In the fifth installment of the “All Advertising Is Local” custom video series presented by Ad Age Studio 30 in partnership with Effectv, advertising experts offer their insights into the importance of over-the-top (OTT) television services in today’s viewing landscape. And while the majority of viewers—including younger audiences—still consume content via linear TV, it is now imperative for marketers to add OTT to their media mix as consumers increasingly shift their TV viewing to streaming services via multiple devices. 

What is OTT?

This starts by defining OTT, which, in such a fragmented media landscape, isn’t always easy. “The term ‘OTT’ is still pretty confusing for the industry,” says Josh Cohen, director of product strategy at Effectv. In the simplest of terms, according to Heather Coghill, senior director of audience insights at Effectv, OTT is classified as “premium video, accessed through the internet, that’s watched on either a smart TV or through an internet-connected device or even on smartphones, tablets or computers.” 

Marketers should bear in mind that despite OTT’s rapid growth—Coghill says usage has increased 81 percent over the last two years—linear TV remains a robust option. When it comes to overall media consumption, OTT “still only accounts for 17 percent of time spent with video,” says Coghill. In addition, research from Effectv’s new report “OTT and Its Place in the TV Ecosystem” has found that only 39 percent of OTT is ad-supported. This means that advertisers “need to focus on AVOD [advertising-supported video on demand]-streaming platforms,” says Cohen.

Fitting OTT into the marketer’s media mix

“Follow the audience,” says Maggie Zhang, EVP of video research and insights at Dentsu Aegis Network. This is key advice for marketing strategies moving forward as advertisers look to balance their TV media plans between linear and OTT. “We look at how people spend their time,” says Brian Hughes, EVP and managing director of audience intelligence and strategy at Magna Global. “An increasing amount of it is on streaming to the TV set. So, what are the opportunities to reach them there? And how can we build that on top of what we’re doing in linear to make it a more effective campaign for our clients?” Zhang echoes this observation: “Nowadays, the audience, or consumer, is watching video content everywhere. So, as a strategy, increasingly, we know that consumers are spending a lot of time on OTT, especially on the big screen, watching long-form premium content streamed directly to their TV set, and most likely in the living room.” 

Another essential element for advertisers to consider when devising their marketing plans is the youth factor, which is why OTT research is critical right now. “Based on the current linear plan,” says Zhang, “we want to understand the incremental reach of OTT, especially when it comes to a specific audience that are more likely to be cord-cutters and cord-nevers.” Lee Singletary, senior manager of brand and industry relations at Comcast Advertising, highlights the increased importance of using OTT as a marketing channel when reaching younger audiences because “among the 18-34-year-old demo, connected TV devices account for more than one-third of daily time spent with video, and live and time-shifted television accounts for the largest share of viewing, at 43 percent.” 

Meeting the challenges and embracing the opportunities

Determining a comfortable balance between OTT and linear seems to be the biggest challenge for advertisers at the moment. It’s an understandable one, because despite its brisk growth as a crucial marketing strategy tool, OTT won’t make much of a dent on its own, at least not yet. “There’s a ton of value to reaching audiences through OTT platforms,” says Singletary, “but if advertisers aren’t implementing strategies that combine with linear, they’re not going to reach a relatively large percentage of the audience.”

This is a challenge that works hand-in-hand with tremendous opportunity, though. As Coghill describes it, OTT is “a really great complement to a more traditional media plan, in that it can help ad-incremental reach, especially among younger viewers, and it can also help balance out their frequency of light TV-viewing households.”

Click here to download the Effectv white paper “OTT and Its Place in the TV Ecosystem