Understanding the Basics: Connected TV vs. OTT
There are far too many acronyms to keep track of when it comes to streaming television – OTT, CTV, VOD, SVOD, the list goes on. What do they all mean? Let’s start with the basics: Connected TV (CTV) vs. versus OTT (over-the-top). The two terms often get used interchangeably, but they are different when it comes to their functionality. OTT refers to streaming content that is viewed on any app or website through phones, tablets or TVs. Examples of OTT include Netflix, HBO Max and Hulu. CTV refers to a TV set connected to the internet through built-in capabilities or through another device such as a gaming console or a streaming device like an Amazon Fire Stick. Let’s not forget the OG in television – traditional (or linear) television viewed through a cable box or through a traditional cable connection. Now that we have the basics, let’s talk about the evolution of streaming television.
Streaming television has come a long way since its introduction in the mid-2000s. Netflix, Amazon Video, Apple TV and Roku were the first generation of streaming content and devices that paved the way for the future of streaming TV. Fast forward to present-day 2021, and we have over 200+ streaming services at our fingertips. We are even seeing more traditional cable companies and networks moving toward OTT services as seen with the introduction of Peacock and Disney+. In 2021, eMarketer projects a third (30.8%) of all U.S. OTT subscription revenue will go to Netflix, and Disney-owned properties (Disney+, ESPN+, HULU) will account for one-fourth (25.9%).
The Pandemic’s Impact on Shift in TV Viewership
Consumers were already shifting their television viewership to streaming services during pre-pandemic times, but the pandemic accelerated this growth exponentially. In 2020 alone, eMarketer reported a 7.5% decline in traditional TV households when previous trends were anticipating only a 4.7% decline. By 2024, the cord-cutter and cord-never households will surpass the traditional tv households, which will be a major shift in how marketers will buy TV advertising. All these stats may have you thinking you need to move your marketing dollars to CTV advertising, but it is important not to cut out traditional TV advertising just yet.
Marrying Your Traditional TV and Connected TV Strategy
We have seen countless benefits of including traditional TV and CTV advertising in your marketing strategy. With traditional TV, we are limited to DMA, schedule and dayparts. Utilize traditional TV to target broader audiences while leaning into connected TV for 1:1 targeting and custom audiences. There’s a shift in consumers migrating away from traditional TV, which means you are missing a substantial audience by limiting your advertising to traditional television. Both traditional and CTV advertising are great options on their own, but you will find the best results by creating a marketing strategy that includes both.
If you haven’t caught on by now, the future of television is streaming, and marketers are not mad about it because CTV advertising offers real-time performance results in addition to the 1:1 targeting capabilities. 2020 was a major growth year for connected TV as viewers consumed more streaming video than ever and desired it at a cheaper price. Successful marketers are recognizing the growth in this space and adapting advertising budgets accordingly for the best advertising outcomes for their brands.
Interested in learning more or talking about how these advertising trends may apply to your brand? Get in touch!