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Eye-Opening Statistics for Over-the-Top Television

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US homes use OTT services as of Q4 2020

Statista

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US homes have at least one Internet-Connected TV device.

Leichtman Research

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have paused content to visit an Advertiser

– OpenX

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will no longer watch traditional pay TV by 2022

eMarketer

Table of Contents

What is OTT, or Over-the-Top Television?

Over-the-top Television (OTT) refers to any type of video or streaming video provided via a high-speed Internet connection not via a cable or satellite provider.

While these services are popular with “cord cutters”, or those who have “cut” the cord with traditional cable, they typically aren’t free.

Most OTT providers have their own app, website, or page of some kind where a user can log in to access the content available with the subscription.

Common access points are a computer, a mobile phone, or through a smart-TV or a conventional TV connected with a streaming device, like Apple TV, Chromecast, or Amazon Fire. OTT services are also available on Playstation and Xbox video game consoles.

As we kickoff 2021, the top five OTT services ranked by their number of subscribers are Netflix (167.1 million), Disney+ (73.7 million), Hulu 36.6 million), HBO Max, and Amazon Prime. (Q4, 2020)

How big is the Advertising opportunity with OTT?

Over-the-Top Television Viewers by Demographic

OpenX

HUGE.

This is especially true if you’re looking to target US households.

According to the research group, Statista:

  • Revenue in the OTT Video segment is projected to reach US$60,734m in 2021 (an 16.6% yoy growth).
  • Revenue is expected to show an annual growth rate of 9.0% (CAGR 2021-2025), resulting in a projected market volume of US$85,888m by 2025.
  • User penetration will be 83.7% in 2021 and is expected to hit 88.1% by 2025.
  • In global comparison, most revenue will be generated in the United States.

Why is OTT Growing so Rapidly?

Users with at least one Over-the-Top Television subscription is at 83.7% in 2021 and expected to reach 88.1% by 2025. That represents a dizzying 278.5 million people! It begs the question, why is OTT growing so rapidly?

As with most things, there’s no “one” clear factor. While the pandemic certainly contributed to part of the uptick in 2020, streaming service usage was skyrocketing even before then.

There are additional factors at play that we’ll dive into here:

1. It’s EASY.

It today’s hyper connected world we demand easy access and immediate gratification. OTT delivers on both. If you want to see favorite movie or show there’s no need to look up a TV guide or pencil it on your calendar, one click and you’re streaming it in your living room. When you pair devices like Apple TV, Chromecast, Roku and even Xbox with your standard Smart TV, your entertainment options are endless.

You’re also not just tethered to your home screen. You can start your flick on your laptop when flying 30,000 feet in the air and finish on your mobile phone while you Uber to your hotel.

Streaming allows you the luxury of watching your favorite movies and TV shows while maintaining a consistent viewing experience across devices.

2. Total FREEDOM.

“Cord cutting” isn’t just a buzzword. As of 2020, almost 20% of US households have cut the cord with their local cable provider. That number translates in over 25 million people and is expected to rise to nearly 29 million in 2021.

The reasons are simple, people want freedom of choice. The days of paying for bloating cable and satellite bills to watch a handful of channels are over.

According to decisiondata.org, in 2019 the average average household cable package was $217.42 per month. When compared to a streaming service such as Netflix, their highest priced subscription plan tops out at $17.99 a month. That’s a savings of over 91% and ad-free to boot. For many households, numbers like these make cord cutting a no-brainer.

3. Award-winning CONTENT.

These Over-the-Top Television providers are doing more than streaming content – they’re creating it too.

According to Whistleout.com, Netflix has the most original content with 461 out of 726 total original titles (or 63.5%) across all streaming platforms. With numbers like that it’s no surprise Netflix is the reigning champ of streaming.

NetflixAmazon Prime, and Disney+ consistently create new films and series for their platforms and retain exclusive streaming rights for other content.

Who remembers HBO’s blockbuster, Games of Thrones? It may have cost $1.5 billion for its pricey sets and special effects, but it also brought in $3.1 billion in revenue in the form of subscriptions. Without a doubt, original content on streaming is big business – big enough to rival Hollywood. 

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What’s the Difference between OTT and CTV (Connected TV)?

With so many acronyms dancing around in our heads it’s easy to get OTT and CTV confused. Here’s one of the best explanations between the two I’ve found thus far:

“OTT means you are accessing content ‘over the top’ of infrastructure providers. If you’re buying bandwidth from one provider like Comcast but subscribing to Hulu, you’re going over-the-top of the provider that provided you the bandwidth. You’re using the bandwidth provider as an access layer but not as the main way you’re accessing content.” – Tal Chalozin, Co-founder and CTO, Innovid

In other words, CTV is the device by which you access content. You need an actual device to consume the content. An analogy would be using TMobile for cell service, but accessing that service through your iPhone. In this scenario TMobile is the OTT and your iPhone is the CTV.

How can OTT help Advertisers battling the iOS 14 update?

If you’re a savvy marketer or advertiser, Over-the-Top Television can be a great tool for reaching demographics no longer accessible due to the iOS14 update.

To recap if you’re not familiar, the Apple’s iOS14 update requires all apps on their App Store to show an App Tracking Transparency (ATT) prompt. This prompt requires users to either opt-in or opt-out from allowing an app to collect and share their data and track their usage.

As a small business owner, you might be thinking – what does this have to do with me? I don’t make apps? 

This is where it gets tricky and why advertisers and media buyers are understandably fearful.

The opt-in/out prompt changes the Identifier for Advertisers (IDFA). The IDFA is how devices assign identity markers to an Apple device that is being tracked and has allowed advertising. These markers allow users to essentially be tagged and categorized without revealing any personal information.

These IDFA’s are what the Facebook pixel uses to report back user events and actions on its app. That same pixel that you most likely have embedded on your site so you can build smarter, more targeted campaigns.

Example of the Ad Targeting Changes Caused by iOS 14

Let’s say Margaret visits Nordstrom.com on her laptop while she’s logged into Facebook. She clicks through a few items, but eventually logs off to jump on her Zoom call. When she leaves work and opens Facebook on her mobile phone, she sees an advertisement for “Free Shipping” at Nordstrom’s enticing her to complete her purchase.

This is commonly referred to as retargeting or remarketing. As personal as it may seem, the ad is not actually targeting “Margaret”, but rather IDFA1234. That’s the identifier and marker that has been assigned to her and what the ad is chasing around the internet.

With the iOS 14 update, if Margaret selects “opt-out” she will no longer be assigned an IDFA. This means Nordstrom won’t know that IDFA1234 was on it’s site shopping and it won’t know to send her that coupon.

This is problematic for businesses who rely on retargeting via mobile apps to drive conversions and lookalike audiences to find prospects online that mimic current customers.

In layman terms, you will now be “flying blind” with your advertising. This means higher costs, lower ROI’s, and a hindered ability to reach new customers online.

I’m using Facebook in the example here since 89% of marketers use Facebook in their marketing efforts, but all advertising platforms that serve ads via apps will be effected.

Also,

How does Ad targeting work with Over-the-Top Television?

Site Retargeting

With OTT’s Site Retargeting tactic, your clients will be able to target users who have previously visited their website!

Let’s say your client is running a recruitment campaign. One user, in particular, works long hours at their current job and has been considering sending in their application to your client’s business, but hasn’t quite taken the next step yet.

Through cross-device matching, your client will be able to show their video ad on the big screen to not only this potential applicant, but to their whole family who may be watching alongside with them!

Email Subscription

Over-the-Top Television allows you to create custom audiences of users based on subscription and newsletter emails they receive.

So if your client is trying to reach avid coffee drinkers for example, we’re able to serve ads to people who receive emails from branches like Starbucks and Peet’s Coffee!

Purchase Receipt

Purchase Receipt targeting enables us to reach users who have received purchase confirmations sent to their email address! These can be from events, invoices, products, and even travel.

Let’s use a local rock band as an example client. To reach users who may be interested in their music, we can target users who have bought tickets to similar musicians like the Foo Fighters, Red Hot Chili Peppers, and other musicians of the like.ver-the

Purchase Receipt targeting with OTT

Search Behavioral

Search Behavioral targeting allows for custom audience creation based on a list of keywords that are relevant to the client’s campaign.

MEET SALLY…

Sally is in the market for a Christmas tree to bring some cheer to her husband Jack, who is suddenly really into the holidays. After searching the term ‘christmas trees’ online, Sally and Jack are served an ad for a local farm on their TV while catching up on their favorite show, which persuades the two to visit your client’s farm for their new tree!

Geo – Fencing

Geo-Fencing targeting utilizes multiple data sources to pinpoint a user’s exact whereabouts, allowing clients to target competitors’ locations and other relevant physical locations where their target audience may frequently visit.

Users who were served an ad via GF were 187% more likely to convert than those who entered the same stores but were not served an ad!

Want to target a specific event?

You can target geographical locations by date and time which is a great way to target users attending a specific event.

geo-fencing using over-the-top television marketing

Have Questions?

Curious how Over-the-Top Television Advertising could fuel your growth?

Our simple, "facts-not-fluff" Cheat Sheet answers all the common questions listed above and includes best practices, estimated costs per CPM, and suggested next steps.
2021 Update