OTT Advertising: What Is It & How Does It Work?

This is your compendium of all things OTT advertising for 2025. From benefits and best practices to measuring campaign success, we’ve got you covered.

by Melissa Yap

OTT Advertising: What Is It & How Does It Work?

12 Min Read

Over-the-top (OTT) advertising isn’t the future—it’s the now. More people are cutting the cord and turning to streaming, and advertisers are following suit, shifting their budgets to meet audiences where they actually spend the most screen time. By 2025, U.S. ad spend on streaming TV is projected to surpass $30 billion, solidifying OTT as a must-have in any performance-driven marketing strategy.

But, simply appearing on streaming platforms isn’t enough. To win with OTT advertising platforms, you need more than a flashy ad—you need a smart, data-driven game plan. Think premium inventory, laser-focused targeting, and the kind of real-time tracking that tells you what’s working while it’s still happening.

This guide has everything you need to nail OTT advertising in 2025.

What is OTT Advertising?

OTT (over-the-top) advertising delivers video ads directly to viewers over the internet—no cable box or satellite subscription is required. It runs on connected devices like smart TVs, streaming platforms, and mobile apps, helping brands reach audiences where they’re actively watching premium content.

Unlike the spray-and-pray approach of linear TV, OTT brings advanced targeting, real-time insights, and ROI you can actually measure. For marketers who live and breathe data, it’s a no-brainer.

OTT vs Connected TV (CTV)

Here’s the breakdown: OTT is the delivery system—the strategy powering streaming content over the internet. Connected TV? That’s the hardware—those internet-connected screens (usually a television set) where your ads land.

In other words, OTT is the playbook; CTV is the field you’re playing on.

Learn more about the differences between OTT and CTV.

OTT vs Video on Demand (VOD)

VOD covers any content watched on-demand, whether it’s ad-supported or subscription-based, while OTT specifically refers to streaming content delivered over the internet. Every OTT ad is part of VOD, but not all VOD content includes OTT advertising.

Benefits of OTT Advertising

OTT advertising is about reaching the right audiences, at the right time, with precision, impact, and measurable results. This is where linear TV falls short.

Here are a few other reasons why OTT ads should be in every modern marketing strategy.

Precise Targeting and Relevance

OTT advertising uses real-time audience data—like interests, behaviors, and demographics—to put your message in front of high-value viewers. That targeting power translates into personalized ad experiences that drive stronger engagement and better results.

Enhanced Engagement and User Experience

OTT viewers are more engaged and more likely to complete your ads, especially when the creative feels relevant and well-timed. Interactive formats and seamless integrations with content make brand interactions feel less like interruptions and more like invitations.

Data-Driven Insights and Measurement

OTT advertising platforms provide built-in analytics that give you full visibility into performance, from impressions to conversions—no guesswork, just real results. With that real-time visibility, marketers can fine-tune strategy mid-flight and prove ROI without waiting on post-campaign reports.

How Does OTT Advertising Work?

The process of OTT marketing isn’t rocket science–it’s quite simple, really. Instead of buying traditional television advertising spots based on broad demographics, marketers use data-driven technology to serve ads to the right viewers at the right time.

1. Define Your Goals and Target Audience

Start by setting clear objectives—whether it’s brand awareness, site traffic, or conversions, your goals will shape your strategy. Then, use audience data to segment by demographics, behaviors, and viewing habits so your ads reach the right viewers from the start.

2. Choose the Right OTT Platforms

Not every streaming platform fits every brand, so select ones that align with your audience and content goals. Consider factors like audience scale, content quality, and ad capabilities across platforms like Hulu, Pluto TV, Peacock, and Disney+.

3. Develop Your Content Strategy

Build creative that’s not just polished but made to resonate with your audience in the context they’re watching. Choose ad formats—like pre-roll, mid-roll, or interactive—that match your objectives and blend naturally into the streaming experience.

4. Plan Your Media Buying

Balance your media budget across platforms and formats for maximum reach and efficiency. Leverage programmatic buying and audience data to deliver ads to viewers most likely to take action.

5. Measure and Optimize

Track real-time metrics like impressions, conversions, and ROAS to understand what’s working. Then, use those insights to refine creative, targeting, and spend—keeping your campaign optimized for performance every step of the way.

Video on Demand Models

Not all streaming platforms operate the same way. OTT services follow different business models based on how they deliver content and generate revenue.

Here are the four main types:

Subscription Video on Demand (SVOD)

Platforms like Netflix and Disney+ operate on a subscription-based model. In other words, in exchange for unlimited access to content, consumers agree to pay a monthly subscription cost.

Traditionally ad-free, some SVOD services now give the option of lower-cost, ad-supported tiers—giving advertisers a way to reach premium audiences.

Advertising Video on Demand (AVOD)

AVOD platforms like Pluto TV, Tubi, and Freevee provide free content–you just have to watch a few ads. Since viewers opt-in to free ad-supported streaming television, platforms can provide brands with a high-reach, cost-effective way to advertise to those audiences.

Transactional Video on Demand (TVOD)

Also known as pay-per-view, TVOD services like Apple TV and Google Play provide the ability for users to rent or buy individual movies and shows. While advertising opportunities are limited, brands can explore product placements (and sometimes partnerships) within premium content.

Premium Video on Demand (PVOD)

Think of this as upscale TVOD with a twist. Get access to early movie releases or exclusives at a premium price. Similar to TVOD, advertising options are limited, but sponsorships tied to big drops can be advantageous if you have the budget to do so.

Types of OTT Ads

OTT advertising isn’t one-size-fits-all. Different ad formats offer different levels of engagement, and knowing how they work can help marketers build more effective campaigns.

Here’s a breakdown of the main types:

In-Video Ads: These include pre-roll, mid-roll, and post-roll placements—skippable or non-skippable—that deliver your message within the streaming content itself.
Banner Ads: Static or animated units that appear above or below the video player, offering a subtle, non-disruptive way to stay visible.
Overlay Ads: Clickable pop-ups layered over the content that draw attention without pulling viewers away from what they’re watching.
Companion Ads: Sidebar placements that run alongside the video, adding an extra branding touchpoint without interrupting the stream.
Interactive and Shoppable Ads: From polls to product carousels, these formats invite viewers to engage—and even convert—right from the screen.

Types of OTT Devices

OTT content isn’t tied to a single screen—viewers stream across multiple devices, and advertisers need to follow them wherever they watch. Understanding the different types of OTT devices helps marketers ensure their ads reach audiences in the right environment.

Here are the primary categories:

Smart TVs: Internet-connected TVs from brands like Samsung and LG offer built-in access to top streaming apps—delivering premium, full-screen ad experiences that fuel CTV growth.
Streaming Devices: Roku, Fire TV, Apple TV, and Chromecast transform any TV into a streaming hub, unlocking massive OTT reach across highly engaged households.
Gaming Consoles: Platforms like PlayStation and Xbox double as streaming centers, giving advertisers access to younger, digital-native audiences in high-attention environments.
Mobile & Tablets: These on-the-go devices stream content through apps and browsers, extending campaign reach and enabling second-screen engagement.
Laptops & Desktops: Viewers stream through web browsers on computers, offering additional touchpoints for targeted OTT ads—even outside the living room.

Best OTT Advertising Platforms

So, how do you reach these audiences? Through OTT platforms, of course. Here are a few big ones to consider:

Netflix

Once a purely subscription-based platform, Netflix now offers an ad-supported tier, giving brands access to high-value audiences watching premium, on-demand content. While inventory is still limited, Netflix’s vast subscriber base makes it a growing player in the OTT ad space.

Learn more about Netflix advertising.

Hulu

One of the pioneers of ad-supported streaming, Hulu blends SVOD and AVOD, offering brands placement within both on-demand content and live TV. They offer advanced targeting with a combination of short- or long-form ad slots. Hulu remains a go-to for advertisers needing both reach and engagement.

Learn more about Hulu advertising.

Peacock

NBCUniversal’s streaming service operates on a hybrid model–free, ad-supported content with premium subscriptions. Its deep library of shows, movies, and live sports makes it a great choice for brands trying to align themselves with high-quality programming.

Learn more about Peacock advertising.

Roku

A dual threat as a platform and device giant, Roku delivers ad-supported content with first-party data and a slew of targeting options across a huge audience. It’s a no-brainer to include Roku advertising as part of your OTT strategy.

Learn more about Roku advertising.

MNTN

Unlike platform-specific ad buys, MNTN’s Performance TV gives marketers access to premium CTV inventory across several major streaming advertising platforms, all within a single self-serve platform. With automated optimization, real-time reporting, and precise audience targeting, MNTN turns CTV into a performance marketing channel that drives measurable results.

OTT Metrics and Measurement

OTT advertising campaigns give marketers the best of both worlds—the impact of TV with the precision of digital. Unlike traditional TV ads, which rely on estimated reach, OTT measurement provides real-time, data-driven insights that allow brands to track performance and optimize campaigns for maximum efficiency.

Here are the key metrics that matter in OTT marketing:

Ad Impressions – The total number of times your ad is served, showing how many opportunities your campaign has to make an impact.
Return on Ad Spend (ROAS) – A performance benchmark that calculates revenue generated for every dollar spent on your campaign, giving a clear view of profitability.
Cost per Completed View (CPCV) – The average cost paid for each fully watched ad, ensuring ad spend goes toward engaged viewers—not wasted impressions.
Cost per Acquisition (CPA) – The total cost of driving a conversion, whether it’s a purchase, sign-up, or another key action tied to campaign goals.
Audience Reach – The percentage of unique viewers within your target demographic who have been exposed to your ad at least once.
Frequency – The average number of times an individual viewer sees your ad, helping to balance brand recall without oversaturating the audience.

Keep in mind, these are just a few KPIs. With these metrics, advertisers get real-time visibility into campaign performance, allowing for data-driven decisions that maximize ROI.

OTT Marketing Best Practices

In OTT advertising, you need to show up strategically. With streaming audiences growing and competition heating up, marketers need to go beyond basic targeting and embrace advanced OTT advertising strategies.

Prioritize Audience-First Targeting: Use first-party data, retargeting, and lookalike audiences to serve ads to viewers most likely to convert.
Layer in Contextual Targeting: Align your ads with relevant content to boost resonance—think fitness ads during workout streams or travel spots in adventure docs.
Leverage Automated Optimization: Let AI-driven tools adjust targeting, bidding, and creative in real time to maximize performance without manual guesswork.
Use Sequential Messaging: Guide viewers through the funnel with a planned series of ads—from awareness to action—all within the same OTT campaign.
Measure Real Impact: Track site visits, conversions, and return on ad spend—not just impressions—to connect media investment to real outcomes.

How Much Does OTT Advertising Cost?

OTT advertising doesn’t come with a one-size-fits-all price tag—it’s built for flexibility. Not to beat a dead horse here, but with linear TV, brands lock in expensive, broad-reach ad buys. OTT lets advertisers control their budget and optimize ad spend in real time.

With that said, several factors influence the OTT advertising cost:

Audience Targeting – The more precise your targeting, the higher the cost per impression—but with better efficiency and lower wasted spend.
Ad Placement & Inventory Quality – Ads running on premium streaming platforms in high-demand time slots will almost always cost more due to competition and viewership quality.
Campaign Duration & Frequency – Extending a campaign or increasing the number of times an individual viewer sees your ad impacts overall budget. However, repetition can also improve brand recall.
Creative Production Costs – High-quality, engaging ads will drive better results, but they’ll also cost a lot more to produce. That is, of course, unless you’re using MNTN’s Creative-as-a-Subscription™ solution, which bundles refreshed creative in with your ad spend.
Bidding & Programmatic Buying – OTT ads are often purchased through programmatic platforms, where pricing fluctuates based on seasonality and demand by competitors bidding on the same audience.

MNTN Performance TV: The Ultimate OTT Platform

Ready to take your OTT advertising to the next level? MNTN Performance TV combines the power of premium Connected TV placements with advanced targeting and real-time measurement—so every ad dollar drives real results.

Here’s what sets us apart:

MNTN Matched: Leverage AI-powered audience targeting to connect with the most relevant viewers and drive better campaign results.
Flexible, Performance-Driven Budgets: No long-term commitments—run campaigns on your terms and optimize in real time.
Verified Visits™ Attribution: Track conversions, site visits, and ROAS with real-time insights that show exactly how your ads perform.
Premium, Brand-Safe Inventory: Appear only on top-tier streaming networks, ensuring high-quality placements for maximum impact.
Creative-as-a-Subscription™: Get high-quality, CTV-optimized ad creative bundled into your campaign—no need for extra production costs.

Power up your OTT strategy with MNTN’s self-serve software—sign up today to get started.

OTT Marketing Platforms: Final Thoughts

As you can imagine, we’ve only scratched the surface here, and our team is ready to answer any further questions you may have about OTT marketing and the benefits of an OTT advertising platform like MNTN Performance TV.

If there’s something you’d like to clarify further, or if there are any challenges you’re facing in your current digital campaign strategy, we’re here to help.