OTT Platform Monetization: How OTT Makes Money

In 2020, OTT Advertising (over-the-top) will be one of the fastest-growing ad markets. Millions of people are abandoning cable in favor of OTT streaming services such as Netflix and Hulu. The traditional method of selling advertisements for TV commercial breaks has entirely altered.

If you own an AVOD (ad-based video on demand) business, you may make money by selling ad spaces on your channel. At MAZ, we’ve worked with some of the world’s best TV and video businesses to develop unique TV applications and increase ad income.

We’ll break down the most significant OTT advertising platforms in this article and help you select one that’s right for your company. So let’s start with the fundamentals.

What Is OTT Advertising?

The insertion of advertisements on OTT video content is known as OTT advertising. OTT (Over-the-Top) content refers to any video streaming that occurs over the internet, such as Netflix, Hulu, Disney+, and others.

In general, video streaming firms can generate money in two ways: through subscriptions (SVOD) or through advertising (AVOD). Today, we’ll look over ad-based video businesses and how they may monetize their content in depth.

What Monetization Models are Available to OTT Companies?

There are various strategies for monetizing OTT platforms:

  • SVoD, Subscription Video on Demand
  • TVoD, Transactional Video on Demand
  • AVoD, Advertising Video on Demand
  • Hybrid methods

Subscription Video on Demand

This is most likely the most widely used OTT monetization technique.

Users of your app choose one of the subscription plans, which are often month-to-month. Almost all app content is then open to the viewer, with the exception of anything you charge extra for.

Some OTT platform providers offer streaming services with integrated payment systems for the convenience of their users.

Transactional Video on Demand, or Pay per View

In terms of profit generation, this is the most effective OTT monetization strategy, but it is not the most popular among consumers.

Users must pay for each item of material they watch in this country. Sometimes this strategy is utilized alongside SVoD – consumers might have a subscription running and yet have to pay for individual content.

Prices for subscribers are sometimes lower.

Advertising Video on Demand, or Advert-supported

Users may watch all content for free under this revenue approach. They are not required to pay for the subscription or for each piece of material.

However, in return for the free material, users must view advertisements within the program. Sometimes the adverts are incorporated into the content itself — for example, the viewer watches a video that is halted every now and then to show a short commercial.

Hybrid Models

Some hybrid OTT monetization methods combine two or three of the preceding approaches in some way.

The following are the most prevalent combinations:

  • The customer purchases a subscription that entitles them to the majority of the content. The pay-per-view approach is used for some unique materials.
  • The user can purchase a basic membership to see the material, but they will still see advertisements. Simultaneously, enhanced memberships that remove advertisements and allow for unrestricted content navigation are available.

How to Get Started with OTT Advertising:

You’re ready to start making money if you already have an OTT channel. (If you don’t, please contact us for advice and guidance.) However, in order to make any real money, you must first meet some requirements.

To begin, you must have the appropriate technology to support your advertisements. Some third-party ad networks, such as Google Ads, will supply you with code. This code enables you to run advertisements automatically with the minimal development effort. In other cases, you may require custom development to meet your specific requirements. If you need a flexible solution for ads, paywalls, or any other type of monetization, services like MAZ are a great way to ensure you’re covered.

Then you’ll need viewers. In general, OTT marketers pay on a CPM basis (cost per mille). That is, they often pay a fixed sum per 1000 views. The cost is determined by the size and caliber of your audience. A larger audience will allow you to sell more ad spaces, while a smaller audience may allow you to attract higher CPMs. Many marketers are willing to spend a greater premium to reach a more precise audience that fits who they’re trying to attract.

Finally, you’ll need some information about your target audience. Advertisers want to know who they’re targeting and how much they’re paying for. Buyers will be significantly more willing to purchase ad space from you if you have up-to-date information on your audience’s demographics, localities, incomes, interests, and more.

Once you’ve met these fundamental prerequisites, it’s time to decide on a monetization strategy:

Monetization Option 1: Video Advertising Networks

A Video Advertising Network (VAN) might be a terrific alternative if you want to run OTT adverts swiftly and easily. Monetizing with VANs is as simple as registering up and pasting their code into your channel. The VAN will begin automatically inserting adverts in your channel and will share a percentage of the money with you.

However, when you employ a video advertising network, you give up choice and profit in exchange for convenience: You have no control over when or what advertisements run, most VANs only fill 40-60% of available ad breaks (leaving money on the table), and they take a portion of all commercials.

Monetization Option 2: Direct Advertising

You may create a custom ad server to have more control over your adverts. You can pick which advertisements to run and when they show using bespoke ad servers. You may also actively negotiate with potential sponsors and establish your own rates. The disadvantage here is that you will have to do a lot more effort, both on the development and commercial sides. Using an OTT app maker, such as MAZ, can, on the other hand, drastically cut your development time and expense.

Monetization Option 3: Sponsorships

Finding a sponsor is another effective strategy to market. Sponsors can pay for the exclusive opportunity to advertise on a specific piece of content, a page within your channel, or even your whole channel (all features you can unlock easily with MAZ).

One significant advantage of sponsorships is that there are practically endless methods to distribute your sponsored messaging. They may be integrated into your content, shown as banner advertising, startup screens, or anything else you can think of.

Sponsors can also help you streamline your ad rotation by requiring you to only serve one business’s advertising and charge them a single adjustable fee. On the other side, because you rely on a small number of advertisers for all of your money, this can be a constraining arrangement.

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