Traditional TV versus OTT Streaming: Where Do They Differ?
In today’s world, the ever-increasing quality of internet services has led to a dramatic rise in the popularity of streaming platforms, where people go to watch on-demand tv and online videos. Although broadcast and digital channels have declined as alternatives such as Netflix and Amazon Prime have gained popularity, video consumption has increased. The ever-increasing variety of TV services available to advertisers provides many choices. Still, it is vital to make an informed decision to maximise the effectiveness of an advertising campaign. In this article, we’re going to explore the basics and the pros and cons of streaming and on-demand platforms compared to traditional televised advertising that marketers need to consider when deciding which advertising platform is most suitable for a brand or business. Let’s start with the basics.
Traditional TV stations
There are two main categories of traditional TV stations: free-to-air ex-terrestrial tv and satellite or cable TV.
Broadcast and cable TV are traditional television services where the content originates from a broadcaster or cable operator. Programming is made available through a set-top box at home, which connects to the service via a coaxial cable or satellite dish.
Terrestrial Broadcast Television
Channels such as BBC and ITV are known as terrestrial because, in the past, they relied on transmission using earth-based antennae. Nowadays, we refer to them as ex-terrestrial because, since 2013, all television signals in the UK have been broadcast digitally. These broadcasters include regional networks and national networks. Public broadcast stations offer linear tv programming to those who purchase a tv license.
Cable and Satellite TV
Cable and Satellite TV provides video programming to viewers who subscribe to a specific service provider such as Virgin or Sky. Cable TV includes access to premium channels such as Sky Showcase, Discovery, Sky Sports, Disney Channel etc. and typically has a vast quantity of specialised interest channels to watch. This TV service requires a monthly subscription fee, although some providers offer unlimited viewing options such as Free View.
On-demand and Streaming Services
Streaming service providers make their content available online via streaming media players such as BBC iPlayer, Netflix, Apple TV, Amazon Prime Video, Android TV, etc.
The primary difference between these two types of content delivery systems is that streaming content providers require an internet connection but don’t rely on any physical cables or antennae to deliver their content. They can provide programming anywhere where users can access an internet connection, at home or out and about.
Widescale internet access facilitates viewing to a much larger audience than would be possible if they were limited to only broadcasting into a specific geographic area. OTT (Over-the-top) streaming services let you watch whatever you want, whenever, wherever you want.
There are some technical challenges involved in viewing high-quality videos over the internet. Still, thanks to advances in broadband and fibre technologies, by 2015, over 70% of UK Internet traffic was streaming video and audio content, indicating that OTT streaming is here to stay.
What features are unique to OTT streaming?
Over-the-top streaming refers to media delivered outside or ‘on top of’ traditional television networks. Streaming is a relatively new way of providing entertainment content to users through their mobile devices. It allows access to movies, TV shows, music, sports events, games and much more from anywhere at any time; you just have to download the app and start watching your favourite content.
In contrast to linear tv programming, streaming services offer unlimited viewing, so you can watch any episode or even binge-watch a whole series. The only thing customers need to worry about is finding something to watch!
Let’s talk about some of the most common features of OTT Streaming.
1. Access to Content – One of the most significant advantages of OTT Streaming is that you can immediately access everything that a content provider has to offer. Customers can stream live sporting events, news programs, documentaries, comedy specials, and even classic films at the touch of a button.
2. On Demand – On-demand streaming stores content recently broadcast on television for later viewing. Unlike traditional linear programming, where viewers are limited to what’s on, OTT Streaming gives you access to a library of thousands of hours of programming. So, if you miss a show while you are away from home, you won’t have to wait for a repeat to catch up.
3. Mobile Apps – Most OTT Services have apps that allow you to view content wherever you are. You can even install them on devices like the Oculus Quest and watch your favourite shows on a simulated big screen in virtual reality. Downloading these apps is free, and many offer trial periods so customers can test them out before committing to a full-fledged subscription.
4. Connectivity – If you’re going to be travelling abroad, you can still enjoy your favourite shows and movies wherever you go; all you need is a mobile device and a connection to the internet.
5. Interactive Playback – Similar to live TV DVRs (Digital Video Recorders) like TiVo, On-demand and streaming services let viewers pause, fast-forward and rewind video content mid playback at the press of a button. Need a cup of tea or want to make a call? Just hit pause, and you won’t miss any dramatic plot twists.
6. High-quality video. Streaming quality is determined by the data transmitted from the distributor’s servers to the user’s monitor. Online streaming typically offers higher resolutions than what standard 1080p HDTV can provide. Online videos take advantage of hi-tech screens and rapidly increasing internet bandwidth by offering videos in 3840p × 2160p resolution. 4K Ultra High Definition pixels are four times higher than those in 1080p and represent a giant leap forward in picture quality.
How to watch streaming services and live TV online
There are many Internet TV providers, including conventional television stations utilising the internet for on-demand and catch-up services after broadcasts. Internet television platforms are now available from almost every major global broadcaster. About 200 over-the-top (OTT) streaming platforms have emerged since 2012. A few of the most popular streaming services include:
- Amazon Prime
- Apple iTunes
- Apple TV+
- 4K Ultra HD Blu-ray
- Google Play
- Roku TV
- YouTube TV
Live television has traditionally been a significant advantage of broadcast TV over streaming services, but that is no longer the case. Live broadcast TV is available online in several ways, depending on what you want to watch. Nowadays, you can enjoy live TV on your computer, mobile device, or set-top box. Streaming services like Roku TV are just like cable or satellite subscriptions, providing live broadcasts and a variety of familiar channels alongside streaming services like Netflix on a set-top box, except that they are delivered over the internet instead of through cable or satellites.
YouTube is the only platform worthy of a separate mention. Since YouTube launched in 2005, video publishing on the internet has become decentralised and democratised globally. There are other free online video streaming services, but none have the same mass appeal that YouTube does. This platform provides a free and easy way to watch, upload and share high-fidelity videos worldwide. Nearly 2 billion people use it; on average, users spend around 40 minutes a day watching it daily, with young audiences watching about 60 minutes daily. It represents the world’s second-largest search engine after Google. Several years ago, the YouTube experience hit the TV screen with smart TVs and streaming devices.
Advertising on the YouTube platform is made possible by hosting commercials on a specific channel or through sponsorship and promotion. Sponsored videos typically contain a segment devoted to the sponsored product or brand. Usually, an influencer will spend approximately 3 – 5 minutes in a video to relay brand messages to their audience, typically accompanied by a banner ad at the bottom. YouTube ads can appear before, during, and after other YouTube videos or as a standalone promoted video after a search.
Advertisers can combine the demographic data collected when users log in and view videos with the content they are watching, resulting in the target audience seeing relevant content. Algorithms can serve your advertisements to specific audiences already watching videos from similar brands or on related topics based on demographic information and interests. The combination of television ads with YouTube’s reach enables brands to extend the lifespan of their commercials. However, brands must ensure that their messages are strong. Unless a commercial connects with viewers, it will never go viral. To give an indication of the potential of viral power, the most-viewed video of all time is “Baby Shark Dance,” with an unbelievable 11.2 billion views and 36 million likes.
Do streaming services spell the end for TV channels?
Traditional linear TV is being replaced by OTT broadcasting for one simple reason: you can watch your favourite show anywhere with an internet connection. Thanks to OTT technology, you can stream live TV from your smartphone, tablet, computer, or laptop anywhere in the world.
When consumers “cut the cord” from cable TV and switch to steaming services or a smart TV, they don’t have to sacrifice anything. In the US, one-third of households terminated their cable subscriptions in 2022, a trend expected to accelerate in the coming years.
A stay-at-home culture has been accelerated by the pandemic, which significantly boosted the numbers of viewers streaming online. Today, streaming video services have become an integral part of the entertainment ecosystem and are expected to surpass traditional TV in just a few years; significant expansions in the streaming industry took place in 2021 and are set to continue and expand into the future. According to a recent survey by Ofcom in 2019, a large percentage of UK adults (42 %) stated that online video services were their primary means of watching TV and movies. A similar percentage of people who use subscription streaming services could envision entirely ceasing to watch traditional broadcast television in five years. Even though most people in the industry think this trend is apparent, marketers worldwide keep a keen eye on it. Over-the-top (OTT) or streaming services generated $171 billion in revenue globally in 2021 and are projected to double by 2025, reaching $252 billion.
Leading streaming services like Amazon continue to bet heavily on producing high-quality original programming. With the dizzyingly expensive new drama based on The Lord of the Rings, it aims to target ever-increasing audiences, having captured a particular demographic with shows like The Grand Tour.
Disney+ revealed that it has more than 50 Marvel, Star Wars, Disney and Pixar originals currently in development, following up on The Mandalorian’s tremendous success.
Once upon a time, you would have assumed that BBC One or ITV would have these shows on at peak time on a weeknight. Until recently, streaming services weren’t naturally associated with hit shows like these.
By embracing streaming, local TV stations hope to remain relevant.
How does this affect the humble British TV channel, still broadcasting predetermined daily schedules? Traditional radio and television networks are trying to keep up with consumers’ increasingly high usage of internet streaming as ever-growing audiences continue to move towards it as a preferred media platform. If one market segment grows, another may stagnate.
The growth of streaming appears to have increased the market as a whole, but it has also displaced traditional TV. The five public service broadcasters’ (PSB) channels are holding on to the majority of viewership despite the overall decline in traditional broadcast TV. On average, traditional television still accounts for 69% of all viewing time in the UK, or 3 hours 12 minutes per day. However, this fell by nine minutes in 2017 and again by 11 minutes in 2018. Today, the average viewer watches 50 minutes less traditional TV each day than in 2010. The shift is most evident among young people between 16-24 years old, whose viewing of conventional TV has nearly halved in that time.
To combat this decline, UK PSBs have been ensuring that viewers have access to original, UK-produced shows. UK channels produced over 32,000 hours of original programming in 2018, more than 125 times more home-grown content created than the UK-created programming produced by streaming platforms. Most shows available on streaming media are US-made productions intended for international distribution.
Although PSBs’ spending on first-run, UK-made programmes was 5% lower in 2018 than in 2016, they have found new ways to finance content. Third-party funding for programmes, including co-productions, more than doubled over a decade to £455 million as of 2018.
The BBC and Channel 4 are refocusing output towards on-demand services to keep pace with online streaming, and the fastest modernisation is taking place on Channel 4. During the pandemic, the company’s on-demand offering grew in importance as advertising revenues from linear broadcasting dwindled. In 2020, Channel 4’s streaming service All 4 increased by a quarter, and usage is expected to double again within five years. Channel 4 chief executive Alex Mahon noted that a younger audience means Channel 4 will prioritise on-demand and digital services regarding shows and advertising monetisation.
Traditional TV stations are most concerned about losing billions of dollars in retransmission fees as viewers cut the cord from linear tv and move to online streaming services. It has been a long-standing practice among broadcast station groups to collect payments from providers such as Virgin Media and Sky to include the ex-terrestrial channels such as BBC and ITV. If retransmission fees eventually plateau and decline, broadcasters must consider new sources of income; the internet has already destroyed many offline, real-world institutions.
Terrestrial broadcast stations must incorporate streaming services as more people watch content on mobile devices. One method of protecting retransmission fees is to bundle digital streaming services and local broadcasting channels into a cable-like package offered by services such as Roku Tv.
Media Selection: Key Considerations
So, what are the key considerations marketers should consider when selecting an advertising platform? Advertising media selection is one of the most critical aspects of digital marketing because they have a massive impact on your business; your chosen platform ultimately affects how well your ads perform. Choosing the best or ideal advertising channel can be challenging when you have many advertising options. These channels can either help or hurt your organisation’s marketing efforts based on their benefits, drawbacks, and applications. Businesses looking to improve ad performance should consider these key factors when selecting advertising media.
Performance metrics are essential factors when choosing advertising media. They measure the cost and effectiveness of your campaign. There are three types of performance metrics associated with TV advertising and streaming platforms:
- CPM (Cost Per Mille) – This metric measures the cost of reaching one thousand viewers, the base advertising rate set by individual networks. Ultimately the CPM determines the price of placing an advert on television at different times of the day that directly reflects the audience numbers watching at that moment.
- CPC (Cost Per Click) – This metric measures the cost per click on an online advertisement. Digital advertising has a crucial advantage; businesses are charged when someone clicks on their ad. A click signifies interest in a product; therefore, companies only pay to reach viewers who have demonstrated a desire for more information or to make a purchase.
- • CPV (Cost Per View) – This metric measures how much you spend on views generated by ads on streaming platforms. Unlike broadcast TV, which relies on rating agencies, streaming services can keep accurate records of audience numbers. In essence, businesses are only charged for exact viewing figures for those that see their advertisements.
- CPCs and CPVs vary depending on where you place your ads. For example, if you place your ads on sites that receive lots of traffic, the CPC will be higher because those sites pay more for clicks. The CPV for an advertisement on YouTube will typically cost between 5p – 20p, and the CPC is about 40p. Netflix intends to charge about £60 CPM for its ad-supported subscription tier. Marketers should contact individual services for their media packages for more in-depth information about advertising rates on streaming services.
The most crucial factor is whether an ad gets seen or not. Reach indicates how many people saw your ads; the wider an advertisement’s reach extends, the better your chances of getting customers. Conversely, if your ads aren’t seen, they cost money without generating revenue. Advertisers need to consider how much traffic or how many viewers a channel streaming platform gets regularly. If the site or channel doesn’t generate many unique viewers, the ads won’t get that many impacts and perform well.
Television advertising typically reaches the largest audience; over 45% of the British public regularly tune in at peak times. However, the benefits of advertising to a vast audience can be offset by the costly prices driven by the CPT (or Cost per Thousand viewers).
Advertisers know that it is possible to blow an ad spend on television. A 30-second national television commercial typically costs over £30,000, which doesn’t include the cost of production. TV advertising undoubtedly adds credibility to a brand, but getting an ad up and running can be time-consuming and lengthy.
Similar to cable tv, the enormous quantity of different streaming platforms available typically means that they won’t receive the audience numbers that the PSBs get. Still, the overall cost of placing an ad will be much cheaper.
Budget Constraints and Cost Effectiveness
Media planners should allocate funds to different channels and spots dependent on the campaign’s budget. Advertisers must select the most cost-effective option depending on your firm’s media budget. A marketer in a small business might have to choose between an online campaign with multiple banner ads or a television campaign with only one advertisement. Before deciding on the best marketing channel, one should know a campaign’s financial capabilities. Targeting specific demographics is the best way to maximise cost efficiency for an ad spend. You can see more about audience statistics on streaming platforms below.
Companies may have to spend a lot of money on television advertising. Not only is it expensive to purchase the slot on ex-terrestrial channels, but it is also expensive to create content for the commercial. Planners must be able to predict which shows in the future will attract more viewers than expected. Inaccurate estimates can compromise marketing ROI. Furthermore, television ads often receive broad exposure, and poor-quality advertisements can damage a company’s reputation. It is more important to create a strong ad when there are more viewers.
For a campaign to be successful, ad frequency plays an important role. For consumers to internalise your marketing messages, you need to repeat your message frequently across multiple channels. Using multi-channel campaigns that involve a variety of targeted channels in a unified way is recommended for maximum impact. To reach the campaign’s target audience regularly, media planners should examine demographics for TV channels and streaming platforms to determine where companies can allocate an ad spend most effectively.
Over half of social media users watch an entire video if it is under one minute long, and the longer the video, the lower the percentage. You have only a short time to engage your audience and keep them interested. While scrolling through your feed, users can quickly observe and interact with short, looping video ads on platforms like Instagram and Facebook. Advertisers can use longer videos if the message is compelling enough to keep viewers hooked.
Ratings determine the success of your advertising campaign before you book a television or radio spot. Marketers should place advertisements during programs with satisfactory ratings that target a specific demographic. For television, the Broadcasters Audience Research Board (BARB) studies audience viewership and provides rating figures for networks and advertisers to use. Marketers can find information about ratings for TV shows on the BARB website, and streaming services offer information on demographics in their media portfolios. One drawback that television advertising can suffer is that TV networks can be less than forthcoming about audience ratings and demographics, relying instead on independent research boards like BARB. In comparison, streaming services will always have an accurate account of all demographics taken from online viewing data and account information.
How does this campaign fit into an overall marketing strategy? Rather than focusing on a detailed plan earlier in the planning process, media planners should build a framework for their campaigns. For example, does the campaign need to prioritise Boxing day sales or general brand awareness? Depending on the ultimate goal of your campaign, the ideal media channel will vary.
Some advertising campaigns may need to encourage users to take action immediately, like on a Boxing Day sale, to increase sales. In this case, targeting specific audiences your product appeals to will be necessary. Streaming platforms and cable tv offer advertisers a cheap solution to reach highly targeted demographics, providing you know your audience, that is.
On the other hand, campaigns to increase brand awareness should be conducted over more extended periods and integrate various media platforms to reach the broadest possible demographic.
Today, television is still the most popular media platform for marketers. The advent of connected TV allows advertisers to use viewer data for more effective demographic segmentation and targeting.
A significant drawback to television advertising is that viewers do not always actively pay attention during commercial breaks and often try to skip or avoid them when given the opportunity. Also, not everyone tuning in will be part of your target audience, which can mean an inefficient use of an ad budget. Consider which demographic segments watch a particular television program before purchasing a slot. Although a primetime show may get more viewers, daytime or late-night television could be more targeted and save you money.
When selecting an advertising slot on live broadcast television, users cannot fast forward through the commercial breaks when watching a football game, for example, if they want to watch the game as it is happening.
YouTube and streaming platforms offer skippable ads, which play for 10 – 20 seconds before viewers can click on the skip button and unskippable ads, which play for about 30-second. Advertisements that are not skipped can last as long as 2-5 minutes and contain infomercial content.
Efficacy of Previous Media Purchases
Understanding what purchases have worked for your team in the past can help you determine your media planning budget. To accurately measure online and offline data, your marketing team needs an effective marketing attribution model, most commonly accomplished using ‘unified marketing measurement’. This type of analytics determines how vital each touchpoint is to the conversion process by assessing online and offline touchpoints. Marketers must access advanced analytics and attribution solutions to improve media allocations on upcoming advertising campaigns. In this regard, online advertising has the edge that traditional television advertising does not. That is because almost every aspect of the online process can be measured and analysed, from advertisement to purchase.
Lastly, it may be an idea to look at competitors’ advertisements and see which platforms they advertise on and which shows they target. Savvy marketers should be able to glean what is performing well by keeping their eyes on the competition.
Key Statistics advertisers need to consider
Streaming services represent a revolution in how we watch TV. Here are some helpful UK streaming audience figures provided by OFCOM and Finder.com.
In the UK, the number of households with at least one subscription to a streaming service has risen to more than 16 million as of 2022, whether they use Netflix, Amazon Prime Video, Disney Plus, NOW TV or another service. Out of the UK population, 6% have subscriptions to all three services, while 32% have both Netflix and Amazon Prime subscriptions. 9 out of 10 Brits have used a streaming platform in the last year. In the UK, there are more than 35.6 million YouTube users, and 35% of the population uses YouTube regularly.
UK’s most popular streaming service Netflix has more than 12.4 million subscribers, an 8% increase since last year; it is by far the nation’s most popular streaming service. Furthermore, Amazon Prime and NOW have seen healthy growth over the past year. One in three Brits has used Disney Plus since it launched late in 2019, representing an explosive rise in popularity.
Another critical statistic marketers need to consider is the demographics that streaming services appeal to. Different age groups prefer different streaming platforms. Most subscribers are millennials; 12% subscribe to three or more services, compared to 6% of Gen Xers and 3% of baby boomers. Most YouTube users fall in the 25 and 44 age categories, accounting for 44% of total users; however, in 2021, Gen X and Baby Boomers represented the fastest growing segments of YouTube users.
The most popular platform, besides YouTube, among all generations is Netflix. 73% of millennials use this service, followed by 67% of generation X, 66% of generation Z, 52% of baby boomers, and 31% of the silent generation. 99% of Gen Z consumers have used streaming services in the past year, making them the biggest consumers of streaming platforms. The percentage of millennials who used a streaming platform last year is a staggering 96%, followed by 92% of gen Xers. More than 80% of baby boomers (82%) follow, with less than two-thirds of the silent generation (63%).
Among 16- to 24-year-olds, 82% report binge-watching TV shows at least once a month, compared with 29% of those 65 and older. In the 16-24 age category, 11% admitted to binge-watching TV daily.
In 2022, Women more than men will use TV streaming services, according to a survey conducted by Finder. More than three-quarters of women have used Netflix in the past 12 months, compared to less than half of men. (56%) of women use Amazon Prime, Disney Plus (45% to 19%), Apple TV (9% to 6%), and NOW TV (15% to 10%). Men are more likely to use YouTube, Sky Go, BT TV, Rakuten TV, and Britbox. In the UK, 46% of women use YouTube regularly compared to 54% of men.
How will broadcast TV evolve in the future?
Due to the rapidly changing market landscape and ongoing diversification, it is difficult to predict the future. In addition to providing a platform for watching films and TV programs, streaming services now create and license their own globally successful content and directly compete with traditional TV and video.
There’s no denying that content is king. While video-on-demand is gaining ground, linear television still plays the most significant role, especially in live events and sports. The longevity of broadcast channels depends upon providing high-quality, engaging content. Ultimately, revenue remains driven mainly by broadcast ratings, even as local stations pivot to streaming.
The findings in this article indicate that broadcast television will remain dominant for a while longer; however, at the same time, streaming services are growing exponentially. There are no guarantees that the current position of broadcasters and content producers will continue to be enough to sustain their business. With the ageing population and streaming becoming more popular, broadcasters must evolve, and they are.
A broadcaster’s relevance depends on adapting to changes, adjusting media strategies, identifying what tactics will lead to success, and preparing for the future. Both advertisers and broadcasters must identify critical changes in broadcasting and emerging trends.
The digital revolution is fundamentally changing the way content is produced and distributed. Media consumption is becoming increasingly mobile and flexible thanks to fast fibre optic networks and 5G technologies. New, intelligent search and advertising recommendations are being developed based on artificial intelligence and analytics to target consumers. Standard set-top boxes are being replaced by ‘all-IP’ boxes and smart TVs, which now offer all-inclusive packages which include the traditional PSBs, cable channels, and streaming services, all delivered via an internet connection.
Consumer behaviour has also changed significantly due to on-demand video: consumers increasingly demand access to relevant and exciting TV and video content anytime, anywhere, and in any format they prefer.
Global content producers are adapting to this changing landscape by setting up their own branded streaming services, and broadcasters are launching or improving their on-demand offerings. The threats posed by digital platform providers such as Netflix, Amazon, Apple, or Google can be countered by joint production, distribution, and collaborative platforms. Broadcasters must be open to cooperation and alliances, including working with direct competitors, to safeguard their business models.
Likewise, advertising on TV and video is adapting to new formats and becoming increasingly personalised. Users’ data analysis can optimise ads and content, increase the advertising effectiveness for viewers, and win them over as customers.