OTT advertising (over-the-top) is one of the fastest growing markets for advertisers today. With many viewers ditching cable and turning to VOD streaming channels like Netflix and Hulu, the old ways of selling ads for TV commercial breaks have completely changed.
If you’re running an AVOD business (ad-based video on demand. See our glossary here if you need a refresher), there are many ways to sell video slots on your channel to advertising companies for profit. In this guide, we’ll be breaking down the most important OTT advertising platforms there are and help you find the one that matches your business.
What is the definition of 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). In this guide, 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: The Basics.
If you already have an OTT channel on the web or on platforms like Roku and Apple TV, 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 which will allow 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, which can range depending on the size and quality of your audience. Having a larger audience will allow you to sell more ad spaces, but having a more niche audience may help you attract higher CPMs (many advertisers will pay higher prices to reach a more specific audience that matches who 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 and OTT advertising companies, 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 every ad published.
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.
One major upside for sponsorships are that there are nearly infinite ways to deliver your sponsored messaging. They can be interwoven directly into your content, shown as banner ads, audio messages, skinned backgrounds, launch screens, product placement, anything you can imagine and offer to prospective buyers.
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 it puts you in the position of relying 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, and YouTube’s web player runs purely on ads, so there are no right or wrong answers. As the OTT and VOD space 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 or just want some guidance on the video business at large, get in contact with our team at MAZ. We love helping businesses of all sizes create powerful strategies and app solutions on OTT.