How To Excel With OTT Content
Businesses small and large rely on television and video ads for growing their customer base and driving sales. Television advertising has proven itself to be very effective for several generations now, and it continues to be very effective for reaching a mass audience.
But it can also be expensive for small businesses on a budget. And recent trends in consumer activity — particular among audiences under age 50 — show that there’s a new kid on the block who’s grabbing the attention of millions of consumers: Over-the-top content.
What is OTT content? How does it work? Why is it growing at such a furious pace? Why are huge media brands jumping all over it? And most important of all: how can it help you grow your business?
What Is OTT Content?
Over-the-top (OTT) Content is website content that is distributed over the internet rather than over more traditional media channels. Some examples would include movies and TV shows streamed on Netflix rather than on cable TV, music streamed on Apple Music instead of on the radio and even phone calls connected via Skype instead of through landline telephone wires.
The rapid growth of streaming video tends to get all the attention, but over-the-top content can technically refer to all of the above. For this discussion, though, the focus will be on video streaming content.
Some of it is distributed completely free of charge, at least for the consumer. This free distribution of content became extremely popular in a very short time, and for good reason. With the rise and affordability of smartphones, streaming content has become an essential part of everyday life for millions of people around the world.
While traditional media like television and radio aren’t going away anytime soon, the truth is that a major shift has occurred in the way that people consume content — and any business that relies on media advertising for driving sales and growing their brand needs to understand this shift and take action to secure their foothold in these evolving patterns of consumer behavior and media distribution.
3 Ways Video Streaming Platforms Make Money
There are three basic methods that streaming content providers use to monetize their content and operate their businesses: SVOD, TVOD, and AVOD.
Some types of content will do well with one method but will bomb with another. And some platforms are experimenting with a blend of two or more of these methods. The methods have their own pros and cons and are not mutually exclusive, so it is reasonable to expect all three to exist for a long time to come.
SVOD Video Streaming
Subscription-based video-on-demand (SVOD) is one of the most popular methods for monetizing video streaming services. Major media stations like HBO and CBS have jumped headfirst into these new platforms and are even creating SVOD platforms of their own. This model is used by Netflix, Hulu, HBO Now and YouTube Red.
With SVOD, customers sign up for a subscription to the service on a monthly or annual basis and typically have unlimited access to all of the content offered. Some platforms will have more than one tier of subscriptions, with the premium content — such as the newest movie releases — available at a slightly higher cost per billing cycle compared to the standard content subscription.
Many streaming businesses prefer this model because it gives the most stable and predictable flow of income from month to month. Subscribers also enjoy it because they get access to tons of content with one monthly bill, and they can budget their personal spending accordingly.
TVOD Video Streaming
Transaction-based video-on-demand (TVOD) is the current internet version of pay-per-view (PPV) that has been common with traditional cable television for the past several decades. Customers can purchase or rent individual movies to watch online at their leisure. Some of the content will be permanently unlocked and may be viewed at any time, while cheaper purchases may only allow viewing for 24 hours or some similar period of time.
TVOD works well for customers who don’t watch a lot of movies and TV shows online, whether due to budget limitations, busy schedules or lack of interest. Video distributors benefit by making some sales from customers who would otherwise not bother to sign up for an SVOD service, but these sales can be sporadic and highly unpredictable.
AVOD Video Streaming
The third method is advertising-supported video-on-demand (AVOD). This type of streaming service allows consumers to watch movies and other videos free of charge. They simply download the app or go to the website and watch whatever they want, whenever they want. YouTube is the chief example of free, ad-supported video content, but there are many other video-streaming platforms popping up that monetize with ads too — with and without the user-generated content model.
The company then places advertisements into the content in order to monetize it and gain some revenue. This method nearly mimics the traditional television practice of interrupting shows with commercials every 5-10 minutes or so, except that the ads can be placed at the beginning of the video or can be skipped in order to provide a less invasive experience for the viewer. But that is shifting, especially with premium content, and more videos are featuring invasive ads today compared with 5-10 years ago.
Customers on a budget are often happy to allow invasive ads in order to watch content for free — especially premium content — so this method is very popular and attracts tons of customers. Ad revenue can be a bit unpredictable, however, so these platforms have to account for that when projecting revenue and calculating costs.
Some video streaming services are beginning to experiment with a mixture of SVOD and AVOD, offering access to their service for a very low subscription rate and then inserting ads to supplement their revenue.
AVOD Advertising Opportunities for Your Business
So what does all of this mean for you, as a business owner?
It means that times are changing and new opportunities are opening up for you to advertise your business, to get the attention of your target customer base and to grow your brand.
Streaming video is a rapidly-growing market, particularly among millennials and Gen-Z audiences, and the AVOD platforms give you the potential to get your ad content in front of millions of people at every hour of the day and night.
One of the most exciting aspects of AVOD advertising is that you have the ability to have your ads targeted to your chosen demographics with much greater precision and consistency than is possible with traditional cable TV. This gives you and your marketing team unbelievable control over who sees your advertisements.
This is the kind of thing that marketing geeks get really excited about. And since it can drive profits right into your company’s pockets, it’s something that you might find pretty exciting too!
So if your business is looking for ways to reach your target customer online by taking advantage of current technologies and marketing trends, then creating ads for streaming video services should be up near the top of your list. This space is growing at a rapid pace, so it just makes sense to put your marketing dollars to good use by investing in these platforms.