In today’s digital landscape, Over-The-Top (OTT) advertising has emerged as a powerful tool for small businesses seeking to connect with local audiences in a more direct and measurable way.
What is OTT?
Over-The-Top (OTT) refers to the delivery of video content through the internet, bypassing traditional cable or satellite services. Viewers consume OTT content on connected devices such as smart TVs, streaming sticks (like Roku or Amazon Fire TV), gaming consoles, and even mobile devices. OTT platforms, including services like Netflix, Hulu, and YouTube TV, offer on-demand content that can be accessed anytime, giving viewers more control over what they watch and when they watch it. These services use internet connections to stream video directly to a connected TV or device, allowing advertisers to deliver targeted ads based on the viewer’s preferences, location, and viewing habits. This data-driven approach makes OTT advertising highly effective for businesses looking to reach specific audiences.
How many viewers still see ads on OTT?
As of 2024, the majority of OTT viewers are leaning toward free or low-cost, ad-supported services. Around 57% of U.S. adults prefer to use OTT platforms that are either free or come with a reduced subscription cost in exchange for watching ads. In contrast, about 33% of viewers opt for premium, ad-free subscriptions. The growing preference for ad-supported platforms, known as Free Ad-Supported TV (FAST) services, highlights a shift in consumer behavior as people look to cut costs while still enjoying a wide variety of content. This balance between paid subscriptions and ad-supported content is driving a dynamic and diverse OTT landscape (Tinuiti) (DemandSage) (The Current).
What kind of results are local advertisers getting on OTT?
By delivering targeted ads through streaming platforms such as Hulu, Roku, and YouTube TV, businesses can tailor their messaging to reach specific demographics, locations, and interests. Here are some examples of how small businesses across America have leveraged OTT advertising to drive tangible success:
1. Increased Foot Traffic
A local service provider saw a significant boost in foot traffic after incorporating OTT into their marketing strategy. By targeting viewers in their immediate area with ads focused on the convenience and benefits of their services, they experienced a 25% increase in walk-in customers within the first quarter of launching their OTT campaign. The ability to target consumers based on location and interests allowed them to effectively engage new customers who were otherwise unaware of their services.
2. Boost in Online Sales
An e-commerce-based small business used OTT to reach a national audience, specifically targeting users who had shown interest in similar products online. By delivering video ads to this niche audience, the business saw a 35% spike in online sales within a few months. OTT enabled them to target viewers across multiple devices, from smartphones to smart TVs, ensuring their brand message reached potential customers when they were most engaged with streaming content.
3. Enhanced Brand Awareness
A family-owned business in the hospitality sector used OTT to raise awareness about their offerings to local and regional audiences. By crafting video ads that highlighted their unique services, they successfully increased their brand visibility, resulting in a 20% rise in bookings during the peak season. The precision targeting offered by OTT allowed them to focus on viewers most likely to be interested in travel and hospitality, maximizing the effectiveness of their ad spend.
4. Higher Engagement for Special Events
Another small business, this time in the event industry, leveraged OTT to promote their seasonal events to a highly specific demographic. Their ads targeted local families and event-goers, resulting in a 30% increase in attendance compared to previous years when they relied on traditional media. The ability to monitor campaign performance in real time allowed the business to refine its messaging and boost engagement throughout the event season.
5. Improved ROI on Marketing Spend
A regional retail store found OTT advertising to be a cost-effective solution for their marketing efforts. By precisely targeting customers in their geographic area, they were able to reduce wasted ad spend while reaching a larger portion of their desired audience. Within six months of adopting OTT, the business reported a 15% growth in revenue, attributing the success to better targeting and the improved customer engagement facilitated by OTT ads.
How does OTT compare to traditional broadcast TV advertising?
OTT advertising generally offers a more cost-effective option for local businesses compared to traditional broadcast TV advertising. Here’s how they compare:
- Cost Efficiency:
OTT advertising allows for more precise targeting, meaning businesses only pay to reach their specific audience, whereas traditional broadcast TV reaches a broader, often less targeted demographic. The broad reach of TV results in higher costs for businesses that may not always translate into direct engagement. For example, a local OTT campaign might start around $20 to $50 per thousand impressions (CPM), whereas a local TV spot on broadcast could range from $200 to $1,500 per 30-second ad, depending on the time slot and market(Tinuiti)(DemandSage). - Targeting Capabilities:
OTT platforms provide advanced targeting options based on demographics, interests, and viewer behavior, allowing businesses to target specific geographic areas or consumer profiles. In contrast, traditional TV ads are limited to broad geographic regions and time slots without the same level of precision. This granular targeting in OTT minimizes waste, making it more efficient for businesses with smaller budgets. - Minimum Spend:
Traditional TV advertising typically requires larger upfront costs due to the need for higher production values and premium airtime purchases. OTT advertising, however, offers flexibility with smaller budgets, allowing businesses to scale their spend based on the size of their market and specific audience needs. This makes OTT more accessible to local businesses that may not have the budget to compete in the traditional TV space. - Ad Measurement:
OTT advertising provides more detailed insights and real-time data, such as ad completion rates and viewer engagement, allowing businesses to track the direct impact of their ads. Traditional TV, while effective for brand awareness, often lacks the same level of detailed performance metrics, making it harder to assess the return on investment (ROI) (DemandSage) (The Current).
OTT advertising typically offers local businesses more targeted reach, better cost control, and clearer ROI compared to traditional broadcast TV advertising.
Small businesses across America are seeing measurable results by incorporating OTT advertising. From increased foot traffic and online sales to enhanced brand awareness and event engagement, OTT offers a flexible, data-driven approach that can be customized to the needs of each business. As OTT continues to evolve, it presents small businesses with an exciting opportunity to compete effectively and more affordably than traditional broadcast TV in a crowded marketplace while maximizing their advertising investment.
Find out what OTT advertising looks like for your business. Book a free consultation with Dave today or call (928) 920-1020.