT is the method for delivering video content, and CTV is the device on which a viewer sees that content. 

Here’s an example. If a viewer watches Netflix on their mobile device, they are streaming OTT content. But if they were to watch Netflix through a Chromecast that’s plugged into their television? In that case, they’re streaming OTT content over CTV.

A visual representation of the differences between CTV and OTT, and how they work together.

Connected TV Advertising 

Knowing the differences between OTT and CTV is important because when it comes to digital advertising they work hand in hand. CTV ads can be bought programmatically, so your DSP likely offers CTV as an advertising channel. This means you are running ads on CTV as a channel, but the ads are served over-the-top.

There are many benefits to CTV advertising. CTV ads offer marketers a way to reach cord-cutting households, which are a growing market. The adoption of CTV has been accelerating. In 2020, over 6 million U.S. households cut the cord with pay-TV, bringing the total number of cord-cutter households to 31.2 million. And, most CTV viewers watch ad supported content. Viewers in the U.S. and Europe say they prefer to watch free-to-view programming versus paying to watch the same content without ads.

We know that CTV reaches an engaged audience, but that isn’t its only benefit. CTV advertising removes the constraints of traditional television advertising, like broadcasting schedules and ad pricing limitations. It adds enhanced targeting options and inventory selection—along with real-time reporting. With CTV, it’s possible to leverage similar campaign setup and targeting as other programmatic media buys like display, native, and video advertising. This means that, like with any programmatic campaign, you can assess progress against goals and metrics while a campaign is live. 

A key difference between CTV ads and other types of programmatic media is the metrics to track. CTV viewers aren’t on a laptop with the ability to click right away like they would a display ad. Therefore, CTV is best for awareness campaigns. You’ll want to track the performance of a CTV campaign through metrics like video completion rate (VCR) and cost per completed view (CPCV). We’re also seeing a resurgence of QR codes as part of a CTV strategy. When you embed a QR code into an ad shown on CTV, your audience can then pull out their mobile phone and scan the code to visit your landing page. With QR codes, you’ll be able to track the traffic that is directed to your landing page via the CTV ad. 

Reach a Growing Audience with Connected TV

By leveraging CTV, you can meet viewers where they are, which is increasingly on CTV. Nowadays, 80% of U.S. households have at least one CTV device. And according to eMarketer, that percentage is expected to climb to 87% by 2025. With this audience rapidly growing, it makes sense to reach them through CTV advertising. If you’re ready to add CTV to your digital strategy, consider using it to provide the awareness component of a full-funnel or cross-channel campaign. It’s a great way to bring awareness to an attentive audience, who you can then later target across other devices. 

For more information on connected TV and StackAdapt, contact your StackAdapt Representative or request a demo.

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