The Basics and Advantages of OTT Advertising


Over-the-top (OTT) Advertising is radically reshaping the digital advertising industry - offering numerous benefits to both advertisers and consumers alike. In fact, in the OTT video ads segment, the number of users is expected to amount to 4,216.3m users by 2027. (Statista) This rapid growth of video content since the beginning of 2020, coupled with the inevitable need for marketers to deploy strategies that don't rely on third-party cookies, has made OTT Advertising platforms crucial for brands.

In this blog post, we will dive into the basics of OTT Advertising, outline its benefits, best practices and future growth in digital advertising.

What is OTT Advertising?

OTT stands for “Over-The-Top”, and refers to streaming long-form video content via the internet on any device, instead of via traditional distribution channels of cable,
broadcast, or satellite TV.

OTT Advertising delivers ads to viewers within this video content. OTT ads, also known as streaming TV ads, offer an opportunity for advertisers to reach new audiences at scale as more viewers begin to prefer watching content via streaming services in lieu of traditional cable and broadcast TV.

CTV stands for “Connected TV”, which is an internet-enabled television that can stream OTT content.

What's the Difference Between OTT and CTV?

Over-the-top (OTT) Advertising and Connected TV (CTV) Advertising are often referred to interchangeably -- which can be confusing, because they're not the same thing. OTT advertising refers to the video content itself-- video streaming through apps. CTV refers to the hardware -- an internet-connected device for streaming and viewing video on a TV-like screen. When we talk about OTT advertising, we're talking about services like Netflix, Amazon Prime Video, Hulu or Disney+, to name just a few. When we talk about CTV advertising, we're talking about devices like Smart TVs, Chromecast, Apple TV, Roku, or various game consoles that have the capability to stream video content (e.g. a Playstation or Xbox). You can stream OTT video via CTV -- but you can also stream OTT via mobile or desktop, which are not CTV devices.

Illustration of OTT Advertising Platforms versus Connected TV CTV Streaming Devices

What's Changing in the OTT Ad Space?

The cord-cutting trend is here to stay -- viewers have gradually been ditching linear TV subscriptions in lieu of OTT platforms for years. But the stay-at-home mandates during the Covid-19 pandemic accelerated that trend, as viewers had more time to spend watching video content and were looking for ways to save money. Over the course of 2020, the amount of time viewers spent watching streaming video increased by 44%. Viewers are spending even more time streaming video in 2021 than in 2020, while their time spent watching linear TV will be down 7% YOY. Cord-cutters typically don't end up re-tying those cords in the future.

Illustration of Ad Supported OTT Services Ad Revenue

This makes OTT a hot commodity, and as such, 73% of ad buyers who bought CTV inventory this year say they've shifted some of that spend from linear to CTV. Digital video (which includes OTT content) will account for 56% of all video ad spend in 2021.

OTT Advertising Services Defined


To understand OTT Advertising, we must define what we mean by "Advanced TV." Advanced TV is essentially all non-traditional TV. Many of these services are communicated through acronyms like TVOD, AVOD, SVOD and PVOD. Let’s break down these acronyms below:


Illustration of the Different Types of Online Video Ads in Streaming Services & Video Advertising


Transactional Video on Demand (TVOD)

Transactional video on demand (TVOD) content is purchased through a pay-per-view model. Viewers can either purchase the content for repeated viewing, or rent it for a single-time use. Amazon Prime Video Store is an example of a TVOD service.

Advertising-Based Video on Demand (AVOD)

Ad-based video on demand (AVOD) doesn’t require a subscription or transactional fee, as it’s ad-supported content. An example of an AVOD service is Freevee. Viewers are adding AVOD to their streaming options for more variety. From January to March 2020, 50% of US adults ages 18-44 signed up for an AVOD service; 47% planned to add another in the 12 months following.

Subscription Video on Demand (SVOD)

Subscription video on demand (SVOD) is content accessible to consumers who have signed up for a subscription to a particular service, allowing them to view as much as they want for a flat rate per month. An example of this is Amazon Prime Video.

Premium Video on Demand (PVOD)

Premium video on demand (PVOD) is a newer concept, where film studios and other providers offer premium video content, like access to a movie premiere, at a higher price point. This type of content became more prevalent over the past year as some studios released films straight to streaming services.

What are the Benefits of OTT Advertising?

Here the key benefits that OTT Advertising can offer to your business:

The Key Benefits of OTT Ads Versus Traditional TV Advertising


OTT Ads Are More Engaging than Traditional tv advertising

While watching broadcast television, viewers are served multiple ads and they are likely to change the channel or fast forward through the commercials altogether. With OTT ads however, the ads are more seamlessly integrated into the user's watching experience: Viewers can't skip the ads but they know exactly how long they will last. The experience is less disruptive, shorter and therefore, more engaging for the consumer. Consumers are more likely to pay attention to the video ads, which then proves to be very beneficial for advertisers.

OTT Video Ads Allow For More advanced targeting

OTT services deliver advertising on a 1-to-1 vector - which means that advertisers can target a consumer wherever that consumer may be, no matter what they’re watching or what platform they’re watching it on. This provides invaluable data for marketers to study what viewers are watching and how they are behaving online - which then helps to target audiences more accurately.

OTT ads can access Hard to Reach Consumers

Remember those cord-cutters? OTT ads empower advertisers to target this group of consumers with more precision, instead of employing a blanket TV ad strategy that may be too broad and ineffective at connecting with consumers.

OTT ads have advanced attribution capabilities.

Unlike traditional tv ads, OTT ads work through pixel-based tracking, through which advertisers can determine whether a person saw an ad and took an action. This data is invaluable to brands as they determine their campaign strategies.

OTT platforms offer unmatched selectivity.

While a lot of digital advertising is bought programmatically, brands have the opportunity to find OTT platforms with first look rights. This allows an advertiser to circumvent the targeting restrictions that inherently come with programmatic ad buying, gain access to top quality content and strategically distribute OTT ads to particular platforms and publishers.

What are the Drawbacks of OTT Advertising?

While OTT ads have numerous benefits, it is important to keep the following considerations in mind when you are developing your next OTT ad campaign:


  • No cookies, so targeting is done primarily by IP address and can be limiting and less accurate.
  • Limited scale = higher CPMs than digital video and linear TV
  • No clear-cut winners so fragmentation can prove to be a challenge

Contextual Intelligence & OTT Advertising

How Does Contextual Targeting Work in OTT Advertising?

Contextual targeting differs from audience targeting, in that audience targeting relies on data indicating a user's interests, behavior, and demographics; while contextual analyzes the content itself to align ad campaigns with relevant environments. With text, this is pretty straightforward: An algorithm scans pages for keywords relevant to the campaign. More advanced contextual solutions can analyze text for sentiment and tone -- not just what the language means, but what meaning it would convey to a human user.

Video requires a different technological approach. The amount of text available to analyze algorithmically is quite limited. There's some text to be found -- metadata and closed captions, for example. But to do contextual in video, the algorithm needs to recognize shapes and patterns. This is extremely important for ensuring brand safety. An advertiser might want to avoid buying around a scene with nudity or violence. A soda brand might want to avoid a scene where characters are discussing quitting their soda habits. A travel brand might want to be aligned with a sunny beach scene -- in which case the algorithm would need to recognize a sunny beach.

Contextual Intelligence in Streaming Services such as Youtube TV, Amazon Fire TV Stick & More

However, contextual analysis of images and video is a much bigger technological lift than that of text. It requires extensive machine learning to teach the tech to recognize patterns. Even more advanced tech capabilities are required to analyze sentiment -- to determine, for example, whether a scene is comedic or tragic or ironic. That's where computer vision comes in, to analyze data and perform image recognition. Computer vision also introduces efficiencies that help contextual targeting scale in video, and helps advertisers discover brand-safe, relevant video content beyond their tried and true inventory sources.

Getting these contextual signals from video content at scale is a significant development, because OTT streaming services -- which are commonly walled-garden environments -- make their own decisions about what data they want to share with advertisers. One benefit of contextual is that video publishers and streaming services will be able to share more data about their programming, without relying on data from their viewers themselves. Sharing more information on the content where their ads are running will encourage advertisers to increase OTT/CTV spending.

How Is Contextual Good for OTT Ads?

In a few words, audience targeting has always been a challenge in OTT, because the CTV environment doesn't support cookies. OTT usually relies on IP data for audience targeting, and IP data relies on signals from the user. IP targeting won't be a reliable strategy for long: As the industry moves toward giving users more data privacy controls, we need to assume IP data will be off the table around the same time Google deprecates third-party cookies, in 2023. The digital ad industry will need a new playbook, and contextual -- already part of publishers' and advertisers' toolkits -- is a clear solution to this pressing problem.

Also, the scalability of OTT contextual targeting just got a boost from the IAB's newly released Content Taxonomy 3.0, created for Connected TV, podcasts, and mobile apps, including games. The updated taxonomy breaks down the "news" vertical into more specific categories (i.e., separating news from op-eds), and adds more "entertainment" categories for CTV. This aims to better ensure brand safety in digital video, and to address another longstanding pain point in OTT/CTV.

There's also a big contextual opportunity in in-video ad formats -- animated overlays below or aside the video, rather than in the video stream itself. The format is basically analogous to the logos and banners viewers recognize from linear TV, but adapted for OTT/CTV. It opens up more inventory and a new revenue stream for publishers, without competing for attention with in-stream video ads.

GumGum Verity™'s OTT Advertising Capabilities

GumGum's contextual intelligence platform, Verity™, is the only contextual intelligence solution to fully analyze video content including audio, imagery and metadata to ensure true contextual relevance and brand safety on any screen.

Now, brands can apply Verity™ video processing to their OTT and CTV inventory for an added layer of contextual relevance, safety and scale.

Verity™ & IRIS.TV Help OTT & CTV Shine for Jewelry Designer

GumGum recently partnered with the powerful video platform IRIS.TV to drive video performance for a jewelry company. 

GumGum Verity™ and IRIS.TV worked together to drive a strong VCR metric by utilizing Verity™ Video PMPs to target contextually relevant videos related to fashion, parenting, shopping and more. In addition to targeting these IAB contexts, the Verity™ team created a custom Mother’s Day segment for this advertiser.


Together, GumGum and IRIS.TV exceeded the client’s goal, generating a VCR of 98.54% with their contextually powered video ads.

GumGum's OTT Video Ads Bring Success for Advertisers

Boost Your Ad Success with GumGum's OTT Solutions. Contact Us Now.

Illustration of OTT Streaming Growth in Ad Supported Streaming Video

The Future of OTT Advertising

Undoubtedly, OTT Advertising is will continue to gain momentum as one of the leading methods to reach consumers in an authentic and meaningful way. This, coupled with the ever-evolving TV landscape will lead to more innovation and therefore, great opportunities for brands and marketers in the OTT space. Now, it is just a matter of harnessing this power to build successful campaigns that will meet your goals and drive ROI.

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