VOD, embraced by media companies and consumers worldwide, has become the go-to way people consume content nowadays. It enables users to watch series and movies across many different types of screens with no cable or satellite subscription required. The advent of streaming media has not only transformed how people consume content – it has also revolutionized how advertisers reach a new, unique audience. In this article, we will cover the main concepts in VOD/OTT advertising and discuss the main benefits it offers.

Increasingly, viewers are turning to alternative viewing options besides traditional TV. Advertisers are following this trend, looking for ways to reach their audiences through devices like Chromecasts, Amazon Fire TV Sticks, Roku and Apple TVs.

Enter, OTT advertising – unlocking new ways and possibilities for advertisers. But before we get to the meat of it, let’s make sure you get the key terms right.

Understanding the difference between OTT, VOD and CTV

The acronyms CTV, VOD and OTT are often used interchangeably – even in industry articles, but they are not really the same thing.

Connected TV (CTV)

Connected TV (CTV) is a whole ecosystem of devices allowing people to watch streaming video content. Examples of these devices include:

  •   Smart TVs – running internet-enabled operating systems and allowing viewers to watch streaming video content.
  •   Streaming devices – devices connected to a TV (Chromecast, Roku, Firestick, Apple TV, and others).
  •   Game consoles – Playstation, Xbox, Nintendo, and others consoles connected to the TV set.
  •   Smartphones and computers are usually not considered part of the CTV landscape (but they can be used to consume VOD content all the same).


CTV is a concept broader than just smart television. To simplify things a bit, it’s best to use the term CTV only to refer to smart television and/or streaming devices that connect to your TV set.

Over the top (OTT)

Over-the-top (OTT), on the other hand, is a catch-all term for providing content and television via the Internet – without the use of TV antennas. To better understand the difference, think of CTV as something strictly connected with watching the content on the TV screen, while OTT is an umbrella term for accessing content on different devices like laptops, smartphones, tablets and smart TV sets.

You can freely use the term OTT when it doesn’t matter what devices you’re using to watch the content.

Video on demand (VOD)

VOD refers to video content that can be played on demand, whereas OTT refers to the distribution model (i.e. video content delivered over the internet).

In other words, OTT is the contemporary, dominant method for delivering video content, while CTV is just an example end device on which that content can be consumed.

Among the most popular VOD service providers are Netflix, Amazon Prime, Disney+, Hulu, HBO Max, and so forth. However, you should be aware of some differences in OTT service providers. OTT providers fall into:

  •   SVODSubscription-based video on demand, refers to streaming services that require subscription (examples include Amazon Prime, Netflix, Disney+, AppleTV+). They usually do not run ads or offer unpaid subscriptions.
  •   AVOD – Advertising-based video on demand, includes all streaming services free to consumers, but generate revenue through ads (like Freevee, Crackle, Tubi, Vudu). There are some AVOD packages that include low-priced packages of popular streaming services. Hulu’s $5.99 version, for example, supports advertising.
  •   TVOD – Transactional video on demand, purchased through a pay-per-view model. The content can either be purchased for repeated viewing, or rented for one-time viewing. Amazon Prime Video Store is a popular example of a TVOD service.
  •   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 while many movie theaters were closed.

To sum up, most OTT content is now accessed through CTV. As a result, OTT refers to the delivery method of video content, CTV to the device on which you watch the content, and VOD to the consumption model (you watch content on demand, regardless of when it’s broadcast).

For the sake of discussion about advertising, however, the OTT/CTV debate is mostly irrelevant – and both terms might appear to mean the same thing throughout the article.

Why is OTT advertising a thing?

Both CTV and OTT keep evolving. In 2020 alone, 80% of TV homes – which is about 96 million Americans – had at least one connected TV in the household. This number is growing as we speak.

For many years, traditional TV advertising has been the best way to reach mass audiences. However, the problem is it is focused on all segments of the potential audience and is not effective for specific advertising purposes.

As viewers adopt OTT services, marketers are discovering new opportunities to target and align with key audiences. CTV and OTT advertising are popular for a number of reasons:

#1 Growing the viewer base

Cable TV subscriptions are in decline. Nearly 60% of Americans cancelled their cable TV packages in favor of streaming services even before the pandemic, while 29% plan on doing so within the next few months.

 OTT advertising offers incredible audience targeting, giving advertisers the confidence that their marketing dollars are going towards the most valuable viewers – rather than everyone watching the TV (as is the case of traditional TV ads).

#2 Better targeting options

Marketers can segment the target audience to improve ad performance. Different targeting options are available through connected TV and OTT based on geolocation, search history, movies watched, games installed, etc. The same audience can be targeted and retargeted across different screens and channels with OTT advertising. An audience can be reached on a laptop screen, and then retargeted across OTT devices.

Better targeting allows advertisers to display ads to only those users who are potentially interested in the ad and achieve a higher ROI.

#3 Interactive ad formats

OTT and connected TV advertising provide marketers with a number of creative ad formats to choose from. In contrast to cable TV advertising that is limited to videos, connected TV advertising can use video, banners, interactives, animated and static ads, and much more.

There are many types of ads used with connected TV advertising, including: 

  •   In-stream video ads are short unskippable ads displayed before, during, or after the main content (YouTube uses these a lot)
  •   Interactive pre-roll ads are very similar to in-stream video ads but have a CTA and a button leading to the advertiser’s landing page
  •   Home screen placement ads are static images or short videos displayed on the home screen, which are often clickable.

Because of the variety of ad formats, advertisers can experiment with different formats and call-to-actions in order to determine which is the most effective in terms of engagement and performance.

#4 Better ad viewability

All ads run full screen so 100% of pixels are in view, eliminating below the fold ads of other media vehicles.

#5 Brand Safety

Ads delivered during live TV or on demand are reached across top tier networks and popular content.

#6 Better Ad Completion rates

98% of viewers watch OTT ads all the way through.

#7 Retargeting

You can retarget your OTT & CTV viewers across all their devices, including laptops, tablets, and mobile phones. Keeping your message top-of-mind throughout the decision-making process.

Measuring OTT advertising

Measurement is a critical element of any ad campaign and OTT advertising is no different. Advertisers want to know which audiences they are connecting with and how different ads are performing.

Compared to streaming TV, linear TV ad measurement typically relies on TV attribution or analysis by cable or satellite providers and agencies. OTT ad measurement is more comprehensive, allowing advertisers to leverage valuable insights and better understand their audiences. The success of an ad or campaign can’t be determined by a single metric – several metrics are required for a full view. Here are a few examples:


To understand how much you spend, first figure out how many unique users saw your ad.

Completion rate

Completion rate tells the advertiser how many times the advertisement was viewed in full. An ad is tracked not just by the number of people who saw it, but also by how many people finished it. This is a telling sign the ad resonated with the audience.

According to a statement from CTV Media, the average ad completion rate on OTT devices is around 98%.

Audible rate

There was a duration of time the advertisement was audible.


Viewability is a metric which tells if an ad was seen by a user, and is usually high for OTT and CTV ads as they run full-screen. CTV ads are often non-skippable, which increases the view rates.

It is measured differently by different platforms, but typically is calculated if an ad is watched for a few seconds and covers more than 50 percent of the screen space. Larger screens (like smart TVs) have higher viewability scores.

Attribution and attribution tracking

The campaign/ad ROI can be calculated by connecting viewership with the completion of an intended action, clicking a CTA or downloading an app.

Cost per thousand views (CPM)

Contains information about one thousand impressions but does not necessarily include the number of viewable impressions or unique views. In contrast, you should look at the cost per completed view, which is more relevant to your campaign’s success.

Cost per completed view

In contrast to CPM, it’s a ratio of the cost of the campaign to the number of completed views.

OTT advertising best practices:

  •   Leverage audience insights and audience segments. Certain ad networks enable brands to engage audiences based on first-party insights, which help brands achieve vastly more significant targeting compared to demographic attributes alone.
  •   Appear alongside relevant content. Displaying ads in proper context is a vital part of a successful ad campaign. OTT ads make it possible, allowing advertisers to stay true to their brand message and tone.
  •   Use a clear call-to-action (CTA), like visiting a website, can be helpful, since viewers may have a device nearby while streaming content to perform a CTA if compelled to do so.

Last words

The ever-evolving TV streaming landscape is full of possibility and opportunity for brands. Get in touch if you need a reliable software development partner to develop a solution for OTT advertising and marketing. Our experts will be happy to discuss your project, helping you assess the services you need to become a future-proof and truly cloud-native OTT content provider. With the support of the BSG development team, you can push the envelope of content, OTT service models, and viewing experiences.