What is OTT Advertising?

Advertising has come a long way from the days of traditional TV commercials. With more people cutting the cord and shifting to streaming platforms, brands need smarter ways to reach their audience. What is OTT advertising? It’s the future of video marketing, delivering targeted ads directly to viewers through internet-based streaming services. 

Unlike traditional TV ads, OTT advertising offers advanced targeting, measurable results, and cross-device reach. Whether you’re a small business or a national brand, understanding how OTT works, its benefits, and which industries can leverage it effectively will help you stay ahead in the ever-evolving digital landscape.

What is OTT Advertising?

OTT advertising refers to delivering ads directly to viewers via internet-based streaming services, bypassing traditional cable or satellite TV providers. With the rise of platforms like Netflix, Hulu, and YouTube, advertisers now have more precise ways to reach their targeted audience with digital commercials that fit their interests and behaviors.

OTT advertising is booming. In the U.S., the OTT market is expected to hit $193.59 billion by 2029, with nearly 4.9 billion users. This massive shift has made OTT one of the most effective ways for brands to engage a targeted audience with personalized, high-impact video ads.

How Over-the-Top Ads Work

Streaming content is delivered over the internet, which means OTT ads can appear on smart TVs, smartphones, tablets, laptops, and gaming consoles. OTT ads are highly targeted, making them more effective.

Ad Insertion Methods:

OTT advertising uses two main ad insertion methods:

• Client-Side Ad Insertion (CSAI): Ads are loaded and played on the user’s device during streaming.
• Server-Side Ad Insertion (SSAI): Ads are embedded into the content before streaming begins, making them less skippable and more seamless for viewers.

Ad Formats

OTT offers several ad formats, allowing brands to engage audiences in different ways:

• Pre-Roll Ads – Play before content starts (like YouTube ads).
• Mid-Roll Ads – Appear during a video, similar to traditional TV commercial breaks.
• Post-Roll Ads – Run at the end of a video.
• Overlay Ads – Small banners or text that show up on the screen without stopping the content.

Streaming Platforms for OTT Advertising

There are several types of streaming services where over-the-top ads can be placed.

• Subscription-Based Video on Demand (SVOD): Services like Netflix, Amazon Prime, and Disney+ offer ad-free streaming through paid subscriptions. Although traditionally ad-free, some platforms are now introducing ad-supported tiers to reach budget-conscious users. In 2023, 83% of U.S. consumers used an SVOD service​.

• Ad-Supported Video on Demand (AVOD): Free platforms like Tubi, Pluto TV, and Crackle rely on ads for revenue, making them prime spots for OTT advertising.
• Transactional Video on Demand (TVOD): Users pay for specific content (e.g., iTunes, Google Play) instead of subscribing to a library.
• Multichannel Video Programming Distributors (MVPD): Traditional cable providers offering streaming services, such as Sling TV and YouTube TV, bridge the gap between CTV advertising and OTT.

Benefits of OTT Advertising

Why are businesses shifting to OTT? Here’s what makes it a game-changer:

• Advanced Targeted Audience: Unlike traditional TV ads that cast a wide net, OTT lets brands target specific demographics, behaviors, and even ZIP codes.
• Programmatic Advertising: OTT platforms use automated, real-time auctions to place ads, ensuring cost efficiency and better audience targeting.
• Enhanced Measurement and Analytics: With OTT, brands can track impressions, engagement, and conversions in real time, making it easier to optimize campaigns.
• High Ad Completion Rates: Non-skippable ads ensure that users watch the full message, leading to higher retention and recall.
• Cross-Device Reach: Since OTT ads play on smart TVs, mobile phones, desktops, and tablets, brands can engage users across multiple touchpoints.
• Access to Cord-Cutters and Cord-Nevers: Many consumers, especially younger generations, don’t watch traditional TV anymore. OTT helps brands reach these audiences effectively.
• Improved Brand Safety and Fraud Prevention: OTT platforms ensure ads appear in brand-safe environments, reducing ad fraud risks.

OTT vs CTV Advertising

Both OTT and CTV advertising involve streaming, but they aren’t exactly the same.

• OTT Advertising: OTT ads are delivered through streaming content over the internet and can be watched on any internet-connected device—smart TVs, mobile phones, tablets, or laptops. This gives advertisers the flexibility to reach their audience no matter where or how they’re streaming.
• CTV Advertising: CTV advertising is a bit more specific. These ads only appear on smart TVs or connected devices like Roku, Apple TV, and Amazon Fire Stick. It’s essentially TV-style advertising, but on internet-connected screens.

Key Differences:

• Device Specificity: CTV is limited to TV screens, while OTT works across multiple devices.
• User Experience: CTV delivers a more traditional TV viewing experience, whereas OTT allows users to watch content on any screen.

Since the average U.S. adult spends over 2 hours per day watching CTV, CTV advertising is great for brand awareness and re-engaging past customers. But if you want broader reach across multiple devices, OTT advertising offers more flexibility.

Who Benefits Most from OTT Advertising?

OTT advertising works for any business looking to engage a targeted audience, but some industries get even more value from it. If you’re in one of these fields, OTT ads can put your brand in front of the right people at the right time.

• Direct-to-Consumer (DTC) Brands: If you run a DTC brand, OTT advertising gives you laser-focused targeting. You can reach specific customer segments based on demographics, interests, and buying behavior. Instead of wasting ad spend on the wrong people, your message lands in front of those most likely to buy.
• Home Services Businesses: Plumbers, roofers, HVAC companies, and other home service providers can target local audiences with ads that appear in specific geographic areas. That means your business gets seen by homeowners in need of repairs or renovations.
• Entertainment Industry: OTT platforms are perfect for promoting movies, TV shows, concerts, and live events. Your ad plays in front of an audience already watching similar content, making it more relevant and engaging.
• E-commerce Platforms: Running an online store? OTT ads can showcase new arrivals, seasonal deals, and exclusive promotions, driving traffic straight to your website. With clickable ad formats, viewers can go from watching an ad to buying a product in seconds.
• Automotive Industry: Car dealerships and manufacturers can highlight new models, lease deals, and promotions with high-quality video ads. OTT helps you target potential buyers based on location, income level, or even interest in specific car brands.

Get High-Impact OTT Advertising with an Award-Winning Team

At LMH Agency, we specialize in OTT advertising strategies that drive real results. We don’t just place ads—we create campaigns that integrate seamlessly with your broader digital marketing efforts, ensuring maximum impact. With cutting-edge tech, data-driven insights, and a focus on your business goals, we help you reach the right audience and boost engagement.

Want a marketing strategy tailored to your business goals? Contact us today for a free consultation and see how OTT advertising can take your brand further.