What is OTT (Over-The-Top) vs CTV (Connected TV) Advertising?
Anyone who works in or around the online advertising world knows that digital media, in all of its diverse forms, is making big waves in the marketing industry.
Almost every digital advertising channel is experiencing extremely high levels of year-over-year growth, including sectors like retail media and digital audio advertising.
TV advertising is no different, with popular disruptors referred to as OTT (over-the-top) and CTV (connected television) seeing a 40.6% increase in ad spend leading up to 2020, and having $13.41 billion in spending growth forecasted by the end of 2022.
It’s not hard to see why, either - with a 2020 study by the Leichtman Research Group indicating that 80% of households in the United States have at least one connected TV, and that 40% of all adults in TV households use them at least once a day.
Not surprisingly, publishers and advertisers alike are often looking for ways to approach this space to get in on a piece of the action.
The only trouble is, like all things that are connected to the ad tech ecosystem, OTT and CTV advertising are riddled with jargon that can be difficult to make sense of (to say the least).
As relatively new additions to the wide range of digital advertising terms gaining rapid popularity online, even the basics of the terms “OTT” and “CTV” themselves are leaving many in the industry feeling confused.
In this article, we’ll be untangingling the semantic confusion surrounding OTT and CTV, how they differ from one another and from traditional linear TV, as well as reviewing the benefits that each of these channels has to offer.
Table of Contents
- What is Linear TV?
- What is OTT (Over-The-Top) Advertising?
- What is CTV (Connected TV) Advertising?
- Differences between OTT and CTV advertising explained
- Advantages and Challenges of OTT and CTV Advertising
What is Linear TV?
Before diving into what OTT and CTV are, it’s important to first understand what linear TV is and its role in the modern TV advertising landscape.
Linear TV refers to the traditional TV system in which viewers access broadcasted content by tuning in during the time at which it airs, based on a TV station’s programming schedule.
Through linear TV, the channel upon which content is broadcasted must be accessed through a paid cable, paid satellite, or free over-the-air (OTA) connection.
Outside of viewing a program when it airs, the only method of interacting with a linear broadcast is to record it for later viewing through the use of a digital video recorder (DVR).
This differs from non-linear media formats, including OTT, through which viewers can access the content they wish to watch at any time.
While linear TV may seem like an “old fashioned” system, it continues to hold the majority of ad spending dollars in the modern TV advertising landscape - though this position is gradually shifting as audience reach fragmentation takes place through OTT’s disruption.
(A chart illustrating the forecasted increase of CTV ad spending vs linear TV.)
In a report by eMarketer, linear TV’s spending allocation is forecasted to gradually decline, while mediums that make use of CTV devices will account for the majority of TV advertising growth moving into 2025.
To understand why this is the case, let’s take a closer look at what OTT and CTV are - and why these mediums are gradually shifting advertising budgets away from linear broadcasts.
What is OTT (Over-The-Top) Advertising?
OTT (over-the-top) refers to streaming technologies used by media services to deliver TV and video content via online channels, rather than traditional cable.
OTT advertising (also known as “streaming TV advertising”) refers to ads that are served directly to the viewers of media channels that operate using OTT tech.
Some examples of popular OTT streaming services include:
- ESPN Plus
- Disney Plus
- Amazon Prime Video
While OTT’s naming convention is somewhat "loose" (in that everyone seems to have their own interpretation of what the name means and where it originated from), “over-the-top” generally refers to media being streamed “over the top of” (or “bypassing”) cable, broadcast, and satellite TV companies - all of which traditionally held exclusive control over content distribution.
Another popular interpretation behind OTT’s name is perceiving the content as being accessed “over the top of” the baseline functionalities of an OTT compatible device - or, by streaming the media “over the top of” the internet.
In other cases, the content itself found on OTT channels is referred to as being “over the top”, “above and beyond”, or “premium” when compared to traditional content streaming outlets like YouTube and other social networks.
In yet one more definition, set-top boxes, which are pieces of hardware that are often used to enable OTT device connectivity, often sit “over the top” of TV sets when in use.
Whichever way you choose to interpret OTT, it has undoubtedly become a popular acronym which is used to concisely refer to the way that many consumers are choosing to stream their favorite TV, film, and other video content online.
What is Advanced TV?
Advanced TV is an umbrella term used to broadly refer to any and all streaming technologies, platforms, and/or formats through which content is accessed online, rather than traditional cable.
Both OTT and CTV, as well as a myriad of other abbreviations within the OTT ecosystem can accurately be described as being advanced TV technologies - due to the shared nature in which all of them connect viewers to an online media viewing experience.
While not the focus of this article, the term “advanced TV” plays a significant role in the “cord-cutting” trend - or in other words, the consumer movement away from traditional cable towards internet-based alternatives.
If you’re interested in taking a deep-dive on advanced TV and how this term relates to OTT and CTV, check out this list of popular advanced TV acronyms by Amazon Ads.
What is CTV (Connected TV) Advertising?
CTV (connected-television) refers to any non-PC, non-mobile, internet-capable device that is used to access OTT video content online, specifically in instances where that content is then delivered to and viewed by using a (big screen) TV.
CTV advertising refers to professionally produced video ads, reminiscent of traditional TV ads, which are intended to be served at various points during a user’s viewing experience. CTV ads are not the same as display ads which sometimes appear in video content.
Some examples of CTV devices to which CTV ads are served include:
- Smart TVs (which are inherently internet compatible)
- Internet Streaming Devices (for example, set-top boxes like those manufactured by Roku, as well as devices like the Google Chromecast, Amazon Fire Stick, and Apple TV)
- Gaming Consoles (Xbox, Playstation, Nintendo)
An article published on Forbes provides some statistics surrounding the current landscape of CTV devices in the United States - with Roku holding 39% of the CTV market share (including an estimated one-third of Smart TV sales in the US and Canada) and Amazon holding 30%.
The article also highlights Samsung and Vizio as leading manufacturers of Smart TV sets - with 33 million and 15 million Smart TV sets sold, respectively. It also explains how these companies have begun offering addressable CTV media programs (Samsung’s program / Vizio’s program) to advertisers.
These offerings by Samsung and Vizio originate from the intense pricing competition taking place across much of consumer culture, which is forcing product-based companies within many industries to turn to advertising streams to subsidize their decreasing profit margins.
Similar to Amazon’s media strategy in the retail sector, Samsung and Vizio, among other companies that have traditionally focused on selling products to consumers, are now positioning themselves as media publishers to work directly with advertising partners.
In order to properly understand these emerging service offerings in the advanced TV ecosystem, it’s important to understand the semantic differences between OTT and CTV.
Differences between OTT and CTV advertising explained
Let’s briefly review what’s been covered so far.
OTT is a technology through which content is delivered to viewers online, while CTV refers to specific types of internet-compatible devices upon which that content is displayed.
Advanced TV is an umbrella term which encompasses both OTT and CTV, while linear TV is the traditional system in which media is broadcasted using a planned broadcasting schedule.
One of the primary differences between OTT and CTV advertising is that OTT ads are usually served in the form of video ads within accessed video content, while CTV ads are typically served alongside apps that are installed on CTV devices, or the device’s home page itself.
Unsurprisingly however, due to OTT and CTV’s similarity (and because this is ad tech), the two terms are often used (wrongfully) interchangeably with one another.
(An infographic comparing OTT and CTV provided by the IAB.)
As the media programs offered by various businesses have become more sophisticated over time, the need to standardize the use of each term has arisen - ensuring that advertisers are able to allocate their ad spend accurately to easily identifiable channels.
The need became so great, in fact, that the IAB Tech Lab published a dedicated article providing standardized guidelines for how and when the terms OTT vs CTV should be used.
To summarize the article:
- The terms “OTT” and “OTT advertising” should be used in instances where it doesn’t matter which device is being targeted by an advertiser - for example, when advertising through an OTT streaming service like Netflix.
- The term “OTT” is also appropriate when referencing “premium” OTT programming, which is distinct from other forms of “commonplace” user-generated content online.
- The terms “CTV” and “CTV advertising” should be used exclusively in instances where Smart TVs and media streaming devices are being referenced - for example, in cases where an advertiser wishes to target a particular type of CTV device.
- The term “CTV” should not be used when referring to mobile, desktop, laptop, and/or tablet devices, as these devices are not included within the definition of a CTV device (despite being capable of streaming OTT content in many instances).
- The IAB renamed one of their own programs, the “OTT Technical Working Group” to the “CTV Technical Working Group”, to better reflect their own program offerings.
With an understanding of each term’s proper use, let’s take a brief look at the publisher ecosystem for each of these types of advertising.
What is an OTT publisher?
In ad tech, the standard definition of a publisher is fairly straightforward.
With a standardized definition of what OTT advertising encompasses, it becomes easier to identify what an OTT publisher is when discussing advanced TV advertising.
Earlier in the guide, several examples of OTT streaming services were listed:
- ESPN Plus
- Disney Plus
- Amazon Prime Video
Following the IAB’s definition, all of the above services can be classified as OTT publishers, as their services reach users across multiple types of CTV devices.
For clarity, there are several semantic terms commonly used to describe the services above, including:
- OTT TV Providers
- OTT Service Providers
- OTT Content Providers
- OTT Media/Video Streaming Services
- VOD (Video on Demand) Delivery Services
(As a side note, many streaming service providers also allow viewers to access their content through a company website.)
As you can see, the language for defining these services is very loose - which often contributes to various terminology being used interchangeably.
There’s one more term that’s sometimes used to describe the above services - that term being “OTT app”.
An OTT app is a piece of software designed according to the technical specifications of the CTV devices upon which it serves content. The app can be downloaded onto one or more CTV devices, allowing those devices to stream content from the service provider via the app.
While major service providers like Netflix have apps which allow users to access their streaming service, independent content publishers can also launch their own OTT apps.
OTT Streaming Services vs OTT Platforms Explained
As an independent publisher, launching an OTT app is typically accomplished through the use of a service which is not to be confused with an OTT service provider - that service being referred to as an “OTT platform”.
An OTT platform is a distinct and separate type of business from an OTT streaming service - though with how often terms are used interchangeably in the industry, this can sometimes (understandably) cause some confusion.
Instead of focusing on optimizing viewing experiences for their own audience, OTT platforms are services which help independent OTT publishers to become their own streaming services, allowing the audiences of those publishers to stream their content over the internet.
Most OTT platforms provide independent OTT publishers with the tools they need to store, manage, and deliver content online to their viewers through a suite of video hosting and streaming functionalities.
In many cases, OTT platforms also help OTT publishers to launch their own OTT apps, allowing the audiences of those publishers to stream the content to their CTV devices.
In these cases, the app acts as a gateway for viewers to access the content stored on the publisher’s OTT platform through various CTV devices.
Some examples of the most popular OTT platforms include:
And some examples of independent OTT publishers who have launched their own OTT apps by using an OTT platform include:
- National Comedy Center
- Max Maxwell TV
- Flying TV
Many more examples of independent OTT publishers can be found on pages like Uscreen’s example page, where dozens of categorized creators can be reviewed.
In addition, this comprehensive list of OTT platforms and CTV devices compiled by ClearCode may be of interest if you’d like to further explore different components of the OTT ecosystem for yourself.
What is a CTV publisher?
Similar to how OTT publishers were identified in the previous section, by using the IAB’s guidelines for the use of the term CTV, it becomes easier to identify what a CTV publisher is.
Earlier in the article, several CTV device manufacturers were listed, including:
- Amazon (with the Fire Stick)
- Google (with the Chromecast)
- Apple (with the Apple TV)
- Gaming Consoles (Xbox, Playstation, Nintendo)
Following the IAB’s definition, all of the above can be considered CTV publishers and/or CTV publisher ad networks, as the media programs offered by these companies focus exclusively on the “walled garden” audience ecosystems of their own CTV devices.
However, this isn’t to say that there aren’t avenues for well-established independent content publishers to get involved with CTV publishers - as ad networks are always eager to expand their content offerings to their audiences.
While this section has covered the basics of CTV publishers, there are actually sub-categories of CTV publishers, which, if you’re interested in learning more about, have been described at length in the IAB UK’s Guide to the Connected TV Supply Chain.
Advantages and Challenges of OTT and CTV Advertising
We’ve covered a lot surrounding the semantic details of OTT and CTV - but for all of their technicalities, what advantages do these advertising mediums have to offer?
OTT and CTV have such high levels of audience addressability that they’re both often referred to as addressable TV in the context of digital advertising.
What’s more, CTV has the highest ad viewability rate among all other forms of digital video.
This comparison chart details a list of some of the most popular advantages and challenges featured by OTT and CTV advertising when compared to traditional linear TV strategies.
|Advantages||• User-controlled viewing experiences allow advertisers to reach specific audiences with perfectly timed, engaging, and contextually relevant ads.
• First-party data profiles on viewers provide advertisers with granular targeting as well as audience retargeting options.
• As viewers (particularly millennials) move away from linear TV, OTT and CTV are allowing advertisers to target otherwise unreachable audiences.
• OTT and CTV provide quantifiable metrics to gauge campaign performance, including video reach, completion rates and viewability rates.
• OTT and CTV are considered to be two of the most spend-effective channels due to their audience targeting capabilities.
• In most cases, CTV ads cannot be skipped.
• CTV ads and their CTAs (calls-to-action) can be served in a variety of versatile ad formats.
• Due to the current high quality of content found within the OTT and CTV ecosystem, brand safety is generally higher than that of linear TV advertising.
|• Linear TV still retains the largest market, and therefore audience reach, over OTT and CTV.
• Niche TV networks can sometimes offer opportunities that yield higher cost efficiency, even over the targeting options made available through OTT and CTV.
|Challenges||• Different OTT service providers have different content offerings, which can force both viewers and advertisers to split their attention between multiple providers.
• The OTT content experience requires access to reliable, high-speed internet which some audiences may not have access to.
|• The audience reach of linear TV is often referred to as being “fragmented”, due to many audiences falling out of favor with the medium and moving to OTT and CTV.
• Despite the development of new technologies to assist in linear TV ad targeting, OTT and CTV still provide more granular options.
With the long list of advertising advantages stacked in OTT and CTV’s favor, as well as the trend of audiences shifting towards these mediums to engage with their favorite content, it’s no surprise that OTT and CTV are gaining a rapidly increasing share of TV ad spending.
However, with that said, linear TV isn’t set to disappear in a hurry, and the few advantages it does retain are important ones that should see the medium remain relevant in the advertising ecosystem for years to come.
Enhancing Your OTT/CTV Advertising Program
We’ve covered a lot about the differences between OTT and CTV - but to be fair, this article has really only covered the basics!
As a newer medium with which both publishers and advertisers are experimenting, advanced TV presents an evolving myriad of monetization opportunities for those who are willing to keep up with the industry.
Before wrapping up, there’s one more component to the ecosystem you might be interested in learning more about.
Publishers and advertisers often make use of SSPs (supply-side platforms) and DSPs (demand-side platforms) to manage their media buying and ad inventory sales.
Without getting into the weeds of the ad tech ecosystem, there are some significant disadvantages associated with relying on third-party ad tech platforms, including expensive revenue sharing models and lack of data transparency.
If you’ve been considering ways to monetize in the OTT and CTV space, consider exploring AdButler - an API ad serving solution - that allows you to:
- Connect to all of your advertising partners (AdButler is often used as a “demand neutral” SSP)
- Keep complete (and private) control of your first-party data
- Develop a propriatary API ad serving solution with assistance from a team of ad tech experts
- Store all of your video ad and display ad creatives
- Set up your own self-serve advertising portal
- Access comprehensive reporting metrics and share them with stakeholders
- All accessible at SaaS pricing (rather than a revenue sharing model)
The AdButler team has over two decades of experience in providing and configuring ad serving solutions for both publishers and advertisers.
We’d love to share a conversation with you. Ask us a question today!