CTV vs OTT: What’s the Difference and Why Does it Matter?

As streaming TV continues to grow in popularity, more and more brands want in on the advertising benefits. But there’s a lot of confusion around terminology in this new channel, and it merits discussion. OTT and CTV, while related, are not the same. And if you’re planning to advertise with streaming services, you should know the difference.

What is OTT? 

OTT, or “over the top,'' has its roots in the traditional TV world. Everything changed when our favorite old-school shows began streaming over the internet in addition to broadcast, cable or satellite. The term, “over the top” refers to that old-school media being viewed on computers on mobile devices, versus on TV. It was used in the early days to refer to streaming TV shows because mobile and desktop were being used to watch these shows in addition to - or “over the top '' of - linear TV. Netflix, Hulu, and Disney+ are all OTT examples of services. You can watch all their content on demand on any device. 

Wait - then what’s CTV?

A few years ago, TVs were connected via gaming consoles or set-top boxes, but now most TVs come with direct connections to the Internet and pre-installed apps for streaming services. Either of these scenarios represents what we refer to today as CTV or “connected TV.” It's basically just a TV that’s connected to the internet. If you’re streaming content on your television, you’re watching CTV. 

You can see why there’s confusion, right? Both CTV and OTT refer to streaming video, but one is limited to the TV, whereas the other refers to streaming video over just about any device with a screen. OTT covers all streaming content, no matter how or where you watch it. You don’t need a box, a subscription, or even a TV.  CTV is limited to video streamed on a TV. So, ultimately, CTV is a subset of OTT. 

Why does it matter?

When it comes to advertising via CTV or OTT, it’s important to understand the difference between the two. The easiest way to distinguish is this: OTT is a delivery mechanism; CTV is the device on which the content is consumed. Here’s an example that might help clear up some of the confusion: As mentioned earlier, Hulu is an OTT service. You can watch it on your phone, tablet or laptop - or you can watch it on your connected TV (CTV). Make sense? 

It’s OK if you’re still confused, by the way.  A lot of people - even in the industry - are! Here’s a handy usage recommendation from our friends at the IAB that you may find helpful: 

1. Use CTV when you are specifically talking about Smart TVs and streaming devices that are attached to TVs. Mobile and desktop devices are not included under the term CTV.
2. Use OTT when it doesn’t matter which devices are included. For example, if you want to talk about “OTT services” (like Hulu or TubiTV), and delivery to a particular device doesn’t matter.  OTT is still a valid term that distinguishes premium television content from the vast world of online video where user-generated content is commonplace.

Why advertise on OTT and CTV? 

If you’ve been considering programmatic advertising within streaming content, keep reading. Obviously, OTT and CTV work together here. OTT services will provide the content, but if you’re looking to reach cord-cutters where they live, you’ll want to focus on CTV. 

One of the key benefits of CTV advertising is that you’re reaching the growing number of cord-cutters. Today, just over half of US households - about 56% - subscribe to a cable or satellite service. At the same time, 80% of households have at least one CTV device. 

CTV gives advertisers the power to reach and engage streaming audiences while they’re leaning in to their favorite pastime. Brands can use the same data-driven targeting to reach their audiences, but with the advantage of longer-format video ads on a huge screen. Even better, advertisers have access to metrics that traditional TV advertising simply can’t deliver, along with the ability to leverage dynamic creative and adjust on the fly. 

While advertising on CTV offers more control and accountability than linear TV ads, it’s important to remember that it’s also very different from programmatic advertising on other screens. There’s no clicking, tapping, or swiping on a TV screen, so keep in mind that brand and product awareness are excellent goals for your campaigns in this medium. If you do choose to focus on lower-funnel or direct response advertising, keep phone numbers and URLs simple, or consider experimenting with a QR code that viewers can quickly scan with their mobiles. (35% of Americans multitask on their smartphones while watching TV, after all, so they’re likely to have them handy!)

Of course, all OTT advertising is valuable - people watch shows on a broad range of devices. But CTV gives brands the opportunity to reach viewers who are really focused. TV is lean-in. You  may be able to reach the whole family sitting in their living room, and even spark a discussion that centers around your brand, product, or service. CTV delivers a unique opportunity that can’t be matched on other devices. It’s a powerful, additional touchpoint for any campaign.

Hopefully, you have a better understanding now of the differences between CTV and OTT and how they work together to deliver a powerful new advertising opportunity. If you’re ready to learn more, check out our Guide to a Shifting TV Landscape.