Contextual Advertising and OTT: What’s the Difference?

New digital video viewing behavior and consumption habits of consumers have opened the door to new advertising opportunities. As viewers continue to cut the cord, operators, broadcasters, and advertisers must adapt their strategies accordingly. Both traditional operators and third-party advertisers are exploring new advertising opportunities to achieve this. 

To keep pace with these changes, you may find it helpful to understand the differences between contextual advertising and Over-The-Top (OTT) advertising. Let’s take a closer look at these advertising methods, how they differ, and when it makes the most sense to use them in your video strategy.

What is OTT Advertising?

Over-The-Top (OTT) advertising refers to advertisements inserted into media content streams delivered via a managed network, such as the internet. OTT ads can be placed in many different media types, including TV shows, movies, radio, and internet content like music-streaming apps. Most OTT ads are placed in an “unskippable” format, meaning that they play before the content starts, and viewers have no option to skip past them. 

OTT advertising is rapidly growing due to its ability to target precise audiences and offer highly measurable results. These ads are often placed based on users’ geographic location, age, gender, and other information collected from their internet protocol (IP) address, mobile device, and other digital identifiers. OTT ads can also be placed based on a user’s browsing history, previous purchases, and interests.

What is Contextual Advertising?

Contextual advertising is the practice of displaying ads on websites or apps according to the topic of a piece of content. The content’s subject is typically determined by employing a computer algorithm to analyze the content’s metadata, such as its title and description, and then matching the content with potential advertisers.

The ads appear as “sidebar” or “below-the-fold” placements. In the case of websites, these ads appear on the right side of the page; in the case of apps, they typically appear at the bottom of the screen. Contextual advertising has been used for many years and was once the sole digital advertising method. This type of advertising is often combined with other advertising types, such as OTT ads, to create a more comprehensive advertising strategy.

How do Over-the-Top and Contextual Ads Differ?

There are a few critical differences between OTT and contextual advertising. First and foremost, OTT ads are usually “skippable,” while contextual ads are typically “unskippable.” Skippable ads allow viewers to skip past them after a few seconds, while unskippable ads play before the content and cannot be ignored. 

Another key difference is that OTT ads are targeted based on IP address, and contextual ads are targeted based on content. OTT ads are placed in streaming media based on the user’s IP address, unique to each internet-connected device — a computer, smartphone, or tablet. In contrast, contextual ads are placed in content, such as a website or app, based on the content’s topic.

When is Each Type of Advertising Effective?

Given the differences between OTT and contextual advertising, it makes sense that these two advertising methods are not used in combination. However, in some instances, both sorts of adverts are employed independently. OTT ads are most effective when targeting broad audiences, such as the general population or a wide range of geographic areas. OTT ads are also used to help promote events and new products. Contextual advertising is best used when targeting specific audiences, such as individuals with particular interests or hobbies.

What is contextual targeting in OTT?

Contextual targeting varies from audience targeting in that the former depends on data identifying a user’s interests, activity, and demographics. It is relatively basic with text: An algorithm searches pages for terms associated with the movement. More sophisticated contextual systems may evaluate text for mood and tone, determining what the phrase means and what meaning it would communicate to a human user. At the same time, the latter analyzes the content itself to align ad campaigns with suitable contexts.

However, contextual analysis of pictures and video requires a far more significant technical leap than text analysis. Even more advanced technical skills are necessary to assess sentiment, such as determining if a scenario is funny, tragic, or ironic. To educate the technology to spot patterns, considerable machine learning is required.

 That’s where computer vision comes in, to evaluate data and recognize images. Computer vision also brings efficiencies that aid in scaling contextual targeting in the video and assisting advertisers in discovering brand-safe, relevant video content outside their tried and proven inventory sources.

A distinct technical approach is required for video. The amount of text accessible for algorithmic analysis is pretty restricted. Some text can be found, including metadata and closed captions. However, the algorithm must detect forms and patterns to perform contextual video. This is critical for maintaining brand safety. An advertiser may avoid purchasing near a scene, including nudity or violence. A soda company may wish to prevent a situation in which characters debate ending their soda habit.

What are the advantages of contextual in OTT?

  • One advantage of contextual is that video publishers and streaming providers can disclose more data about their programs without depending on user data. More transparency about the content on which their adverts appear would entice marketers to raise their OTT/CTV investment.
  • Second, there is a significant contextual possibility in in-video ad formats, such as animated overlays below or alongside the video, rather than within the video stream itself. The form is similar to the logos and banners viewers are familiar with from linear TV. Still, it has been updated for OTT/CTV.

 It gives publishers extra inventory and a new revenue source without competing for attention with in-stream video advertising. When an advertiser combines an in-video commercial with one of their advertisements in the video stream, they may effectively create a video takeover. When utilized alone, in-video commercials significantly cut the costs of OTT/CTV advertising since they do not have the high production costs and timelines of traditional video ads.

  • Third, because the CTV environment does not enable cookies, audience targeting has always been complex with OTT. It often relies on IP data for audience targeting, while IP data relies on user signals. IP targeting will not be a long-term strategy: As the industry progresses toward offering customers more excellent data privacy settings, we should expect IP data to be phased out at about the same time Google phased out third-party cookies in 2023. Contextual advertising, which is already part of the toolkits of publishers and advertisers, offers an obvious answer to this serious problem.

Wrapping up

Broadcasters and marketers need new strategies and advertising possibilities to stay relevant as people continue to shift away from linear television. People have been increasingly abandoning cable TV subscriptions for years in favor of over-the-top (OTT) options. At a period when people had more time and money to devote to watching videos due to the pandemic, this trend intensified. At this point, OTT contextual advertising is a viable option. Continue reading our blog to stay up to pace and gain new solutions. Suppose you want to remain relevant in the advertising industry. In that case, can help you keep on top of the current consumer behavior and new-age digitalization trends.

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