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OTT vs CTV Advertising: What’s the Difference?

Marketing
Marketing
Published: Jul. 19, 2023

OTT (over-the-top) and CTV (Connected TV) have become popular buzzwords in the marketing industry. However, there is a prevalent misconception that these terms can be used interchangeably, when in reality, they are not the same thing.

In order to successfully implement a multichannel advertising campaign strategy, marketers must have a clear understanding of the fundamental distinctions between various channels. To bring clarity and provide a better understanding, let's delve into these concepts and differentiate between OTT and CTV.

Want to learn even more about connected TV? Check out our ultimate guide to connected TV advertising.

What is OTT?

Over-the-top (OTT) advertising refers to the delivery method of streaming video content over the internet, bypassing conventional cable or satellite providers. As the name suggests, over-the-top essentially goes "over” traditional TV channels like cable or satellite.

It is commonly associated with the term "cord-cutters" as it enables viewers to access TV programming using an internet connection instead of relying on traditional broadcast services. Popular examples include Hulu, Netflix, Amazon Prime, Peacock, and Disney+. OTT often utilizes dedicated devices, referred to as OTT devices or boxes, which can be connected to standard displays.

OTT devices come in several forms:

  • Some, like Xbox, serve as game consoles as well.
  • Others, such as Roku TV, use OTT boxes and specialized remotes.
  • And there are those, like Hulu and Netflix, that operate solely through internet-connected smart TVs.

What is CTV?

Connected TV (CTV) refers to any device equipped with internet capabilities that is either connected to or embedded within a TV set, allowing users to stream video content. Some examples of CTV devices include smart TVs, as well as popular streaming devices like Amazon Fire Stick and Roku.

How is OTT different from CTV, then? OTT refers to the delivery method of video content, bypassing traditional distribution channels, while CTV refers to the physical device that supports such video streaming content. For instance, you can watch OTT content — your favorite Hulu show, for example — on a CTV device like a Roku TV.

While OTT and CTV have their differences, they also share several similarities. Both OTT and CTV allow viewers to watch content on-demand, enabling them to choose what they want to watch and when they want to watch it. This flexibility is a significant departure from traditional TV schedules.

Plus, both OTT and CTV have experienced significant growth and disruption to brands in the demand-side as well as to publishers in the entertainment industry in the supply-side. They have changed the way people consume video content and have challenged traditional TV models. Just take a look at the numbers:

  • eMarketer forecasts US advertisers will spend more than $25 billion on CTV in 2023
  • By 2026, it is projected that the revenue generated from OTT media will exceed $210 billion.
  • In 2023, time spent on CTV has almost doubled in four years.

The History Behind CTV and OTT

Today, OTT and CTV are anything but interchangeable — but that’s not how it's always been.

OTT began as a catch-all for any and all non-traditional TV. Media buyers considered OTT to be any premium video delivered outside of or “over” a set-top-box. That meant any and all devices could be considered OTT. For instance, streaming Netflix through your phone or on your smart TV would both fall under OTT.

This all changed in 2021 when the MRC officially changed the definition of OTT to help separate the term from connected TV — which has exploded in popularity over recent years. eMarketer has found time with connected TV devices will make up one-fifth of viewers’ digital time in 2023.

Daily average time spent with CTV among US adults, 2019 - 2024

Essentially, the MRC made a distinction between "CTV" as the medium (content consumed on a television screen via internet delivery) and "OTT" as a reporting category (encompassing various nontraditional TV video consumption).

The distinction allows for more precise measurement of video consumption on connected devices, such as smart TVs, streaming devices, and gaming consoles. It recognizes the unique viewing experiences and behaviors associated with watching content on these devices.

Who are the major players in CTV and OTT?

Think of the connected TV and OTT landscape as a three-sided market.

  1. Buyers: Advertisers or agencies who seek to promote products, services, or messages through advertising campaigns. They are the primary source of revenue for the ecosystem, as they pay to display their ads on connected TVs and OTT platforms.
  2. Sellers: The entities that distribute video-on-demand or FAST channel content, including content owners, app owners and and app store owners.
    1. Content owners have the rights to certain programming.
    2. App owners control the streaming apps viewers can download from their connected TV to access popular streaming services or content.
    3. App stores control the distribution of publisher apps.
  3. Audience: The consumers or viewers of content on connected TV and OTT platforms. This includes individuals who access streaming services on smart TVs, set-top boxes, streaming devices, laptops or mobile devices

The common thread connecting these three pieces is the medium or device through which streaming content is delivered — specifically smart TVs and other connected TV devices. Think of an Amazon Fire Stick, Roku TV or LG Smart TV. These devices contain the streaming apps through which viewers consume video content.

We can think of the ad technology, or adtech, as the industry likes to call itself, as the pipes that transmit data from one source to another — including supply-side platforms, demand-side platforms and ad servers.

What makes CTV unique?

From viewability to measurement and more, connected TV has become a distinct term in the world of OTT for a reason. CTV has a number of unique features, including:

Co-viewing: The traditional measurement tools used in mobile or desktop environments may not account for the co-viewing aspect of CTV. Why? CTV advertising often takes place in an environment where co-viewing is common. Multiple viewers may be watching content together on a single television screen, introducing additional complexity in measuring individual viewer attention, engagement, and the impact of ads.

Attribution: Business outcomes like page visits, sign-ups, and purchases driven by CTV ads occur on other devices, such as phones or laptops — making CTV more challenging than in other OTT environments. Because of this, CTV attribution requires piecing together multiple signals from varied sources.

Measurement: The measurement of CTV advertising is largely pixel-based, meaning that viewability and engagement metrics are captured using viewability pixels attached to the VAST tag’s tracking events. Pixel-based CTV measurement can be more challenging than mobile or desktop because traditional measurement tools such as JavaScript and Software Development Kits (SDKs) may not be as readily available or compatible in the CTV space.

Targeting: Targeting on OTT often relies on data collected from individual user accounts or devices. This data can include user preferences, viewing history, and behavioral patterns. On the other hand, CTV targeting typically relies more on contextual cues and aggregated household-level data, as individual user tracking is less prevalent.

We can break down how the CTV viewing experience is further different from OTT — specifically on mobile and desktop — below.

Types of devices

CTV: These can be split out into smart TVs and smart TV set-top-boxes or add-ons. Common add-ons include streaming sticks like the Amazon Fire Stick and Roku Streaming Stick, as well as gaming consoles.

OTT: OTT includes everything on connected TV — plus desktop, tablet and mobile devices.

Viewer experience

CTV: Connected TV mimics the “lean-back” viewing experience from traditional TV. While individuals using smartphones actively browse through content and can effortlessly skip ads with a simple swipe, television viewers adopt a more relaxed approach, leaning back to enjoy the content, and are less inclined to click or scroll through advertisements. Additionally, with on-demand video, viewers have to explicitly request the content, leading them to often watch the ad as a prerequisite to accessing their desired programming.

OTT: OTT viewing experiences on a mobile or desktop device offer an “on-the-go” experience viewers cannot get with connected TV devices. Unlike video content viewed on the “big screen” or CTV, video content streamed on mobile or desktop devices is viewed in portrait or landscape mode. Because content is consumed on a smaller screen, engagement may be lower and ads are more likely to be skipped if given the option.

Targeting

CTV: Person-level targeting in CTV can vary in availability and feasibility due to factors like platform capabilities, privacy regulations, and data partnerships, as it offers more precision and personalization but requires advanced technology and data granularity, which might be limited in some cases.

OTT: Audience targeting is more than possible on mobile and desktop, led by browser behavior. It’s easy to collect individual-level data since desktop and mobile and mostly personal devices.

Activity

CTV: Click-through is not possible on CTV — it’s not possible to open up a web browser and navigate to a site.

OTT: Viewers are able to click-through from the advertisements into the brand’s website or app, where they may complete their journey.

Timing

CTV: On connected TV (CTV), audiences typically watch TV when they’re home — usually during prime time, before or after work.

OTT: Those who consume content on desktop or mobile are often “on-the-go,”meaning they can watch video content throughout other parts of the day.

Key Takeaways

You now know the key differences between over-the-top and connected TV. Need a quick reminder? We’ve compiled our key takeaways below.

  • CTV (connected TV) is a subset within the broader concept of OTT (over-the-top). CTV specifically pertains to internet-connected TVs that support video streaming content. On the other hand, OTT refers to the delivery of video content directly over the internet, bypassing traditional distribution channels.
  • The CTV and OTT landscape can be thought of as a three-sided market comprising buyers, sellers, and the audience. The main thread connecting these three sides is the streaming app and device, which delivers video content from the seller and buyer to the viewer.
  • Traditional measurement tools used in mobile or desktop environments may not account for co-viewing in CTV advertising, where multiple viewers watch content together on a single television screen, leading to complexities in measuring individual viewer attention, engagement, and ad impact.
  • CTV attribution poses challenges as business outcomes driven by CTV ads occur on different devices, necessitating the integration of multiple signals in a household device graph to accurately measure and attribute results.
  • Targeting on OTT platforms is primarily based on individual user data, including preferences, viewing history, and browsing behavior, while CTV targeting relies more on contextual cues and aggregated household-level data due to limited individual user tracking.

Ready to plan your next CTV campaign?

Knowing the difference between OTT and CTV is critical for any advertiser looking to navigate the streaming landscape with certainty. With this knowledge in your wheelhouse, you’re ready to take on your next big CTV campaign with confidence.

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