OTT & CTV Advertising Cost: CPM Pricing Explained

by The MNTN Team

7 Min Read

Streaming has already surpassed cable and broadcast television as the most popular TV medium, and the gap it’s leaving in its wake keeps getting wider. As of 2023, 36% of total TV usage was dedicated to streaming content via over-the-top and Connected TV services.

Just as any savvy marketer, you probably know CTV and OTT ads are the future of TV advertising. But how much the two mediums will cost you is an entirely different story. With that in mind, here’s everything you need to know about Connected TV CPM rates and OTT advertising costs.

OTT and CTV Advertising Explained

Over-the-top (OTT) refers to content delivered over the internet, regardless of device, without the need for traditional cable or satellite connections.

Connected TV (CTV) refers to the technology and devices consumers use to watch that content, specifically internet-connected television sets. These may include gaming consoles, smart TVs, and dedicated streaming devices like Roku or Apple TV.

With the growing number of cord-cutters and streamers, OTT and CTV advertising has become essential to your marketing goals. The cost of streaming advertising (just as it has been for traditional TV) is measured in the cost per thousand (CPM, with the “ M” representing the Roman numeral for 1,000). In other words, fees are calculated by how much it will take you to reach 1,000 viewers.

OTT Advertising vs. Linear TV Advertising

OTT advertising offers huge advantages over traditional, linear TV ads.

Linear TV campaigns run during scheduled TV programs with minimal audience targeting, making them difficult to measure and subsequently determine whether your advertising dollars are driving meaningful results.

You’ll also have to purchase linear ad space in large chunks, which typically consist of entire designated market areas (DMAs). There are only a couple hundred throughout the United States. And though purchasing an entire DMA slot will allow you to reach many people, the vast majority of those individuals likely won’t align with your ideal audience.

OTT and CTV, on the other hand, open the door to precision targeting, taking local TV advertising to new heights. You’ll be able to target zip codes, cities, or even neighborhoods, allowing you to reach specific audiences based on demographics, interests, and viewing behaviors.

OTT Advertising vs. Addressable TV Advertising

Addressable TV advertising combines aspects of both linear TV and OTT content, allowing you to target specific households with traditional television broadcasts. However, though it narrows the focus of your campaign beyond a DMA, it still does not allow the level of precision available via OTT and CTV marketing.

How Much Do CTV and OTT Advertising Cost?

The cost of CTV and OTT advertising varies widely based on several factors.

OTT pricing models use CPM, but the exact costs will vary based on your targeting criteria, the platform used, ad length, and demand. For instance, positioning your ads alongside HBO Max’s latest hit will cost more than running content during a movie that’s been out for several years.

Prices are dynamic. Consulting with the platform you plan to use will provide the most accurate and up-to-date cost estimate.

We’ll cover the primary cost drivers in detail momentarily.

What Is a Good CPM for Connected TV and OTT?

A good CPM will often be subjective to the advertiser, and can vary based on content, programming, and other variables. You can evaluate the quality of a CPM based on a few things, such as:

Whether the CPM delivers a return on investment (ROI) and helps drive measurable outcomes on CTV (such as ROAS, cost per visit, cost per acquisition).
Whether the CPM will allow you to effectively reach your desired audience enough to achieve your goals.
Whether the value of the CPM unlocks brand-safe, high-quality inventory that can help drive brand lift.

Social media platforms like YouTube tend to have a lower CPM than streaming services like Max and Prime Video. Consider other variables like the quality and specificity of the audience to identify which placements best align with your marketing goals.

Cost Drivers for OTT and CTV CPMs

Let’s take a closer look at the factors that influence connected TV CPM, which include the following:

Platform Used

Different CTV platforms have varying CPM rates. Premium services like Disney+ may demand a higher rate due to their large, engaged audiences and high-quality content. Lesser known or up-and-coming platforms may offer lower CPMs, just with a smaller reach.

Targeting Options

The more specific your targeting options, the higher the CPM rate. Targeting based on demographics, interests, or behaviors can increase costs, but it’ll also ensure that your ads reach the right audience. Conversely, displaying content in front of an entire zip code or neighborhood might be cheaper.

Learn more about OTT targeting and CTV targeting.

Ad Length and Format

These can also influence your costs. Interactive ad formats or high-quality video ads, for instance, can command higher prices due to their engaging nature, while banner or display advertisements tend to be the cheapest.

Learn more about CTV ad specs and formats.

Competition for Inventory

The laws of supply and demand apply to the world of OTT advertising. When multiple advertisers compete for the same inventory, CPM rises. Many different factors can drive up demand, such as highly anticipated content releases, like season or series finales.

Learn more about CTV inventory.

Seasonal Demand

Similarly, seasonal demand plays a crucial role in determining CPM rates. The months leading up to the holiday shopping season often experience a huge spike in demand (and costs).

Industry-specific seasonal fluctuations can leave you facing increased competition as well. For instance, if you’re a fashion retailer, you and your competitors might be fighting for OTT ad slots in late spring.

How To Buy OTT and CTV Advertising

Before you start purchasing ad slots, you’ll need to define your goals, whether those involve increasing brand awareness, lead generation, or direct sales.

From there, you’ll select your platform. Centralized solutions like MNTN Performance TV give you access to premium inventory on top streaming networks, making it easy to manage your campaign and maximize your reach.

After you’ve chosen your preferred platform, you’ll need to set your budget and identify your target audience. You’ll also need plenty of high-quality, engaging content.

Lastly, you’ll want to continually review the results of your campaigns, build on your successes, and make adjustments as needed to optimize your return on investment.

What Is the Completion Rate of Connected TV?

Completion rates measure the percentage of ads watched from start to finish. In 2021, CTV completion rates reached 97%.

MNTN Performance TV Takes CTV to the Next Level

OTT and CTV marketing offers far better attribution capabilities than traditional television advertisements. MNTN Performance TV takes these capabilities to the next level with our advanced targeting solution, MNTN Matched.

MNTN Performance TV ensures your marketing assets appear alongside engaging content via partnerships with top-tier streaming networks and apps. And with MNTN Matched, CTV becomes a fully measurable performance marketing channel that allows you to align your campaigns with ideal audiences.

Start embracing the power of high-precision CTV advertising with MNTN Matched.

Schedule a demo today to learn more.

OTT & CTV Advertising Cost: Final Thoughts

OTT and CTV advertising offer powerful ways to reach your ideal audience with targeted, engaging content. Platforms like MNTN Performance TV make the medium more accessible and cost-effective by giving you total control over when and where your ads appear. Explore MNTN and start optimizing your CTV campaigns today.