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Imagine you’re back in high school (rough time, we know. But stay with us!). Your teacher just handed back a recent test, and your palms are sweating as you scan their feedback.
There, at the top of page two, you see it: “Mostly correct, but…” Ah, partial credit. If you were like us, you’d probably find yourself wondering, “Isn’t being close good enough?”
Fast forward to “adult” life (yikes), and there are certainly instances in which being close is more than enough…but there are also times when precision is key. In a space as complex as digital marketing, for example, a lack of precision can lead to misunderstandings and costly errors.
Today, we’re digging into an area where it pays to be precise: differentiating between connected TV (CTV) and over-the-top (OTT) advertising. Though these terms are sometimes used interchangeably, there are important differences to be aware of. Knowing what each refers to and how they differ will ensure your team is utilizing these channels effectively, and prevent an awkward situation in which an ad intended to run on a TV device ends up displayed on someone’s phone instead.
Ready to dive into all things OTT vs. CTV? Let’s begin.
Before we can explore the differences and similarities between OTT and CTV, we need to define each term individually. First up? CTV.
A CTV is any television set that is connected to the internet. CTVs include smart TVs, as well as TV sets that can access the internet via an OTT device, a set-top box, or a gaming device that serves as an OTT device.
The term CTV describes the device on which viewers are watching video content. As such, it’s not possible for someone to watch CTV on their phone, laptop, desktop, tablet, or other digital device, since none of those devices are TVs.
(Psst: There are tons of other words and acronyms associated with CTV that you might want to know about. Check out our connected TV advertising glossary to learn more!)
Now that we’ve established what connected TV is (and what it is not), let’s move on to OTT.
Where the term CTV describes a specific device, OTT describes a way that video content is delivered to users. Specifically, OTT is a method of delivering video content to users through the internet, rather than via cable, broadcast, or satellite. A few well-known providers of OTT content include Netflix, Hulu, HBO Max, and Disney+.
OTT advertising can happen just about anywhere. The same cannot be said of CTV (because, hey, how many people do you know that carry their TV sets around with them?)
Though there are ways in which CTV and OTT overlap, it’s important to note their key differences:
Though these terms are sometimes used synonymously, they are distinct. Just remember, all CTV is OTT, but not all OTT is CTV (kind of like how all squares are rectangles, but not all rectangles are squares).
“Okay, we get it,” some advertisers might say. “CTV and OTT are different. But why use them? What benefits do they offer?”
Well, more and more people are using CTV devices to watch video, and many people are turning to OTT content over traditional cable and broadcast providers. In short, both CTV and OTT offer advertisers the opportunity to connect with people when and where they’re watching video. Still not convinced? We’ll let the numbers speak for themselves:
With the explosion of people tuning into CTVs and tapping into OTT video content, it’s no surprise that ad spend has followed in kind. In 2022, US CTV ad spend grew by 23% year-over-year (YoY) and is projected to grow by 27.2% YoY in 2023 to $26.92 billion. And, subscription OTT ad spend is forecast to grow 50.5% YoY in 2023 and to reach $11.11 billion in ad spend in 2024.
Before we wrap things up, here’s a quick quiz to assess your knowledge on CTV vs. OTT:
Imagine you’re chatting with your coworker Larry. While discussing an upcoming campaign, Larry says, “Let’s include CTV ads in the mix! I saw one while watching the newest episode of ‘The Bachelor’ on my phone this morning, and it totally hooked me.” How do you respond?
If you chose answer B, congratulations! We can now officially dub you a CTV vs. OTT wizard: You know exactly what these terms mean, where they overlap, where they are distinct, and their top benefits.
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Looking to expand even further upon your OTT vs. CTV advertising expertise? Our Connected TV Advertising Guide can help! In it, we dig into how to make the most of the CTV opportunity, CTV best practices and strategies, how to optimize towards key KPIs, and more.