The Rise of OTT

OTT has become the buzzword du jour in recent months, not only because it offers an entirely new way to consume digital content, but also because it represents the marriage of traditional television and online video. For the uninitiated, OTT stands for “Over-the-top,” a phrase that refers to the method by which video-based content is delivered to users. Instead of going the traditional (a.k.a. “linear”) route – i.e., content delivery through cable/satellite TV gatekeepers such as Comcast or Spectrum – OTT essentially piggybacks on a user’s broadband connection to deliver digital video content directly to users via the Internet.

Chances are you’ve already interacted with OTT through popular streaming TV services such as Netflix, Hulu or Amazon Video, all of which deliver video content over the same broadband connection that you would use for surfing the Web or checking your email. The success of these streaming services indicates a seismic shift in how consumers engage with video content, and for the astute digital marketer, the emergence of OTT represents a gold mine of opportunity when it comes to audience targeting capabilities.

So is an investment in OTT-specific advertising platforms worth it? Let’s take a look at some of the interesting developments taking place in terms of linear TV viewership among various age groups, as it reveals the burgeoning influence that OTT is exerting upon viewing habits across target demographics.

TV Viewing Habits by Age Group

In terms of audience age groups, recent data published by Nielsen reveals a sharp decline in traditional TV viewing by younger audiences; in fact, teens and younger Millennials (ages 18-24) are watching 40% less traditional TV than they were 5 years ago, and viewing time among older Millennials (ages 25-34) has fallen by 25% in that same time frame as well. But this decline has not been limited to the younger audiences – according to Nielsen’s Total Audience Report, traditional TV viewing time among Gen Xers (ages 35-49) has contracted by 13% as well, while it remained relatively flat among adults aged 50-64. For the older Baby Boomers (ages 65 and up), traditional TV watch time has actually increased by over 7% in the past 5 years, indicating that declines in linear TV viewing tend to taper off with each successive age bracket.

While the value of each demographic is a topic that is constantly up for debate among marketers, it’s safe to say that consumers of digital video content are the focus of most advertising budgets today for a number of important reasons:

• All OTT devices are assigned a unique device ID, giving advertisers the ability to target users by this metric in OTT environments. This paves the way for more specific targeting capabilities including cross-device household targeting.

• When purchasing OTT inventory, advertisers and media buyers can take advantage of various parameters supplied by demand-side platforms including device type, day parting, channel, geolocation, and even show genre. Even in the past three months, advances have been made that enable advertisers to get “hyper-local” with their targeting.

• Several third-party audience measurement providers – including heavy-hitters such as Nielsen and ComScore – are delving further into audience measurement solutions that are specific to OTT environments, providing marketers with more robust tools to help facilitate effective ad buys.

OTT vs. Linear TV: The Audience Targeting Advantage

One of the most important distinctions to make between linear TV and OTT is the fact that when you advertise via linear TV, you typically target a show because of the audience you think is watching, while with OTT, you target individuals no matter what they’re watching. This subtle but hugely significant difference is one of the main reasons why OTT-specific advertising is heating up across the board, as marketers look to take advantage of the many benefits that this unique and versatile platform has to offer.