The popularity of OTT content, CTVs, and smart TVs is surging, and advertisers are taking notice.
CPMs for OTT ads are remarkably high, often surpassing website ads by over 1,000%.
For OTT publishers, this presents a significant opportunity to generate revenue through OTT monetization.
But what is driving advertisers to invest heavily in OTT advertising? We identified six main reasons.
Let’s dive in.
Shifting Budgets from Linear TV
A significant number of companies and brands that advertise on linear TV are moving a substantial portion of their advertising budgets to OTT.
These advertisers are used to paying premium rates for TV ads, where a 30-second spot can cost tens of thousands of dollars.
As a result, OTT advertisers, who are accustomed to the costs of linear TV advertising, are not deterred by paying high CPMs of $10, $20, or $25.
Although these prices may be steep for typical digital advertisers, they are more aligned with the advertising budgets of linear TV.
Brand Awareness Campaigns Are Costly
Like linear TV ads, OTT ads are great way to build brand awareness.
Unlike cost-per-click (CPC) campaigns, this form of advertising demands a more substantial upfront investment.
Furthermore, OTT ad campaigns run on a per-impression basis, which reduces the likelihood of advertisers terminating a campaign prematurely.
In contrast, CPC campaigns provide greater flexibility and enable advertisers to make real-time adjustments or terminate a campaign if its performance is unsatisfactory.
Unskippable Ads
5…4…3…2…1…click!
If you don’t have a premium account on YouTube, you know all too well the five-second countdown on preroll ads before the “Skip Ads” button becomes available. During those give seconds, the last thing users care about is the ad. They are just waiting for the time to lapse.
In contrast, OTT ads cannot be skipped.
This feature is of immense value to advertisers, who are willing to pay a premium to ensure that users view their entire 15 or 30-second ad.
High Viewability
Viewability is crucial in digital advertising, and OTT ads excel in this area.
OTT ads are full-screen and are not skippable, meaning that unless the viewer actively avoids the ad, it is guaranteed to be seen.
The high viewability rate of OTT ads justifies their high CPMs, as it guarantees that the ad will be viewed.
Advanced Targeting
Linear TV advertising is akin to casting a wide net into the sea. There is a chance of catching fish, but it’s also possible to come up empty.
OTT, on the other hand, provides greater precision through various targeting options such as demographics, location, viewing habits, and other metrics.
Despite the relative infancy of OTT technology, advertisers already have much more tools for tracking their campaign’s success than with linear TV.
This allows for more accurate ad targeting and makes OTT advertising a valuable asset for advertisers.
Focused Users
Linear TV ad breaks typically last two to three minutes. This is a signal to viewers to get up, grab a snack, or take a bathroom break.
OTT ads tend to be much shorter, reducing the likelihood of viewers becoming distracted or leaving the room during the ad.
As a result, OTT advertising is more effective and cost-efficient for advertisers.
Key Takeaway for Publishers
OTT publishers have a golden opportunity to generate substantial revenue.
To make the most of this opportunity, you should devise a monetization strategy that fosters maximum competition, which, in turn, leads to higher revenue.
Adnimation, a Google Certified Publishing Partner (GCPP), is one of the select companies in the world that have access to Google’s product for monetizing OTT apps and content.
This access allows our partnering publishers to tap into Google’s vast video ad inventory and substantially increase their revenue.
If you want to learn how to leverage these high CPMs and maximize your OTT ad revenue, feel free to get in touch for a free consultation.
