OTT, CTV and Linear TV, and What They Mean for Marketers

ChannelMix Blog

TV isn’t just TV anymore. As the medium has evolved, it has split into OTT, CTV and linear TV, and that has important impacts for marketers.  

Let’s start by defining what we mean by these terms. 

OTT stands for “over the top.” It’s video content that is streamed over the Internet, not through broadcast stations, cable companies or satellite TV providers. This content goes directly to viewers, “over” the head of traditional providers. Hulu, Netflix and HBO Max are all examples of OTT services. 

Some marketers will further divide OTT into AVOD, advertising-based video on demand, which includes services like Peacock or Pluto, and SVOD, subscription video on demand platforms like HBO Max or Netflix. 

But those terms sometimes bleed together. Some services offer multiple tiers — one might be completely advertising-supported, but the viewer can go ad-free if they agree to pay a monthly fee. Some OTT services, like Hulu + Live TV and YouTube TV, present programming in a linear format, too. 

CTV is short for “connected television” and refers to TVs that stream Internet-based content. The emphasis is on TV. CTV is not a tablet, desktop or smartphone. According to the IAB, a CTV might be a Smart TV that has Internet capability built in or a device that can stream content through a TV, like a Roku, Apple TV or Chromecast device or a gaming console with streaming capabilities. 

OTT is the service. CTV is the device, and it’s just one way that audiences can access OTT services. (Others would include smartphones and laptops.) 

Linear TV, meanwhile, is “old school TV” — the kind that cable, broadcast and satellite has delivered for decades. It’s called linear because viewing is limited to what’s airing at a particular time on a particular channel — whatever is lined up for that moment in time. Want to watch “This Is Us” on linear TV? Tune in to NBC on Tuesday nights at 9 p.m. ET /  8 p.m. CT. (Though most definitions of linear TV also include time-shifted viewing through a DVR or some other device.)

The Benefits of OTT, CTV and Linear TV

In recent years, OTT’s audience has been increasing, with even larger growth in 2020. Last summer, 79 percent of U.S. households said they watched OTT video, up from 76 percent earlier in the year, Google reported. 

There are a few reasons why OTT appeals to advertisers. Compared to linear TV, advertising on OTT can be more targeted — by geography, viewer interests and first- and third-party data. There are also attribution solutions that can help track website or store visits later. 

The increased adoption of CTVs have increased the value of OTT platforms as well. According to Media Reach, CTV devices are responsible for a higher share of impressions compared to laptop, desktop or mobile viewing. Ad completion rates are noticeably higher when viewed on a CTV. This year, 83 percent of U.S. households will own a CTV device.

As a result of these trends, the IAB reported, 60 percent of U.S. advertisers were planning to move ad budget from linear TV to streaming this year. 

But, unlike other digital advertising, it can be harder to measure engagement. You don’t have clicks you can track, the way you would with email or display ads. And while some level of attribution is possible, addressability isn’t perfect. A lot of OTT content is consumed in a household where multiple people are watching, eMarketer noted

While OTT is growing, it’s important to remember that traditional, linear TV still makes up the majority of TV viewership, at least for now. 

How CTV, OTT and Linear TV Can Work Together

That’s why many marketing plans incorporate linear and OTT advertising into their strategy. According to the Video Advertising Bureau, a blended approach delivered a brand favorability lift that was twice as high as a plan that only used OTT ads. Google’s Media Lab has noticed a similar effect.

And it’s becoming easier to measure what’s being watched. Many Smart TVs include automated content recognition (ACR) technology — the devices listen to what’s being viewed, whether that’s via OTT or linear channels, and match it against a vast library of TV programming. That data can then be used to more accurately measure, target and retarget advertising.  

All this new data, whether it’s from CTV, OTT or linear channels, represents a huge opportunity for marketers, but also a very challenging one from a data management standpoint. If your team needs help finding the best way to organize and manage TV data, Alight can help.

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