Programmatic Video: CTV & OTT - So What’s The Difference?

Since COVID-19 hit the world in 2020, more people have been at home watching streaming content than ever before. This has increased programmatic video advertising opportunities. The main two avenues for distribution are Connected TV (CTV) and Over the Top (OTT) advertising. 

When first hearing about CTV, most people equate it with something like running a commercial on Hulu (or a similar provider). However, this isn’t necessarily the case.  When an ad is viewed and how it is viewed determines if it’s considered OTT or CTV. Add in additional acronyms such as video on demand (VOD) and full episode player (FEP), and now there’s even more confusion over placements and definitions. 

With these different acronyms and types of video content out there, it can be difficult to know what type of ad you’re buying or watching. The differences between CTV and OTT can make a difference in marketing campaigns due to the cost, devices and potentially targeting. 

OTT vs. CTV: The Main Differences

The main difference between CTV and OTT is the device. It’s simplest to think of OTT as the channel and CTV as the “TV device” you are streaming on. Traditional OTT, without a TV-style device, is mostly viewed on mobile, desktop or tablet. CTV is actually a type of OTT, since any ad viewed on a Smart TV, streaming device or game console is being streamed over the internet. All CTV is OTT, but not all OTT is CTV advertising.

What is OTT Advertising?

Basically, OTT (Over The Top) is any content that is delivered “over the top” of the internet. Types of OTT would be Hulu, Netflix, Amazon Prime, Tubi, etc. When describing this to clients and co-workers, I tell them to consider OTT as the channel or network you’re seeing an ad on. An example would be watching a running shoe commercial on the Hulu mobile app while you’re on your train commute to work. Because you’re watching the ad on Hulu, which is a service offered through the internet, it’s considered OTT.

CTV Advertising – a subset of OTT

Meanwhile, CTV ads will be on a traditional Smart TV, a streaming device such as Roku, Google Chromecast or Amazon Fire. It will also be on game consoles such as Playstation, Nintendo Switch or Xbox.  Using the previous example, seeing the same running shoe commercial on a Roku while streaming Hulu would be a CTV placement. 

While both OTT and CTV are digital ad placements, there are many more differences (and similarities) between the two. To break these down further, we’ll go through targeting and use cases, CPMs and placement styles. 

How Programmatic Videos Are Shown

Most OTT placements are going to be one of two things – Full Episode Player (FEP) or Run of Network (RON). Both of these are available on CTV or OTT, and typically are the main two PMP (private marketplace) deals that are selected. 

Full Episode Player Ad Placements

Full Episode Player is what it sounds like – the native episode player on a premium network’s website that shows full episodes. I recently watched a new episode of Younger on TV Land’s website, which would be considered the full episode player. However, watching Younger on my iPad with Hulu would be a Run of Network placement

Run of Network Ad Placements

Run of Network ads are spread across many sites, without control over specific ad placement. As mentioned above, Run of Network is more common on CTV as direct OTT placements on websites are dominated by Full Episode Player placements. Additionally, CTV tends to see more Video On Demand (VOD) placements. 

Video on Demand Ads

While Video On Demand is also a traditional term, the CTV version is slightly different from within your cable box, where you can view content in the on demand section. The best example is DirecTV on a Roku device. It’s not always the exact video on demand that you think. It can be in real time or downloaded/viewed later.

Audience Targeting for Programmatic Ads

Knowing the different types of placements, the strategy of buying an OTT/CTV ad comes down to targeting. As talked about in my past programmatic article, one of the main benefits of programmatic advertising is using third-party data to get more granular with audience targeting. 

Using third-party providers helps you create your audience to overlay. However, whether this is first-party or third party data, you can create a niche audience directly for your ad. 

Say you have a customer list of past purchasers. You can upload this to target users with a new product they could be interested in. They could then see this new product while viewing from their couch; as opposed to being on social media or actively researching your brand. Third-party data like purchase behaviors or interests can also be used to refine your target audience.

Costs and Strategic Considerations

With so many types of targeting available, there are many ways video ads can be used in a marketing strategy. Using a mix of OTT/CTV is best when the budget is large enough and scalable because CPMs are vastly different for OTT and CTV. 

OTT vs. CTV Cost Per Mile

OTT CPMs typically range from ~$10 – 40 while CTV CPMs generally start in the $40 range and can get as high as $200 depending on the placement and if there is any seasonality. Think of Hulu around Christmastime! 

This is where a well-thought-out marketing strategy comes into play in order to get the most out of the available budget. A smaller budget might benefit from OTT only if reach isn’t as much of a concern as more “mainstream” placements would be. The same budget could get placements on Hulu. However; this puts the budget at risk for a low win rate at a much higher CPM. 

How Can You Benefit

Knowing the differences between CTV and OTT can help marketers and agencies understand what type of ads they are buying and how it fits into their whole advertising strategy. There are clearly benefits of CTV due to reach. However, smaller budgets don’t always allow for this elevated cost per mile.