The Benefits of OTT Advertising for Retailers

A person holding a tv remote pointed at hundreds of shows to choose from.

Video streaming has taken the world by storm. Today, nearly every home has a subscription to Netflix, with other streaming services such as Disney+, Apple TV+, Amazon Prime Video, and Hulu on the rise. Now, you can watch as many episodes as you want, whenever you want, with on-demand subscription services. In this blog post, we will explore how the benefits of OTT advertising for retailers so you can take advantage of this powerful form of marketing.

To get a glimpse of how popular video streaming truly is, check out these statistics:

  • Eighty-two percent of Americans subscribe to at least one video streaming service (Deloitte)
  • On average, users subscribe to four paid video streaming services (Deloitte)
  • Netflix has the highest number of subscribers in the video streaming service industry, with 233 million subscribers as of the first quarter of 2023 (Statista)
  • Revenue in the video streaming market is estimated to reach $95.4 billion in 2023, with $39.3 billion coming from the U.S. (Statista).
  • The global video streaming market will be worth over $1.6 trillion by 2029 (Fortune Business Insights).
  • Approximately 1.6 billion people across the world will be users of video streaming services by 2027 (Statista)

As video streaming services grow in popularity, the advertising world must evolve to keep up with the landscape of modern media. More businesses are turning to OTT advertising to reach their target audiences and market their products and services.

What is OTT Advertising

To understand OTT advertising, you first need to understand what OTT is.

“Over-the-top” refers to accessing T.V. content with an internet connection and not relying on traditional cable and satellite. Viewers of OTT content can access it whenever and wherever they want, as the content is not subject to geographic limitations or broadcast schedules. Furthermore, OTT streaming isn’t restricted to a T.V. device. Any device that connects to the internet and can display video content is an OTT device, including:

  • Mobile devices (smartphones, tablets)
  • Personal computers
  • Gaming consoles
  • Smart T.V.s/Connected T.V.s
  • Streaming devices (Roku, Apple T.V., Amazon Fire T.V., etc.)

OTT advertising, also referred to as streaming advertising or connected T.V. advertising, is the practice of showing ads to consumers who are watching OTT content. Many video streaming platforms allow advertisers to advertise themselves and their products or services to users.

When you invest in OTT advertising, your ad will appear when a user watches content on a streaming platform. Different ad formats, such as video and display ads, can be customized to your needs. For instance, you can opt for a 15-second video ad that plays during a commercial break of a popular show. With an effective OTT advertising strategy, you can increase brand awareness and expand your reach to a larger audience, resulting in higher sales and revenue for your business.

How Retailers Can Benefit from OTT Advertising

For a long time, smaller retailers couldn’t leverage OTT advertising for various reasons, such as the high upfront cost of producing a TV-commercial style video, lack of targeting capabilities, and lack of familiarity with OTT advertising, among other reasons.

However, the tide is turning, and large and small retailers choose OTT advertising over traditional advertising methods. As more consumers shift to streaming services for their entertainment needs, retailers who don’t invest in OTT advertising risk missing out on a huge opportunity to reach their target audience.

Better Targeting to Reach the Relevant Audience

In traditional T.V. advertising, the sole targeting method involves selecting a designated market area (DMA). Considering that there are just 210 DMAs across the U.S., you’ll likely reach locations you want to avoid targeting.

With OTT advertising, you can leverage audience targeting features to ensure your ads are seen by users interested in your products or services. You can utilize in-depth data, such as location, demographics, behaviors, interests, purchasing history, and more, to target specific users more personalized. For example, you can use geofencing data to see specific retail stores a user has visited and learn what products interest them before serving them precise OTT ads.

By reaching the most relevant users, you increase your chances of getting high-quality leads, ultimately resulting in more sales for your business. According to a survey by OpenX, about 72% of people watching OTT content can remember a specific ad they saw, while 40% pause their video content to research or purchase the advertised product or service.

Better Measuring and Reporting

After investing in an advertising campaign, you’ll want to obtain precise data regarding viewer engagement, ad impressions, and conversions. Thankfully, with streaming advertising, you can measure and track the performance of your ad campaign to determine which users saw the ad, how many of them saw it, and what actions they took after seeing it.

Effective measuring and reporting also help you learn what’s working and what’s not. Then, you can change what’s not working and adjust, improve or scale your most successful campaigns. Ultimately, this data maximizes your return on investment (ROI).

Higher Completion Rates

The possibility of a user watching your entire ad is higher with streaming T.V. than with traditional cable T.V. advertising. In the latter, viewers watch multiple ads, many of which may not resonate with them. When ads don’t resonate increases the likelihood that they will change the channel, run to the kitchen, or fast-forward the commercial. Effective OTT advertising, on the other hand, considers consumer viewing habits and seamlessly integrates ads into the viewing experience. While viewers must pay attention to the ads, they know how long they will last, making the experience less disruptive. In addition, the ads resonate with the target audience, making them less likely to skip them.

In addition, streaming advertising allows for ad frequency capping. You can control the frequency at which your ads appear to viewers by capping ads per user to once an hour, once a day, or any other desired frequency. You can also tailor your ad for each household by setting the conditions for each viewer over a specific day, month, or season. This is good news for advertisers when consumers pay attention to ads without getting bored or frustrated.

Non-Reliance on Third-Party Cookies

Due to increasing concerns about data privacy, third-party cookies, which track user behavior across websites, data collection is facing significant limitations. With increased privacy limitations, a shift in advertising strategies and adopting alternative tracking methods is necessary.

T.V. doesn’t rely on third-party cookies or IDFA, so it isn’t as affected by these privacy regulations. Streaming subscription services typically rely on first-party publisher data for effective targeting, making them more popular for advertisers and consumers.

Advertising Diversification

One mistake that many retailers make is relying on one performance media channel for advertising. By only using one media channel, you are restricting your reach to a specific audience segment, hindering your exposure to potential customers who may be active on other channels.

OTT is a reasonably new channel introduced into the advertising mix. By investing in OTT advertising, you can tap into a different market segment, expand your reach beyond traditional advertising, and more effectively connect with your customer base. It also allows you to explore and experiment with other ad formats offered by OTT platforms, including pre-roll, mid-roll, and post-roll video ads and display ads that can enhance user engagement and capture viewers’ attention.

According to expert projections, ad revenue for OTT advertising for retailers will reach $162.2 billion by 2026, accounting for 58% of all OTT revenues. These stats show that more and more brands are realizing the importance of embracing this new channel.

Esquire Advertising Enters OTT Market With Affordable Entry Point For Retailers

In early 2023 Esquire Advertising announced a plan to begin rolling out a custom OTT service package aimed at the needs of big box retailers. Understanding that most smaller retailers need more money or the infrastructure to develop their own tv commercial-style video ads and the expertise to manage the digital campaigns, the company developed a service bundle that provides the necessary components to launch their campaign.

With Esquire Advertising’s OTT package, retailers can access digital ad placements on major streaming networks nationwide. Company founder, Eric Grindley, said of their service, “With our pricing model, we can offer small businesses an opportunity to penetrate ad segments of the digital streaming market that are prohibitively expensive to most retailers — and that is something we are extremely proud of.” Esquire Advertising is a tech-focused marketing agency specializing in location-based targeting strategies. The announcement of their new OTT advertising for retailers is one of the company’s recent expansions within the tech industry, one they hope will give brick-and-motor stores a competitive edge in a rapidly changing market.

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