What is OTT Advertising, and How You Can Make Money with it? [2020 Update]

Posted on August 22, 2019
 

OTT Advertising (over-the-top) is one of the fastest growing ad markets in 2020. Millions of viewers are ditching cable and turning to OTT streaming channels like Netflix and Hulu. The old way of selling ads for TV commercial breaks jas completely changed. 

If you’re running an AVOD business (ad-based video on demand), there are many ways to sell ad slots on your channel for profit. At MAZ, we’ve helped some of the world’s top TV and video brands around the world create custom TV apps and multiply their ad revenue.

In this guide, we’ll break down the most important OTT advertising platforms and help you find one that matches your business. So let’s start with the basics:

What is OTT Advertising?

OTT advertising is the placement of ads on OTT video content. OTT content (or Over-the-Top) refers to any video streaming that takes place over the internet, like Netflix, Hulu, Disney+ and more.

Generally speaking, there are two ways that video streaming businesses can make money: With subscriptions (SVOD) or by running advertisements (AVOD). Today, we’ll be going in-depth on ad-based video businesses and how they can monetize their content.

How to Get Started with OTT Advertising:

If you already have an OTT channel, then you’re ready to start making money. (If you don’t, get in touch with us here for advice and guidance). But to make any real money, you’ll have to meet some prerequisites.

First, you need to have the right technology to support your ads. Some third party ad networks like Google Ads will provide you code. This code allows you to run ads automatically with little development work. In other instances, you may need custom development to suit your specific needs. If you’re looking for a flexible solution for ads, paywalls or any kind of monetization, services like MAZ are an excellent way to make sure you’re covered.

Next, you need viewers. Generally speaking, OTT advertisers pay on a CPM basis (cost per mille). That means that they typically pay a set price per 1000 views. The price depends on the size and quality of your audience. A larger audience will allow you to sell more ad spaces, a more niche audience may help you attract higher CPMs. Many advertisers will pay higher prices to reach a more specific audience that matches whom they’re targeting.

Lastly, you need some information on your audience. Advertisers want to know who they’re reaching and what they’re paying for. Having up-to-date information on your audience’s demographics, locations, incomes, interests and more will make buyers far more likely to purchase ad space from you.

Once you meet these basic requirements, it’s time to choose your monetization plan:

Monetization Option 1: Video Advertising Networks

If you want to run OTT ads quickly and conveniently, a Video Advertising Network (VAN) can be a great option. With VANs, monetizing is as simple as signing up and dropping their code into your channel. The VAN will begin automatically placing commercials in your channel, sharing a portion of the revenue with you.

However when you use a video advertising network, you sacrifice choice and profit for convenience: You can’t control what ads run or when, most VANs only fill 40-60% of available ad breaks (leaving money on the table), and they take a percentage of all ads.

Monetization Option 2: Direct advertising

To take more control over your ads, you can develop a custom ad server. With custom ad servers, you can choose what ads to run and when they appear. You also get to negotiate with potential advertisers directly and set your own prices. The drawbacks here are obviously that this is much more work for you, both on the development side and the business side. However, using an OTT app creator like MAZ can significantly reduce your time and cost of development.

For more on the cost to build a custom app, see our guide here.

Monetization Option 3: Sponsorships

Another impactful way to advertise is to find a sponsor. Sponsors can pay for the right to advertise exclusively on a certain piece of content, a page within your channel, or even your entire channel (all features you can unlock easily with MAZ).

One major upside for sponsorships are that there are nearly infinite ways to deliver your sponsored messaging. They can be interwoven into your content, shown as banner ads, launch screens, anything you can imagine.

Sponsors can also simplify your ad rotation, as you only have to serve one business’s ads and charge them one flexible price. On the other hand, this can also be a restricting system since you rely upon a small group of advertisers for all of your revenue.

Conclusions on OTT Advertising Revenue:

Ultimately the best way to advertise on OTT will depend fully on the nature of your business. Netflix runs no ads at all. Hulu has a hybrid subscription/ad-based model. YouTube’s web player runs purely on ads. So there are no right or wrong answers.

As the OTT industry continues to develop, businesses that can be creative and work with what they have are the ones that will likely see the most success.

If you’re serious about making money with OTT ads, get in touch with our team at MAZ. We love helping businesses of all sizes create powerful strategies and app solutions on OTT.

TAGS: OTT streaming video

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