OTT Advertising 101: What It Is and Why It Matters

Let’s face it: TV isn’t what it used to be. These days, nearly 89% of U.S. households subscribe to at least one streaming service, and over half use free, ad-supported platforms every week. Viewers have traded cable bundles for on-demand convenience – and advertisers are following fast. In fact, global OTT ad spending is expected to top $200 billion by 2025.

That’s because streaming TV, also known as OTT (over-the-top), is changing the game for brands of all sizes. If you’ve ever watched a show or movie through an Internet streaming app and seen a commercial pop up, you’ve experienced OTT firsthand. These ads are delivered online, bypassing cable and satellite TV, and landing directly on viewers’ screens, wherever they’re watching.

In this guide, we’ll break down what OTT advertising really is, how it compares to terms like streaming and CTV, and why it’s such a powerful (and approachable) tool for marketers, especially if you’re just getting started.

What Is OTT Advertising?

OTT stands for Over-the-Top, and it refers to video content that’s delivered via the Internet rather than traditional cable or satellite TV.

So what does “over-the-top” really mean? Think of it like this: you’re going over the cable box, bypassing traditional broadcasters, to deliver content straight to viewers through streaming apps on devices like smart TVs, smartphones, tablets, and more.

OTT advertising is simply the placement of ads within streamed video content. Instead of showing up during a scheduled commercial break on cable, your ad appears when someone is watching a show or movie on a streaming service – on any internet-connected screen.

Here’s the cool part: with OTT, you don’t have to guess who’s watching your ad. You can target specific audiences based on data like age, interests, location, and even the kind of content they’re watching.

A quick recap:

• OTT = Over-the-top (delivered via the Internet)

• OTT content = TV shows, movies, and videos streamed online

• OTT advertising = Video ads placed inside that streaming content

• Why does it matter? OTT lets you reach modern viewers on modern devices with better targeting and clearer performance data than traditional TV.

What's the difference between OTT, CTV, and Streaming?

You might hear the terms OTT and CTV used interchangeably, but they’re not exactly the same. OTT refers to the method of delivering content – it’s any video content streamed over the Internet without going through a cable provider.

Connected TV (CTV), on the other hand, refers to the devices used to stream that content on a television. In simpler terms: OTT is what you’re watching (internet-delivered streaming content), and CTV is where you’re watching it (on a smart TV or connected device). All CTV is a form of OTT (since it uses the Internet), but not all OTT is on a TV screen – you might be streaming on a phone or laptop, which is OTT but not CTV.

Example:

If you’re watching Hulu or a live news app on your Smart TV in the living room, that’s both OTT and CTV. If you’re watching that same content on your tablet or smartphone, it’s OTT (streaming via the Internet) but not on a connected TV. This distinction is helpful as we talk about OTT advertising, because it highlights that OTT ads can reach people on many devices – not just the television set.

OTT (Over-the-Top)

As we just covered, OTT is the method of delivery. It refers to any video content delivered over the Internet, outside of traditional cable or satellite systems. If someone’s watching a show using an app on their smart TV or phone, that’s OTT content. If there’s an ad in it? That’s OTT advertising.

Example: Watching a free movie on your tablet using a streaming app = OTT.

Streaming TV

This is a broader umbrella term. It simply refers to TV-style video content that’s streamed online. OTT is a type of streaming TV, but so is on-demand content on subscription services, livestreams, and more.

Example: Watching a sitcom, a live concert, or a mini-documentary online = streaming TV. If it’s over the Internet and resembles TV, it counts.

Bottom line: All OTT is streaming TV, but not all streaming TV includes ads, and not all streaming TV content is delivered through OTT platforms you can advertise on.

CTV (Connected TV)

Connected TV refers to the device, not the content. It’s a device that’s connected to the Internet and can stream OTT content. That includes:

• Smart TVs with built-in apps

• TV sets connected to devices like Roku, Amazon Fire, Apple TV, or game consoles

So when you see a video ad play on a smart TV app, that’s an OTT ad delivered on a CTV device.

Example: Watching a cooking show on your smart TV using a streaming app = OTT on a CTV.

How OTT Advertising Works

OTT advertising brings the targeting and flexibility of digital marketing to the big (and small) screen. Here’s a quick look at how OTT ads get from an advertiser to a viewer:

1. Audience Targeting

Every OTT campaign begins by defining who you want to reach. Unlike traditional TV, where everyone watching a channel sees the same ad, OTT lets you target specific audiences. You can target by demographics (age, gender, location), interests and behaviors (e.g. fitness enthusiasts, sports fans), or even by viewing habits or time of day. For example, a local sports bar could target 25-40-year-old sports fans in its city who frequently stream live sports events. This precise targeting means you show ads to the people who matter – and don’t pay to reach those who aren’t likely to care, eliminating a lot of waste.

2. Ad Delivery

When a viewer starts streaming and an ad break is approaching, the streaming platform will fill that slot with an ad that fits the viewer’s profile. OTT ads are typically served through automated systems (ad servers or programmatic platforms) that decide in milliseconds which ad to show to each viewer. This is often done via real-time bidding in programmatic advertising – multiple advertisers bid for that ad impression, and the winner’s ad is shown, all in an instant. The key is that different viewers can see different ads at the same time, even if they’re watching the same program, thanks to this dynamic ad insertion technology. For instance, two households streaming the same cooking show might get totally different ads – one sees a local grocery store ad while the other sees an ad for a new kitchen gadget – based on each household’s profile.

3. Platforms & Devices

OTT ads can appear on a wide range of devices. Smart TVs and connected TV devices (like Roku, Amazon Fire TV, Apple TV sticks) are a big part of OTT, but ads also run on mobile phones, tablets, laptops, and even gaming consoles – basically anywhere people stream video over the Internet. The content might be a streaming service’s original show, a live sports event on a network app, or a classic movie on a free ad-supported app. If it’s streaming online and showing you ads, that’s OTT. The flexibility here is huge: your ad could play on a 60-inch living room TV or on someone’s phone while they ride the bus to work.

4. Ad Insertion Timing

OTT advertising slots typically mirror the familiar TV ad experience – pre-roll ads (that play before your show or video starts), mid-roll ads (those breaks during the content, like a commercial break on traditional TV), and post-roll ads (ads that play after the content ends). Pre-rolls are great for grabbing attention early (viewers are settling in and paying attention at the start), mid-rolls catch people during natural breaks (often unskippable, ensuring high completion rates), and post-rolls can deliver a message without interrupting the show (though some viewers might tune out once the content is over).

Many OTT platforms also offer non-skippable ad formats (often 15-30 seconds), meaning the viewer must watch the ad, which guarantees your message is seen. Others allow skippable ads after a few seconds – in those cases the trick is to make the first 5 seconds super compelling to hook the viewer before they can skip.

5. Interactive Features

Unlike traditional TV, OTT ads can be interactive. Some OTT ads might include clickable banners or QR codes on-screen, letting interested viewers engage further (for example, scan a code to get a discount or tap their remote to learn more). These interactive OTT ads blur the line between a typical TV commercial and a digital ad, offering new ways to drive action. If you’ve seen an ad on a streaming service that says “Learn More” or shows a QR code you can scan with your phone – that’s an interactive OTT ad in action.

6. Measurement & Reporting

One of the biggest advantages of OTT advertising is measurability. Because these ads are delivered via the Internet, advertisers get detailed data on performance, much like online ads. You can track impressions (how many times your ad was shown), video completion rates (what percentage of viewers watched the ad to the end), and even actions that happen after the ad (for instance, visits to your website or app installs, if properly tracked) . OTT platforms can often report unique reach (how many different households or viewers saw your ad) and manage frequency (so the same person doesn’t see your ad too many times).

And while a viewer can’t usually click a TV ad, OTT advertising allows for view-through attribution – meaning if someone saw your streaming ad and later took an action (like searched for your business or visited your site), that can be captured in reporting. In short, OTT brings digital-style analytics to television screens, so you’re not left guessing whether your commercial had an impact. You’ll know – and you can use those insights to keep improving your campaign.

The Benefits of OTT Advertising

OTT advertising has surged in popularity not just because that’s where the audience is, but because it offers major advantages over traditional TV ads (and even over some other digital channels). Here are some key benefits:

1. Precise Targeting, Less Waste

Perhaps the biggest draw of OTT is how precisely you can target your ads. Traditional TV is a bit of a blunt instrument – you pick a show or channel, and your ad reaches everyone watching, whether they’re your ideal customer or not. In OTT, you can zero in on just the viewers you want. Want to show an ad to new parents in suburban zip codes who stream kids’ shows? Or to outdoor enthusiasts who’ve been binge-watching a nature documentary series? OTT makes that possible. By using data from streaming services (like account demographics and viewing habits) and even your own data (like customer email lists), you can serve ads to highly specific audiences. This means little to no wasted ad spend – your budget goes toward viewers likely to be interested, not the whole world. For marketers and business owners, especially those with tighter budgets, this precision is gold.

2. Reach Cord-Cutters and Young Audiences

An entire generation (and then some) is moving away from cable subscriptions – these “cord-cutters” and “cord-nevers” (people who never had cable to begin with) can be tough to reach with traditional TV ads. OTT is how you find them. If your target audience is watching free movies on Tubi instead of tuning into network TV at 8 pm, OTT is the only way to get in front of them. It ensures you’re advertising where people are actually paying attention.

3. High Engagement with Sight, Sound, and Motion

Video ads have always been powerful because they engage multiple senses – and OTT delivers that TV commercial impact with the convenience of digital. Viewers tend to be highly engaged when streaming their favorite content.

Unlike scrolling on a phone, where multiple things compete for attention, streaming typically commands full focus (you’re leaning back to watch a show). Ads on a large TV screen with sound and motion can leave a strong impression, often more so than a small banner ad on a webpage. Since many OTT ads are non-skippable, and always in-view, completion rates for video ads on streaming are very high – often 90% or more. That means your message is more likely to be seen and remembered.

4. Better Relevance and Personalization

OTT advertising isn’t one-size-fits-all. Because you know more about who’s watching, you can make your ads more relevant to them. This leads to a better experience for the viewer and better results for you. For example, you could run different ad creatives for different audience segments – maybe a sports-themed version of your ad to show to sports fans, and a different version emphasizing, say, the family benefits of your product for those watching family content.

This level of tailoring was never possible with traditional TV, and it makes viewers more likely to engage because the ads feel relevant to them. In short, OTT can make advertising feel less like “ads” and more like content that speaks to the viewer’s interests.

5. Cross-Device and Cross-Channel Reach

Because OTT content is accessible on so many devices, OTT advertising enables a true cross-device marketing strategy. You can reach the same person on their TV, then later on their tablet or phone with a related message, creating a cohesive story. And OTT can complement your other digital marketing efforts. For instance, someone might see your OTT ad on their connected TV, and then you could retarget that same person with a follow-up ad on their social media or a mobile app (many ad platforms allow this kind of coordinated campaign).

This way, you build frequency and reinforce your message across screens. It helps move customers through the funnel – maybe the TV ad builds awareness, and the mobile ad drives the click or conversion. OTT basically allows TV to join the rest of your digital marketing mix in a seamless way, rather than standing apart.

6. Measurability and Quick Optimization

Unlike the old days of TV, where you ran an ad and hoped for the best, OTT provides near real-time feedback on how your ads are performing. You’ll know how many people saw them, if they watched fully, and can often gauge subsequent actions (like website traffic spikes) that resulted. This means you can optimize your campaigns on the fly. If one ad creative isn’t performing well, you can swap it out or adjust your targeting. If you notice a certain streaming channel is driving more responses, you can allocate more of your budget there. OTT turns advertising into a data-driven endeavor – you get to tweak and improve as you go, leading to better ROI over time. Improved accountability is built-in; you can clearly see what you’re getting for your money and justify your ad spend with concrete numbers (impressions, clicks, conversions, etc.), something that used to be very hard with traditional TV.

7. Brand-Safe, Premium Content Environment

OTT ads typically run within professionally produced shows, movies, and live programming on reputable streaming services – as opposed to user-generated content on the open web. For business owners concerned about brand safety (i.e., making sure your ads don’t show up next to offensive or inappropriate content), OTT offers more control and confidence. You can choose or exclude content categories, and streaming services have standards for their content. In other words, your commercial for a family-friendly product can appear in a family sitcom on a streaming app, rather than risk showing up next to some random questionable internet video.

This premium context often means viewers also trust the ads more. Seeing a local brand’s ad on “TV” (streaming) carries a bit of that old TV prestige – it can boost your brand credibility, since it feels like you’re appearing alongside high-quality entertainment.

8. Resilience to Privacy Changes

Digital marketing is in flux with privacy changes (like the phase-out of third-party cookies on web browsers). Interestingly, OTT advertising is somewhat insulated from these shifts. Streaming platforms use their own first-party data (logged-in account info, etc.) for targeting, and TV screens never relied on cookies in the first place. So the ways you target OTT viewers today are expected to remain effective even as other digital channels face tracking limitations. In a world where marketers are seeking future-proof advertising options, OTT stands out as a channel that can adapt and thrive in the evolving privacy landscape.

Challenges of OTT Advertising and How to Overcome Them

OTT advertising offers a ton of benefits, but it’s not without some challenges – especially for newcomers. It’s good to be aware of these potential hurdles and ways to address them:

1. Fragmentation of Platforms

The OTT landscape is quite fragmented. Viewers are spread out across many different streaming services and devices. There’s no single place to buy ads that reach everyone (unlike the old days, when one TV network could deliver millions of viewers). This means if you go directly, you might have to strike deals with multiple platforms – for example, run some ads on a smart TV manufacturer’s platform, others on a streaming app like Tubi, others on a network’s app – to cover your bases. It can get complex to manage.

The solution is to use an aggregated buying approach. By using programmatic ad platforms or a service that has access to multiple OTT channels, you can simplify this. Essentially, you input your targeting and budget, and the platform finds the viewers across those fragmented services for you. This way, you ensure your campaign has enough scale without having to manually juggle five different ad accounts.

Tip: When planning, think of a mix of at least a few different streaming sources to maximize reach, or let an expert platform handle the mix. Diversifying across apps also means if one source has limited viewers, another picks up the slack.

2. Learning Curve and Technical Complexity

If you’re new to TV or digital advertising, some OTT lingo and tech can be confusing. Terms like DSPs, SSPs, attribution pixels, etc., might pop up. Also, creating video ads is a bit more involved than making a simple image or text ad. There’s also the matter of ensuring your video meets each platform’s specs and navigating reporting dashboards. This can feel overwhelming.

But don’t panic! You don’t have to go it alone. One way to tackle this is to partner with an OTT advertising platform or service that is built for newcomers (we’ll introduce Skybeam in a moment, which is one such solution). These platforms often offer user-friendly tools, templates, or support to get your campaign off the ground. Some even help with creative (or have partners who can make a video for you if you provide images and script ideas).

Additionally, start small and learn by doing – maybe launch a test campaign in one city or on one platform, get comfortable with the process and metrics, then expand. There are also agencies and consultants who specialize in OTT if you prefer a hands-off approach. The key is that while OTT has some technical layers, there are plenty of resources to help newbies succeed.

3. Measurement and Attribution Challenges

Tracking what happens after someone sees a TV ad (even a streaming one) isn’t as straightforward as tracking a click on an online banner. If a viewer sees your OTT ad on their TV and then later visits your website from their phone, connecting those dots requires the right tools. Similarly, if they walk into your physical store a day after seeing your ad, how do you know the ad influenced them? These attribution questions are a known challenge in OTT.

However, the industry has made a lot of progress here. Third-party measurement providers (like Nielsen, Oracle Data Cloud, and others) can match exposure data with other behaviors – for example, using device IDs to see if a device that was exposed to your OTT ad later visited your site or app. Some OTT platforms directly integrate these capabilities or offer brand lift studies (which survey viewers to see if they recall or were influenced by the ad). While as a small business you may not need very fancy attribution, you can still track important actions.

One simple approach: use a unique promo code in your ad, so you can directly measure responses from the ad. Over time, OTT measurement will continue to improve, but even now, you should be prepared to use a combination of analytics and maybe a bit of old-fashioned asking customers (“How did you hear about us?”) to gauge success. The good news is you will get a lot more data from OTT than you would from a traditional TV buy – it’s just tying it to business outcomes that may need extra thought.

4. Creative Production Needs

Unlike text or image ads, video ads require, well, a video! For some businesses, especially smaller ones, producing a high-quality video ad might seem like a challenge. You may need to invest in production or get creative with a DIY approach. The challenge is making an ad that looks professional enough to sit next to big-brand commercials on TV. Fortunately, producing video content has become more accessible – you can shoot high-resolution footage with a modern smartphone and use affordable editing software or hire freelance creators.

Some streaming platforms even have simple ad builders or partnerships with video creators for hire. The main thing is to ensure your ad clearly conveys your message and looks/sounds good. If you’re not confident in doing it yourself, consider budgeting a bit for professional help. Think of it as creating a short promo video for your brand, which can be repurposed on social media or your website too. Once you have your video, the hard part is done, and you can run it in OTT campaigns repeatedly. So yes, making a video is a hurdle, but one that’s very much worth overcoming given the upside of OTT’s reach. Many businesses start with one good video ad and iterate on it.

In summary, while OTT advertising comes with new platforms and processes to learn, the obstacles can be managed with the right approach and tools. Don’t let the fragmentation or tech jargon scare you off – plenty of small businesses are successfully running OTT campaigns today. With a bit of guidance (and perhaps a partner platform to streamline things), you can tap into the streaming ad space and look as polished and targeted as the big brands.

Skybeam: Making OTT Easy for You

Excited about the potential of OTT but unsure where to start? That’s exactly why we built Skybeam – a self-serve OTT advertising platform designed to take the guesswork out of streaming TV campaigns.

Whether you’re a small business owner or a marketer without TV ad experience, Skybeam helps you plan, launch, and optimize OTT ads with ease:

• One Simple Platform: Create, manage, and measure your campaigns all in one place. Skybeam handles the hard parts—like accessing premium inventory across top streaming channels—so you don’t have to juggle multiple tools or vendors.

• Smarter Targeting, Better Results: Reach the exact audience you care about using Skybeam’s built-in data and audience filters. Whether you’re uploading your own list or choosing from predefined segments, every dollar goes toward reaching viewers who are likely to care.

• Cross-Screen Coverage: From big-screen TVs to mobile phones, Skybeam delivers your ad wherever your audience is watching. Your message stays consistent across devices and moments.

• Real-Time Insights: See what’s working as your campaign runs. You’ll get live metrics and built-in optimization tools so you can tweak on the fly and make every impression count.

• Beginner-Friendly: No jargon, no overwhelming dashboards. Skybeam walks you through each step with helpful tips and intuitive controls—so even if it’s your first time advertising on TV, it won’t feel like it.

In short, Skybeam makes professional-grade OTT advertising simple, efficient, and accessible. You bring the message, we’ll help you deliver it to the right screens.

Conclusion

OTT gives business owners and marketers a rare combo: the impact of TV plus the targeting and measurement of digital. Whether you’re building brand awareness locally or driving online sales nationally, OTT fits right into your marketing mix.

If you’ve never tried TV ads before, Skybeam is your chance. You’re no longer locked out. You can launch smarter, more focused campaigns on streaming TV and stand alongside big brands, without contract lock-ins and signup fees.