CTV vs OTT Advertising: What is the Difference?

Multichannel digital advertising is one of the most important factors for brand promotion on the market. In order to successfully implement a multichannel advertising campaign strategy, it is necessary to distinguish the types of these channels from each other.

So let's find out, what is the difference between CTV and OTT?

When you say CTV, do you mean the big smart TV in your living room where you're rewatching The Big Bang Theory on Apple TV again? Or do you mean you subscribe to a dozen streaming services to watch video content?

And when you talk about OTT do you mean a TV connected to the Internet or that new show you started watching on Hulu?

Many people and even many marketers put an equal sign between OTT and CTV in casual conversation. However, to set up multichannel advertising, you'll need a deeper understanding of these concepts.

Also, understanding those differences will help you choose the right DPS platform to run your CTV or OTT advertising.

What is OTT?

OTT literally means "over-the-top", which can be decoded as "over-the-box". Content for OTT is streamed through Internet connection rather than the traditional way through cable or satellite subscription. Viewers don't have to subscribe to a traditional linear TV provider to access OTT video content.

Content is provided as streaming video or through video on demand (VOD) services. Some of the most well-known OTT streaming services are Netflix, Hulu, Crave, and Amazon Prime. Many major companies have also adopted this type of video content delivery and are creating their own OTT services for over the top TV and even developed OTT apps for it. For example, in 2019 Disney launched their Disney+ service, and in 2020 NBC Universal launched an OTT service called Peacock. So OTT advertising means that it will be displayed on these OTT services.

The main difference from traditional linear TV is that as long as the users have some OTT devices with Internet access (mobile phone, tablet, laptop, smart TV, and over streaming devices), they will have access to OTT TV content. Traditional television, on the other hand, would require the user to subscribe to a provider.

What is CTV?

The term CTV (Connected TV) refers to any type of TV that supports digital video streaming. Such devices include Smart TVs and devices that provide easier access to streaming video. For example Roku or Chromecast, Apple TV, Amazon Fire TV, and gaming consoles such as Xbox and Nintendo Switch. The main thing you need to understand in order to differentiate OTT and CTV is that most over-the-top TV content can be watched through CTV devices.

Because of the popularity of Connected TV, there is such a thing as "cable-cutting". It means that users prefer abandoning cable or satellite subscriptions in favor of streaming content. Streaming content is often cheaper than a paid TV subscription, or even free, so this choice is usually based on savings.

In 2020 alone, 6 million households in the U.S. gave up linear and satellite providers in favor of connected television. That brings the total number of households that have abandoned traditional linear TV to 31.2 million.

CTV, OTT: what's the difference?

Let's see the key differences between OTT and CTV to understand what role they can play in OTT and CTV advertising.

First of all, Connected TV (CTV) is a subset of OTT programming. That means that over-the-top TV is a method of delivering video content, and CTV is the device on which the viewer can see that content.

For example, if viewers are watching streaming OTT content on their mobile devices, they are receiving over-the-top TV content. However, if they watch it with Chromecast on their TV, they are now consuming OTT content through the CTV. In this case, the user can see both: CTV and OTT advertising.

OTT and CTV for marketers

Important differences between the two systems are evident when it comes to the topic of marketing or OTT and CTV advertising.

For example, ads are often shown before, during, and even after video content. We often need to see ads before we can watch our favorite blogger's video content on YouTube.

Connected TV advertising is similar to the one on YouTube but still different. Connected TV ads can be displayed on the CTV devices themselves, giving skilled marketers the ability to reach their target audience and connect to them regardless of the content chosen by those users.

The main advantage of advertising on Connected TV (CTV) is that its audience is more engaged and interested. When you set up your CTV ads with DSP, you can choose publishers you trust to make sure the ads won't harm your brand image.

Ads can appear not only directly on the smart TV, but also on other CTV devices, such as the Sony PlayStation 4 game console, Chromecast, AndroidTV, and others.

What does the future hold for CTV?

According to Nielsen, the total number of hours spent watching content from CTV-enabled devices is up to 81% in 2020 compared to the same period in 2019. Many advertisers are interested in learning which demographic groups are most likely to watch their favorite shows on Connected TV devices. According to eMarketer, not only younger audiences are more likely to watch CTV, but older demographic groups are also switching from traditional cable TV.

Their data show that U.S. CTV viewership in 2020 is 45.7 million for Generation Z, 56.5 million for millennials, 48.5 million for Generation X, and 32.8 million for baby boomers, for a total of 183.5 million CTV viewers.

The number of people using CTV continues to grow. In 2020, 80% of households in the U.S. had a CTV. That's about 96 million Americans who have at least one Connected TV in their home. By comparison, that number did not exceed 57% in 2015 and 24% in 2010.

That percentage is expected to rise to 87% by 2025.

In addition, spending on CTV advertising continues to grow. In the U.S., it's going to grow 34.6% to $6.41 billion this year. That's as much as was spent overall on CTV advertising a year ago.

The platforms U.S. brands prefer to invest in:

So the niche of OTT and CTV advertising remains very promising and popular. Let's look at the advantages and disadvantages of advertising on CTV.

CTV advertising

CTV advertising can be purchased programmatically, so your DSP probably offers CTV as one of the advertising media channels.

Advantages of CTV advertising

High view completion rates

Most of the CTV commercials cannot be skipped. Or you can do it, but you have to press the little cross in the corner of the screen, and it's extremely uncomfortable to do with the remote. It gives an advantage to advertisers and a better chance that their ads will be seen. For this reason, CTV advertising has a very high view completion rate.

Linear TV, on the other hand, is increasingly providing a service that allows the viewer to scroll through or skip an ad. And live TV viewing is decreasing year over year, as is the ability of viewers to watch traditional TV commercials.

Ad Campaign Settings

Because CTV advertising is a part of programmatic advertising, the possibilities of its setting are much wider and more varied than the opportunities of setting up ads on traditional TV. There are no limitations like broadcasting time or limitation of advertising prices.

The CTV campaign settings are the same as for native or video ads. There are also advanced targeting options and a wider selection of inventory. And with real-time reporting, you can track user interactions with your ads as long as the campaign is active and adjust settings if necessary.

Brand safety

The DSP platforms that set up advertising campaigns for Connected TV carefully select and verify the publishers where the ads will be displayed. In addition, the platform's tools allow you to choose your desired publishers if you need them. In this way, your brand's reputation will be safe.

Cost of advertising

On linear TV, the cost of advertising is fixed, unlike on OTT and CTV. Here, the cost of the display will be determined based on real-time bidding, which is part of the DSP's service. Thanks to this, advertising on Connected TV is much more profitable. Besides, you can set the maximum price for the display, which will make you better and more reasonable in your advertising budget control.

Creative advertising

With the video format, advertising can be very creative on its own. But with CTV ads, there's a lot more opportunity to make a catchy one because of the interactivity. You can add a button or QR code to get viewers more engaged.

For example, the cryptocurrency exchange Coinbase ran an ad during Super Bowl 2022 where a QR code moved across a black screen, bouncing off its borders. The ad resembled an old video game and it was so popular, that in a few minutes Coinbase faced server overload because of the huge incoming traffic.

Retargeting options

Since the advertising setup options on Connected TV are very high, marketers can use existing customer bases to launch their advertising campaigns.

Targeting multiple devices

Your advertising message can communicate better to the user if they see it on multiple connected devices. Connected TV audience targeting will amplify the message and increase the visibility of the brand or product you're advertising.

Disadvantages of advertising on CTV

• The number of households with CTV has not reached the number that has used terrestrial and traditional cable television. However, the world is moving toward it, and very quickly. But while we're not there yet, it's also worth considering.
• Many platforms and data providers can't map cookies or mobile advertising identifiers (MAIDs) to IP addresses, which limits the scale of inventory available for IP-based audience targeting.
• Lack of audience fragmentation due to hidden account sharing. Since many families, friends or partners often use the same account to watch streaming content, targeting a specific demographic group of customers can be difficult. However, it's still much better than the targeting (or lack thereof) on linear TV.

To take or not to take CTV advertising? Here is the question

There's no one-size-fits-all answer to this question. As always, it all depends on the needs of your brand and your marketing goals.

If you've read the article and realized that this advertising format is what you need right now, we'd be happy to help you with our SmartyAds DSP.