Over-the-top or connected TV? It’s time to clear the air and understand the differences between the two marketing phenomena.
It’s a common misconception. Even the average marketer still falls trap to this typical confusion of distinguishing between OTT and CTV.
Given the high demand of streaming services today, advertisers have been exploring ads over these platforms with Amazon Prime’s airing of commercials in February 2024 a very current example. It seems that more and more brands and marketers are investing in over-the-top (OTT) advertising, as more streaming services are shifting towards an ad-supported business model. Connected TV (CTV) is the fastest-growing major ad channel in the US with a 22.4% or $30.10 billion growth projection in 2024 according to eMarketer.
With the growing rate of consumption and investment towards OTT and CTV, it’s no surprise then that advertisers often interchange and mix up the two. So what’s the difference between OTT and CTV?
What is OTT?
Over-the-Top or OTT refers to the digital content delivered (can be video-based or audio-based) directly to viewers over the internet, bypassing traditional distribution channels like cable or satellite providers. It’s delivered through a variety of channels or streaming services and apps. It gets its name because the service delivers “over the top” of another platform, which in this instance is the internet service provider.
Different types of OTT services include Netflix, Hulu, and Amazon Prime Video. Mass media and networks also have their own OTT services such as Disney+ or television networks like HBO and CBS a few names amongst many more..
Put succinctly, OTT is the process of streaming or viewing video content on your phone, tablet, television, or laptop.
Within OTT, there are different models. Some offer monthly or yearly subscriptions while others generate revenue by showing ads to viewers for lower costs:
One is SVOD (subscription video on demand). It is a subscription-based model that offers exclusive video content to users for a fixed fee, providing a predictable revenue stream for content providers. In return for this fixed subscription fee, SVOD providers give timely access to a set video package. Netflix, Apple TV+, Disney+, Hulu, and Roku Channel are just some examples.
The second category is AVOD (advertising-based video on demand). Audiences can access videos without paying money to the content or platform owner, in exchange allowing advertisers to target specific audiences through ads that run in front of, alongside, in the middle of, or at the end of the video.
Thus, viewing is free to consumers but has advertising similar to traditional TV. Examples include YouTube, Pluto TV, and Tubi.
The third category is TVOD (transactional, pay-per-view fee for content). TVOD services charge a pay-per-view fee for content, with content owners offering rental, purchase, or both options to their audiences. Consumers view content on TVOD apps or services by
paying a one-time fee to either rent or buy it. An example would be the Apple TV App (formerly known as iTunes).
The fourth category is MVPD (multichannel video programming distribution). MVPDs primarily distribute video programming via cable and satellite, investing heavily in broadcasting
infrastructure to expand their services and reach new markets. A virtual MVPD is a service that enables users to access their preferred TV channels via the internet without the need for cable connections. An example would be the Dish Network.
What does CTV mean?
Connected TV or CTV, is television content streamed on smart TVs (like Apple TVs) through connected devices. These connected devices could be internet-connected television devices (such as Roku, Amazon Fire Stick, or Chromecast), gaming consoles (like Xbox or Playstation), or even built into the television itself (such as the operating systems on Vizio, Samsung, LG, and Sony TVs). In other words, CTV refers specifically to internet-connected devices that connect to TV screens for viewing.
Connected TV has become the main way that most audiences engage with content, through both apps and subscriptions. It is the technical core for programmatic TV (PTV) support since the technology also supports advertising.
This is also known as non-linear TV (since viewers watch the same TV show, but on demand). There is typically no scheduled time and no chance to replay, pause, or skip specific content. With non-linear TV or connected TV devices, viewers can watch content at their will; they can pause, replay, or simply stop it whenever they want.
Conventional TV broadcasting or linear TV, on the other hand, allows viewers to see pre-scheduled shows live. Some may better know this kind of television viewing as “broadcast” or “live TV”.
When watching a show on a linear TV, viewers have to set their TV to a certain channel at a certain time. The programming is predetermined by the network or the channel. As a result, viewers are limited to the scheduled programs and are often unable to fast-forward, pause, or rewind the video. It also implies that viewers are unable to get content whenever they want.
Distinguishing between OTT and CTV
Now that we’ve defined both, it’s time to ask ourselves how exactly do we differentiate the two?
CTV is a subset of OTT, wherein it is technically OTT content with the difference being it is specifically viewed on a Smart or Connected TV or streaming device. On the other hand, OTT is more so referring to the method of content delivery rather than the device.
In other words, OTT is the “pipes” or the way video content is delivered. CTV is a popular device type where that video content is seen. Streaming content can, therefore, be made available over-the-top (“OTT”) to Connected TVs (“CTV”), mobile phones, tablets, computers, and other internet-enabled devices for your viewing pleasure.
But why is there even the need to distinguish between OTT and CTV in the first place, other than to just clear the confusion amongst marketers?
Knowing the difference between the two can help you better reach your target audience, maximize your reach and better optimize your advertising campaigns. You can reach viewers beyond the reach of traditional linear TV (i.e. cable, satellite, and antenna), including a growing number of “cord-cutters” or those who don’t pay for standard cable or satellite services.
The targeting capabilities and scope are also different. OTT advertising targets video content across devices (mobile devices, computer or CTV), while CTV advertising will only be seen on the bigger screen. Determining the targeting capabilities of the two can help you deliver more relevant and valuable ads to your target audience.
The ad format, pricing, and monetization models also vary between the two. CTV typically offers a more traditional TV-like experience, which may be conducive to longer-form ads, such as 30-second commercials. For OTT, publishers will typically give more flexibility in terms of ad formats.
Another difference is that CTV platforms often offer opportunities for programmatic advertising and targeted ad placements, which may affect pricing structures. OTT publishers, on the other hand, have different monetization models such as subscription-based services, ad-supported content, or a combination of both.
To sum it all up: All content on CTV is over-the-top (OTT), but not all OTT content falls under CTV. OTT can also be viewed on non-CTV devices, such as laptops or mobile.
Final thoughts
It can often be tricky knowing the difference between OTT and CTV. To aid advertisers and marketers worldwide, illumin is designing a quick, handy guide to help you distinguish the difference between OTT and CTV. Stay tuned!
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