OTT & CTV Advertising Cost: CPM Pricing Explained

OTT and CTV advertising costs are crucial factors for marketers aiming to leverage digital platforms for their campaigns. Understanding the nuances of these advertising costs is essential for optimizing budget and maximizing reach.

In this article, we’ll explore the primary cost drivers and discuss how OTT and CTV pricing and CPMs impact your advertising strategy.

OTT and CTV Advertising Explained

Before discussing the cost drivers and CPMs, it’s important to highlight the difference between CTV and OTT marketing.

OTT (Over-the-Top) advertising refers to ads delivered through streaming services directly over the internet (regardless of the device), bypassing traditional cable or satellite TV.

CTV (Connected TV) advertising, on the other hand, specifically targets ads on smart TVs or devices connected to TVs, such as Roku or Apple TV.

While both fall under digital advertising, OTT encompasses a broader range of devices, including mobile and desktop, whereas CTV is restricted to television screens. Learn more about OTT devices.

OTT Advertising vs Linear TV Advertising

Linear TV advertising involves broadcasting ads to all viewers of a scheduled TV program without targeting specific audience segments.

In contrast, OTT advertising allows for precise targeting based on viewer data, enhancing ad relevance and effectiveness.

OTT Advertising vs Addressable TV Advertising

Addressable TV advertising delivers tailored ads to individual households during linear broadcasts based on their characteristics.

Unlike addressable TV, OTT advertising operates over internet streaming platforms, offering broader device compatibility and on-demand viewing flexibility.

• Learn more about the cost of tv advertising.

How Much Does CTV & OTT Advertising Cost?

CTV and OTT advertising costs can vary widely, typically ranging from $10 to $50 CPM (cost per thousand impressions).

The exact price depends on numerous factors, such as targeting precision, CTV inventory quality, and seasonal demand. Just like booking a flight, prices fluctuate based on timing, demand, and specific preferences, so there is no one-size-fits-all answer.

What Is a Good CPM for Connected TV and OTT?

A good CPM for connected TV and OTT advertising is typically between $25 and $35, reflecting the advanced OTT attribution and targeting technologies used.

These higher CPMs (when compared to linear TV) ensure that your ads reach the right audience with precision. Ultimately, the best CPM balances cost-efficiency with effective audience targeting to optimize campaign performance.

With that said, OTT measurement is more complex than simply analyzing CPM as the sole determinant of success.

Cost Drivers for OTT and CTV CPMs

Understanding the cost drivers for OTT and CTV pricing can help marketers better plan and allocate their advertising budgets. Here are some of the factors that can influence OTT and connected TV CPMs.

1. Platform Used

Different platforms, such as Hulu, Netflix, or YouTube, have varying pricing structures based on their user base and ad formats. Premium ad-supported platforms with larger audiences often command higher costs due to their extensive reach and engagement.

2. Targeting Options

Advanced OTT targeting options, such as demographic, behavioral, and geographic targeting, increase the cost of CTV and OTT advertising. The more precise the targeting, the higher the CPM, as these streaming ads are more likely to reach the desired audience effectively.

3. Ad Length and Format

The cost of advertising can vary significantly based on the length and format of the ad. Longer ads and interactive formats generally cost more due to their potential for higher viewer engagement and impact.

4. Competition for Inventory

High demand for ad space, especially during popular shows or events, drives up prices. OTT advertising platforms with limited ad inventory and high viewer engagement can command premium prices due to increased competition among advertisers.

5. Seasonal Demand

Advertising costs fluctuate with seasonal demand, with peak periods such as holidays and major events leading to higher prices. Advertisers often face increased costs during these times due to the surge in competition for viewer attention.

How to Buy OTT and CTV Advertising

Buying OTT and CTV advertising involves a strategic approach to ensure your ads reach the right audience effectively.

• Step 1 – Define Your Goals: Clearly outline what you aim to achieve with your OTT and CTV campaigns, whether it’s brand awareness, lead generation, or sales.
• Step 2 – Identify Your Target Audience: Determine the demographics, behaviors, and preferences of the audience you want to reach to inform your targeting strategy.
• Step 3 – Choose the Right Platforms: Select the OTT platforms and CTV platforms that best align with your audience and campaign goals, such as Hulu, Roku, or Amazon Fire TV.
• Step 4 – Set Your Budget: Decide on a budget that balances cost-efficiency with the ability to achieve your campaign goals, considering the higher CPMs associated with OTT and CTV.
• Step 5 – Select Your Ad Formats: Choose the ad formats that best suit your message and engagement goals, such as video ads, interactive ads, or sponsored content.
• Step 6 – Create Engaging Content: Develop high-quality, engaging ad content that resonates with your target audience and meets the OTT and CTV video specs of the chosen platforms.
• Step 7 – Leverage Targeting Options: Utilize advanced targeting options to ensure your ads are shown to the most relevant audience segments, maximizing the effectiveness of your spend.
• Step 8 – Monitor and Optimize: Continuously monitor the performance of your ads and use data insights to optimize targeting, ad content, and budget allocation for better results.

What Is the Completion Rate of Connected TV?

The completion rate of connected TV ads is typically high, often exceeding 90%, due to the non-skippable nature of many CTV ad formats. This high completion rate ensures that your message reaches the audience in its entirety, enhancing the effectiveness of your campaigns.

OTT & CTV Advertising Cost: Final Thoughts

Understanding the intricacies of OTT and CTV advertising costs is essential for any modern marketer aiming to leverage these powerful digital platforms. By considering key cost drivers and following a strategic approach to purchasing ad space, you can optimize your budget and lower your OTT and CTV CPMs. As the landscape continues to evolve, staying informed and adaptable will ensure your campaigns remain effective and efficient.