CTV has become a true pillar in the industry. Increasing demand from advertisers for CTV and OTT offerings has many publishers energized to enter the burgeoning CTV marketplace. With more households than ever choosing to “cut the cord” on traditional TV, this trend is poised to continue, with CTV advertising becoming among the fastest growing sectors in the entire ad landscape.
But if you’re thinking there are a great deal of confusing terms involved in this subject, you’re right. Not only is there an alphabet soup of letters flying around, but they are sometimes used inaccurately or even interchangeably by professional sources. This can make it confusing to get a handle on what all these terms actually mean. So we’re here with a little bit of guidance on what CTV, OTT, and linear TV mean, and why it’s important for publishers to know going forward.
What is the Difference between CTV and OTT?
Despite their close similarities, these terms are not interchangeable. To avoid confusion, let’s break down the three:
Linear TV is “traditional” TV, and refers to television broadcasts that viewers watch at specific times on specific channels. Shows that aired but were DVR’d (digitally recorded) and watched at a later time fall into this category as well. While linear TV still carries the largest video advertising market, the landscape is more fractious in recent times. CTV spend will likely outpace linear TV if trends continue, with nearly three quarters of buyers shifting budget from linear TV to CTV in 2021 according to IAB.
Connected TV (CTV)
CTV refers to devices that connect to the internet to stream video content on televisions. These include Smart TVs, but are not limited to just television sets. CTV also covers devices like gaming consoles (such as PlayStation and Xbox), Amazon Fire Stick, and Roku. In addition to the growing audience numbers, buyers praise CTV for its combination of premium TV content with digital measurement and targeting.
Over the Top (OTT)
OTT (over-the-top) has been used to refer to a variety of content delivery environments, however, the most basic definition refers to video delivered over the internet rather than through a traditional cable TV box. OTT in this definition is essentially a new term for digital video. That can mean TV content delivered to a large-format screen, but it can also mean lower quality video delivered to an old cellphone.
OTT content services include things like Netflix, Hulu, and Amazon Prime. Media brands are starting to launch their own OTT services such as Disney+ and Peacock from NBC. Occasionally you may hear two further subcategories that are sometimes used when talking about OTT services:
- AVOD: “Advertising-based video on demand” which are OTT services that rely on ads for revenue, like NBC’s Peacock.
- SVOD: “Subscription-based video on demand”, which are OTT services where revenue is mostly accrued from subscriptions, for example Netflix.
Putting it all together
Though related, CTV and OTT refer to different things and should not be confused with one another. “CTV” represents the devices that stream video content, and “OTT” refers to the content delivery method. Linear TV, on the other hand, primarily utilizes cable, satellite, and antenna technologies to deliver linear live streaming channels and on demand content.
What does all of this look like functionally? Here’s a simple example.
If you watch Grey’s Anatomy in its regular time slot on ABC on your non-internet connected television set, that’s linear TV. If you go to Hulu’s site and watch it on your mobile device or laptop, that’s streaming OTT content. Then, if you use your Roku to stream Grey’s Anatomy, you are using a CTV device to stream OTT content.
There are many opportunities available to publishers in the CTV space. As the CTV boom continues and advertisers shift a larger percentage of ad spend toward CTV spaces, publishers need to be sure in their knowledge of the ecosystem and its terminology so they can be confident when discussing the future.
How is your team approaching CTV? We want to hear from you!