The surge of over-the-top (OTT) streaming platforms has redefined digital advertising, offering brands a direct line to millions of engaged viewers on devices like smart TVs, smartphones, and streaming sticks. In 2025, with platforms like Roku, Hulu, and Peacock commanding massive audiences, OTT advertising has become a cornerstone of modern marketing strategies. However, understanding OTT advertising cost is essential for brands to budget effectively and maximize return on investment (ROI). This article explores the factors influencing OTT ad costs, typical pricing models, and strategic considerations for advertisers navigating this dynamic landscape.
The Rise of OTT as an Advertising Powerhouse
OTT platforms deliver video content over the internet, bypassing traditional cable and satellite providers, and have seen explosive growth. Roku reaches over 80 million active households, Hulu boasts 152 million ad-supported viewers, and Peacock engages 110 million users in 2025. These platforms offer non-skippable ads in a premium, brand-safe environment, achieving 48% higher engagement than social media ads, according to 2024 industry data. This combination of scale and precision makes OTT advertising a compelling channel for brands seeking to connect with streaming audiences.
The OTT advertising cost reflects this value, varying based on platform, ad format, targeting, and inventory demand. Unlike traditional TV, which often requires six-figure budgets for prime-time spots, OTT platforms offer flexible entry points, making them accessible to small businesses and enterprise brands alike. However, costs can escalate with premium placements or advanced targeting, requiring careful planning to align budgets with campaign goals.
Factors Influencing OTT Advertising Costs
OTT advertising cost is shaped by several key variables, each impacting the overall budget required for a campaign. Understanding these factors helps advertisers anticipate expenses and optimize spending:
- Platform Selection: Different platforms have distinct pricing structures. Hulu’s cost-per-thousand-impressions (CPM) ranges from $10 to $30, while Peacock’s premium inventory, like live sports, can reach $40 CPM. Roku Ads Manager, with no minimum spend, is more budget-friendly for small businesses.
- Ad Format: Standard video ads (15–30 seconds) are typically the most cost-effective, while interactive formats, like shoppable ads or Hulu’s ad selector, command higher rates due to increased engagement. Peacock’s marquee ads during high-profile events are among the priciest options.
- Targeting Precision: Granular targeting—such as specific demographics, behaviors, or geographic regions—increases costs. A campaign targeting high-income households on Hulu will cost more than one with broad demographic filters.
- Inventory Demand: Peak viewing periods, like holiday seasons or major sporting events, drive up costs due to limited premium inventory. Off-peak campaigns, such as those in early spring, are often more affordable.
- Buying Method: Self-service platforms like Roku Ads Manager offer lower entry points, while programmatic buys through demand-side platforms (DSPs) like The Trade Desk or direct deals with sales teams (e.g., Peacock) require higher minimums, often starting at $1,000–$5,000.
These factors create a wide cost spectrum, with campaigns ranging from a few hundred dollars for a localized Roku ad to millions for a national campaign during the Olympics on Peacock. Industry estimates suggest average OTT CPMs fall between $15 and $40, significantly lower than traditional TV’s $50–$100 for prime-time slots.
Pricing Models and Budgeting Options
OTT platforms employ various pricing models to accommodate different advertiser needs, each with implications for budgeting:
- Cost-Per-Thousand-Impressions (CPM): The most common model, where advertisers pay for every 1,000 ad views. CPMs vary by platform and targeting, with Hulu at $10–$30, Roku at $10–$25, and Peacock at $15–$40.
- Cost-Per-Completed-View (CPCV): Used for non-skippable video ads, this model charges based on fully viewed ads, ensuring engagement. CPCV is ideal for performance-driven campaigns but may cost more than CPM.
- Programmatic Bidding: Real-time bidding through DSPs allows advertisers to set maximum bids, offering flexibility but requiring higher minimums. Programmatic buys on Roku or Peacock often start at $1,000.
- Direct Deals: Negotiated with platform sales teams, these secure premium inventory, like Hulu’s live TV placements, but involve higher costs and longer commitments, typically $10,000 or more.
For budgeting, small businesses can leverage self-service platforms like Roku Ads Manager, which has no minimum spend, allowing campaigns as low as $500. Hulu’s Ad Manager requires a $500 minimum per campaign, while programmatic or direct buys suit larger budgets. Advertisers should allocate 10–20% of their budget for creative production, as high-quality ads are critical for OTT’s premium environment.
Strategic Considerations for Cost Management
To optimize OTT advertising cost, brands must approach campaigns strategically, balancing reach with efficiency. Begin by defining clear objectives—brand awareness, website traffic, or conversions—to guide platform and format choices. For awareness, a broad-reaching video ad on The Roku Channel may suffice, while conversions might require shoppable ads on Peacock. Aligning goals with KPIs, such as impressions or click-through rates, ensures budgets are spent on measurable outcomes.
Timing is a critical factor. High-demand periods, like Q4 holidays or major events like the Super Bowl on Peacock, inflate CPMs due to inventory competition. Launching campaigns during quieter periods, such as Q1, can reduce costs while maintaining reach. For example, a retail brand might save 20–30% by advertising in February versus December, based on 2024 cost trends.
Testing is another cost-saving strategy. Start with a small budget to test ad formats, audience segments, or platforms, scaling investment toward high-performing elements. A/B testing different creatives—such as a 15-second versus a 30-second ad on Hulu—can reveal what drives engagement, allowing budget reallocation. Roku Ads Manager’s real-time analytics facilitate this iterative approach, providing insights into performance metrics like completion rates.
For larger campaigns, programmatic buying offers cost efficiencies through real-time bidding, enabling advertisers to adjust bids based on audience value. Partnering with a DSP like Magnite or FreeWheel can streamline access to multiple platforms, reducing per-platform costs. However, small businesses should prioritize self-service tools to maintain control and minimize overhead.
Maximizing ROI Through Targeting and Creative
Effective targeting and creative development are pivotal to managing OTT advertising cost while maximizing ROI. OTT platforms leverage first-party data—viewing habits, search queries, and demographics—combined with third-party data to deliver precise audience segments. A fitness brand on Roku could target viewers of health content, while a local retailer on Hulu might focus on specific ZIP codes. Granular targeting increases costs but improves efficiency by reducing wasted impressions.
Creative quality directly impacts campaign success. OTT platforms demand high-resolution, engaging ads that align with their premium content. Roku’s partnership with Spaceback, for instance, allows brands to repurpose social media assets into TV-quality ads at no cost through Q1 2025, saving on production. A compelling 15-second ad with a clear call-to-action, like a QR code for a product page, can drive conversions more effectively than a generic 30-second spot. Testing multiple creatives ensures optimal performance, with platforms like Hulu reporting 35% higher recall for tailored ads.
Comparing OTT Costs to Other Channels
OTT advertising is cost-competitive compared to traditional and digital alternatives. Traditional TV prime-time spots can cost $50,000–$150,000 for 30 seconds, with CPMs of $50–$100, while OTT CPMs average $15–$40, offering similar reach at a lower price. Social media ads, like those on Facebook, have lower CPMs ($5–$10) but lack OTT’s distraction-free, premium environment. Programmatic OTT buys are pricier than social media but deliver 40% higher brand lift, justifying the investment for performance-driven campaigns.
Compared to other OTT platforms, Roku’s no-minimum-spend model is the most accessible, while Peacock’s premium inventory commands higher rates. Hulu strikes a balance, with flexible self-service options and competitive CPMs. Brands should weigh these differences against their audience and goals, selecting platforms that align with their budget and targeting needs.
Building a Cost-Effective OTT Strategy
Navigating OTT advertising cost requires a blend of strategic planning, precise targeting, and iterative optimization. By understanding platform pricing, leveraging flexible buying models, and prioritizing high-quality creative, brands can craft cost-effective campaigns that resonate with streaming audiences. Platforms like Roku, Hulu, and Peacock offer scalable solutions, from low-budget self-service ads to premium programmatic buys, ensuring accessibility for all advertisers. As OTT ad spend continues to climb, projected to hit $30 billion globally by 2027, brands that master cost management will unlock the full potential of streaming advertising, driving impactful connections in 2025 and beyond.