Programmatic Advertising and AdTech in OTT & CTV

The way TV shows, movies, documentaries, and sports are consumed has changed enormously over the past three decades.

The arrival of pay-per-view, VHS, video on demand, DVDs, and digital video recorders (DVRs) gradually freed viewers from the tyranny of broadcast schedules — no longer did you have to be in front of the screen at a specific time to catch a program. Streaming services pushed that shift even further, and with it came a new layer of advertising opportunity that the industry is still figuring out.

This piece covers the following areas:

• The evolution of TV consumption
• The streaming services landscape
• OTT and CTV: definitions and distinctions
• OTT & CTV advertising trends and statistics
• AdTech's role in OTT & CTV
• The challenges facing OTT and CTV advertising

The Evolution of TV Consumption

TV consumption has gone through several distinct phases, each driven by a new technology that gave viewers more control over when and how they watch:

Key Terms

Linear TV: Content is broadcast on a fixed schedule. Viewers must tune in at the designated time. Includes free-to-air, cable, satellite, and broadcast.

Pay-per-view: Viewers pay a one-off fee to watch a specific event or program — a boxing match, for example.

VHS: Pre-recorded or recorded content played back via a VHS cassette and player.

Video on demand: Viewers access TV shows and movies on their own schedule.

DVDs: Physical media — purchased or rented — offering on-demand viewing at home.

Digital video recorder (DVR): Allows viewers to record live broadcasts and watch them at a later time.

Streaming services: Internet-delivered video, ranging from live sport to back-catalogue TV shows and original movies.

Streaming Services: OTT and CTV

Streaming services — Netflix, Disney+, Hulu, Amazon Prime Video, and dozens of others — are formally referred to as over-the-top (OTT) media services. The "over-the-top" label refers to content being delivered over the internet, bypassing traditional cable or satellite infrastructure.

It's worth being precise about the distinction between OTT and CTV, since the two terms are frequently conflated:

• OTT refers to the content — the video delivered by streaming services. That content can be accessed on CTV devices, but also on desktops, laptops, smartphones, and tablets.
• CTV (connected TV) refers to the devices used to view that content: smart TVs, streaming sticks and boxes, and game consoles. Notably, the IAB Tech Lab does not classify desktops, laptops, smartphones, or tablets as CTV devices.

The Streaming Services Landscape

The streaming market has become crowded quickly. Major services currently operating include:

Netflix · Disney+ · Amazon Prime Video · Paramount+ · Hulu · Apple TV · Discovery+ · ESPN+ · Peacock · BritBox · HBO Max · Roku · Zee5 · YouTube Premium · RakutenTV · Showtime · Curiosity Stream

Each platform competes for viewer time and subscription revenue, and increasingly, for advertising dollars.

OTT & CTV Advertising

Advertising has historically been the financial backbone of media — from print to broadcast to digital. As streaming audiences grow, advertising is becoming central to how OTT and CTV platforms generate revenue.

Subscription Models

Most streaming services launched as pure subscription plays. The market has since bifurcated into two dominant models:

Subscription Video On Demand (SVOD): Viewers pay a recurring fee — typically monthly — for ad-free access to content.

Ad-Supported Video On Demand (AVOD): Viewers pay nothing, or a reduced fee, in exchange for seeing ads during content.

Many platforms now offer both tiers, allowing subscribers to choose their preferred trade-off between cost and ad exposure.

A Tale of Two Platforms: Netflix and Hulu

Netflix and Hulu illustrate the divergent paths that major streaming services have taken — and where they're converging.

Netflix:

• Historically SVOD-only, Netflix began introducing an AVOD tier to offset subscriber revenue losses.
• Netflix's total revenue in 2021 was USD $29.7 billion.

Hulu:

• Has offered both SVOD and AVOD tiers for years.
• Hulu's total revenue in 2020 was USD $7.2 billion.
• Hulu's ad revenue reached USD $2.1 billion in the year ending September 2021.

Key Advertising Trends

• Viewer migration away from linear TV and toward streaming services is accelerating.
• Ad spend on linear TV still exceeds CTV and OTT ad spend, but the gap is narrowing — CTV/OTT ad spend is rising while linear TV ad spend is declining.
• Streaming services that previously offered only paid subscription plans are introducing ad-supported tiers to grow their subscriber base and compensate for slowing subscription growth.

AdTech's Role in OTT & CTV

Much of the AdTech infrastructure already built for web and mobile advertising can be adapted for OTT and CTV. The core functions remain the same — ad serving, media buying, data management, and measurement — though each presents unique wrinkles in the streaming context.

Ad Serving

Two main approaches exist for inserting ads into streaming content:

• Client-side ad insertion (CSAI): The ad is requested and rendered on the viewer's device. This is similar to how ads work in a web browser, but introduces buffering issues and is more vulnerable to ad blocking.
• Server-side ad insertion (SSAI): Ads are stitched into the content stream at the server level before delivery. This produces a smoother viewing experience and is harder to block, but it also complicates measurement and verification.

Media Buying

OTT and CTV inventory is generally treated as premium compared to display or standard web video. As a result, the dominant media-buying models are direct deals and private marketplace (PMP) transactions, rather than open programmatic auctions. Buyers typically want more control and transparency over where their ads appear.

Data and Measurement

Collecting audience data and measuring ad performance in OTT and CTV is more complicated than in web environments. A viewer might see an ad on a smart TV but complete the resulting conversion — a purchase, a sign-up — on a smartphone. Connecting those touchpoints requires identity resolution across devices and environments, which remains an unsolved problem at scale.

Challenges Facing the OTT and CTV Advertising Industry

Despite strong growth, the OTT and CTV advertising market faces several structural challenges.

Fragmentation

Fragmentation is endemic to programmatic advertising, and OTT/CTV is no exception. Each CTV device operates on its own hardware and software stack, with its own proprietary identifier system. There is no universal device ID equivalent to a cookie or mobile advertising ID that works across all CTV environments. This makes it difficult to deduplicate audiences, manage frequency, and attribute conversions reliably.

Identity Resolution

The multi-device, multi-app nature of streaming consumption makes identity resolution a central challenge. A household might use a Roku device, an Apple TV, a smart TV's built-in app, and a mobile app to access the same or different streaming services. Linking those touchpoints into a coherent audience profile is technically difficult and commercially contentious.

Measurement

The combination of inconsistent identifiers, closed-off platform ecosystems, and the server-side nature of SSAI ad delivery makes campaign performance measurement genuinely hard. Verifying that an ad was actually seen — and by whom — is far less straightforward than in a browser-based environment.

Ad Fraud

Fraudsters consistently target the channels where the most money is flowing, and OTT/CTV is now squarely in that category. The relative immaturity of fraud detection tooling in this space means that certain types of invalid traffic are harder to identify and filter than they would be in more established channels. The industry is still developing the standards and technology needed to address this effectively.