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What Is CTV Advertising: Connected TV Ads + How They Work
Introduction
/// Definition of CTV Advertising
Connected TV (CTV) refers to any television that can be connected to the internet, enabling video content to be delivered over the top (OTT) rather than via traditional broadcast, cable, and satellite services. These include smart TVs from various manufacturers, standalone streaming devices like Roku, Apple TV, Chromecast, and Amazon Fire Stick, and Blu-ray players, game consoles, and set-top boxes. CTV advertising hence relates to ads served on these connected platforms.
Although often used interchangeably, CTV and OTT advertising are not synonymous. OTT advertising spans a wider range of internet-connected devices through which consumers can access OTT content, including mobile devices and desktop computers. These OTT ads can appear on both the big screen in your living room and smaller screens like a mobile phone or tablet, offering advertisers a versatile canvas for their campaigns. Conversely, CTV advertising is confined to the TV screen, bringing a targeted digital advertising approach directly to the big screen in the living room.
CTV combines the best of traditional television advertising with the precision and analytics of digital marketing. Unlike traditional TV advertising where a single ad is shown to every viewer watching a specific program regardless of their interests or specific demographics, CTV ads are targeted based on user demographics, interests, and viewing behavior, among other parameters. This means advertisers can target specific audiences, thereby increasing the likelihood of viewer engagement.
The rise in popularity of smart TVs and other CTV devices has led to an increase in consumption through such platforms, making them fertile ground for marketers looking to reach a wide yet more targeted audience base. With features allowing more personalized ad placements than traditional mediums could ever offer, it's no surprise that more businesses are adopting this form of advertising.
/// Importance of CTV Advertising in the Current Media Landscape
CTV advertising has emerged as a crucial component in the current media landscape due to its reach, targetability, and measurability. CTV offers a unique blend of the wide reach and impact of traditional TV advertising, coupled with the interactive and targeted advertising capabilities of digital platforms. This dual benefit makes it an increasingly popular choice among marketers, helping them connect with audiences via more personalized and engaging advertising campaigns.
CTV advertising offers brands unparalleled opportunities for audience segmentation and personalization. It leverages user data from various sources like viewing habits, purchase history, and demographic information which allows advertisers to deliver highly personalized content tailored specifically for each viewer’s interests and needs. Such precision targeting improves ad relevance, leading to better conversion rates and a less intrusive viewing experience.
Furthermore, it aligns well with the increased viewership shift towards streaming platforms and smart TVs, solidifying its position as a necessary part of a comprehensive media strategy. According to Nielsen, streaming accounted for 38.7% of total TV usage in July 2023, outpacing traditional broadcast (20%) and cable (29.6%). This trend is expected to continue: eMarketer projects that by 2024, the number of CTV households in the U.S. will surpass that of traditional TV households by more than two-fold.
Background and Context
/// Evolution of Television Advertising
The landscape of television advertising has undergone a remarkable transformation since its inception. To fully appreciate the nuances of CTV advertising, it is essential to take a closer look at the evolution of TV advertising. In this section, we explore the notable phases that have marked this journey.
The Early Years (1940s - 1960s)
This era was characterized by direct, product-centric advertisements focused on the features and benefits of products. During this time, it was common for companies to sponsor entire programs, giving rise to the term "soap opera". This term originated because many of these sponsored programs were melodramatic serials, and the sponsors were often soap manufacturers. These sponsored shows allowed for seamless integration of advertisements into the programming, with hosts and actors directly promoting products to viewers, creating a symbiotic relationship between the program content and the advertisements.
The Golden Age (1960s - 1980s)
The 1960s marked the beginning of what many consider to be the "Golden Age" of television advertising, a period that extended into the 1980s. This era witnessed a creative revolution in the advertising world, where advertisers began to explore more narrative-driven and emotionally resonant approaches. Commercials became more sophisticated, utilizing storytelling techniques to forge a deeper connection with the audience. This period saw the birth of iconic ad campaigns, including Coca-Cola's "Hilltop", Virginia Slims' "You've Come a Long Way, Baby", and McDonald's "You Deserve a Break Today". These campaigns not only promoted products but also evoked strong emotional responses from viewers.
The Cable Boom (1980s - 2000s)
With the advent of cable television in the 1980s, the advertising landscape expanded exponentially. The proliferation of channels enabled advertisers to target niche audiences more effectively. This period also witnessed the emergence of shortform and longform direct response television (DRTV), enabling consumers to respond directly to advertising offers via a toll-free number.
The Digital Shift (2000s – 2022)
In the 2000s, the advent of digital technology significantly transformed the advertising landscape. The introduction of additional screens, such as PCs, tablets, and smartphones, revolutionized how consumers interacted with advertising content. These platforms not only expanded the avenues for content consumption but also introduced new response mechanisms, like ad clickthroughs or QR code scans, enabling direct engagement between viewers and advertisers through websites and mobile apps. This shift enabled advertisers to craft more targeted and personalized campaigns by leveraging data and analytics to understand and cater to individual viewer preferences and behaviors.
The Age of Streaming (2022-Present)
Although it could be argued that the inception of streaming and CTV began in 2007 with the debut of Hulu and Netflix's streaming services, 2022 stood as the milestone year when streaming eclipsed cable TV as the primary platform for TV viewership. While audiences have gravitated towards streaming due to its convenience and variety, advertisers have astutely pursued, recognizing not only the shift in viewer preference but also the distinct advantages that CTV offers. CTV combines the reach and impact of traditional TV advertising with the precision and analytical capabilities of digital advertising. It allows for more granular targeting, personalized content, and measurable results, offering a promising avenue for marketers to connect with audiences in a more engaging and effective manner.
/// Emergence of Connected TV (CTV)
The rise of CTV is a direct result of the digital revolution and the increasing popularity of streaming services. This popularity has soared in recent years, primarily driven by a shift in viewer preferences towards on-demand streaming content and the a la carte flexibility that streaming services offer, allowing viewers to subscribe to only the channels they are interested in, a stark contrast to the bundled channel packages commonly found in cable or satellite subscriptions. Consumers appreciate the convenience and control that streaming offers, as it allows them to watch their favorite shows and movies without being tied to a rigid broadcast schedule. Furthermore, the rich, high-quality content available on streaming platforms has been a significant draw, attracting an ever-increasing number of CTV viewers.
One key factor contributing to the ongoing shift in budget toward CTV has been advertisers' increasing dissatisfaction with traditional TV advertising. Having become accustomed to the advanced targeting and tracking capabilities of digital advertising, advertisers began to expect more from TV advertising, realizing it often lacked precision in targeting and did not easily provide comprehensive feedback on ad performance or viewer engagement. With CTV, however, marketers could access detailed metrics such as frequency, viewability, and video completion rate - key indicators of how well an advertisement is resonating with its intended audience.
For advertisers, CTV offers a valuable opportunity to reach a more segmented and engaged audience. The data-driven approach of CTV advertising allows marketers to gain deeper insights into viewer behavior, facilitating more targeted and effective advertising campaigns. Furthermore, CTV offers a more creative and immersive ad format, fostering a deeper connection between brands and consumers.
/// The Shift from Traditional TV to CTV
In recent years, the media landscape has witnessed a significant shift from traditional TV to CTV, a change driven by technological advancements and evolving viewer preferences. This transition has not only changed the way audiences consume content but also reshaped the strategies advertisers use to reach their target demographics. Let's delve into the nuances of this shift and understand its implications for the advertising industry.
Changing Viewing Habits
As previously mentioned, the rise of CTV is intricately linked to the changing viewing habits of the audience, who now gravitate towards the flexibility and user-centric approach of streaming services. This shift towards on-demand content and personalized viewing experiences has significantly propelled the growth of CTV, ushering in a new era of viewer engagement.
Recent data further emphasizes this trend, showing a consistent increase in time spent on CTV platforms and a significant shift in ad spending. According to eMarketer, while CTV time spent has increased by 95% from 2019 to 2023, ad spend has increased 260%, underscoring CTV advertising’s substantial momentum. Moreover, projections indicate a continued growth trajectory for CTV, with ad spending expected to increase from $25.1 billion in 2023 to $40.9 billion in 2027.
Enhanced Targeting Opportunities
CTV offers advertisers a wealth of opportunities to target their ads more precisely. Unlike traditional TV, where ads are broadcast to a wide audience, CTV allows for targeted advertising based on various parameters like viewer demographics, interests, and viewing patterns. This granular approach to targeting enables advertisers to craft more relevant and engaging ad campaigns.
Interactive Advertising Experiences
Another remarkable aspect of the shift to CTV is the possibility of interactive advertising experiences. CTV platforms are equipped to offer interactive video ads, where viewers can engage with content in real-time, be it clicking on a product to learn more or even making a purchase directly from the ad. This interactive element not only makes the ads more engaging but also facilitates seamless integration of advertising and e-commerce.
Measurable Outcomes
CTV advertising provides the benefit of measurable outcomes, a feature somewhat lacking in traditional TV advertising. Although DRTV advertisers are able to model and directly attribute web responses from their linear TV spots with multichannel measurement solutions like Abacus by Media Culture®, CTV unleashed a rich reservoir of granular data, enabling advertisers to track campaign performance with greater accuracy, gaining insights into key metrics like view-through rates, engagement levels, and conversion rates. This data-driven approach facilitates more informed decision-making, helping advertisers to optimize their strategies for the best results.
/// Exclusive Infographic
CTV + OTT INSIGHTS FOR 2024
Dive into the transformative landscape of CTV and OTT. Equip yourself with essential data and trends to craft a forward-thinking advertising strategy.
Understanding CTV Advertising
/// How Does CTV Advertising Work?
Understanding the workings of Connected TV (CTV) advertising can give marketers a significant edge. But how exactly does this innovative form of advertising operate? Let's break it down step by step.
Step 1: Setting Up the Campaign
To kick-start a CTV advertising campaign, advertisers must first define their target audience, a process significantly enhanced by utilizing Media Culture's proprietary Connection Points Audience Platform. This platform shifts the focus from broad demographic targeting to more precise and high-value audience segments. It not only facilitates more personalized advertising strategies but also amplifies their impact, fostering more meaningful connections with the target audience.
Step 2: Creating Engaging Content
Utilizing Connection Points, advertisers can delve deeper into consumer personas, harnessing audience insights to shape impactful messaging that resonates with the target audience. Unlike traditional TV advertising, CTV allows for a more personalized approach, enabling advertisers to create ads that speak directly to the viewer's preferences and needs. This could involve interactive ads that engage viewers in a more immersive way, fostering a deeper connection between the brand and the consumer.
Step 3: Audience Activation
With CTV advertising, the emphasis shifts from the traditional approach of selecting placements and channels as a proxy for audience targeting, to a more nuanced strategy focused on reaching the right audience, no matter where they may be. Leveraging tools like Connection Points, advertisers can not only build custom CTV audiences but activate them seamlessly across various platforms, streaming providers, and channels, ensuring consistent reach and frequency control from a centralized platform. This shift in focus is facilitated by the advent of programmatic advertising, a dynamic audience buying strategy that intelligently selects the optimal times and platforms to engage consumers.
Step 4: Real-Time Adjustments
One of the standout features of CTV advertising is the ability to make real-time adjustments to the campaign. Based on performance data and analytics, advertisers can tweak their strategies on the fly, optimizing for better results. This dynamic approach allows for a more responsive and effective advertising strategy, ensuring the best return on investment (ROI).
Step 5: Measuring Success
Once the campaign is launched, the next step is to measure its performance. CTV advertising offers a range of metrics to evaluate the performance of the campaign, including reach, frequency, impressions, clicks, and conversions. These metrics provide valuable insights into the campaign's effectiveness, helping advertisers to fine-tune their strategies for future campaigns. Platforms like Abacus by Media Culture® also enable advertisers to measure both short- and long-term performance, ensuring they accurately gauge the immediate campaign impact while also understanding the sustained influence and lifetime value generated through various advertising channels.
/// Key Players in the CTV Advertising Space
In the ever-evolving world of streaming and CTV advertising, various key players have carved distinct niches, each contributing to the industry's landscape. These entities span across 3 primary categories: SVOD/AVOD (Subscription Video on Demand/Ad-Supported Video on Demand), FAST (Free Ad-Supported Streaming TV), and Live Streaming. Let's delve deeper into each category and the notable players within them.
SVOD/AVOD Services
Within the streaming industry, Subscription Video on Demand (SVOD) and Ad-Supported Video on Demand (AVOD) are the most prominent monetization models. SVOD is a model where users subscribe by paying a monthly or annual fee to access a library of content, usually without the interruption of advertisements. Conversely, AVOD operates on a subsidized model, allowing users to access content at a lower fee, but with advertisements interspersed within the content.
Whereas the distinction between SVOD and AVOD platforms was once clearer, recent developments have blurred the lines, with AVOD providers like Hulu introducing ad-free subscriptions and others like Netflix and Disney+, once exclusively SVOD, now offering ad-supported tiers. This shift not only expands the revenue streams for these platforms but also opens new avenues for advertisers to reach large, engaged audiences.
Popular SVOD/AVOD services include:
- Apple TV+: Apple TV+, a streaming service launched by Apple Inc., operates primarily on a subscription-based model, offering a wide array of original content without any advertisements. The platform is home to a growing library of exclusive movies, documentaries, and television shows, produced under the “Apple Originals” label. Noteworthy original programming includes series like Ted Lasso, The Morning Show, and For All Mankind, which have been recognized for their critical acclaim, and live sports, like MLS Season Pass and MLB's Friday Night Baseball.
- Disney+: Disney+, a subsidiary of The Walt Disney Company, features dedicated content hubs from brands such as Disney, Pixar, Marvel, Star Wars, and National Geographic. Disney+ recently introduced an ad-supported tier, expanding its advertising opportunities and enabling advertisers to reach consumers across the platform's rich family-centric content library. In addition to classic and recent animated and live-action movies, popular original programming includes Marvel shows like Loki and Wandavision and Star Wars programming like The Mandalorian and Obi-Wan Kenobi.
- Hulu: Hulu, also owned by The Walt Disney Company, offers a hybrid platform with both subscription and ad-supported content. It attracts advertisers aiming to reach a younger, tech-savvy audience who prefer streaming over traditional TV, offering immersive and interactive ad experiences like GatewayGo, which encourages consumers to engage with advertiser offers, and Max Selector, which grants viewers the choice of the ad unit they watch during commercial breaks. Popular original programming includes The Handmaid’s Tale, Only Murders in the Building, and The Great British Baking Show.
- Max: Max, previously known as HBO Max, is a subscription-based streaming service owned by Warner Bros. Discovery. It offers a rich library of content including series, movies, and originals from a variety of sources like HBO, Warner Bros., New Line Cinema, DC Entertainment, and Discovery brands like Discovery Channel and HGTV. Original programming includes The White Lotus, Peacemaker, and Tokyo Vice.
- Netflix: Netflix, a dominant player in the streaming industry, initially operated as a subscription-only service (SVOD). It has expanded its offerings to include an ad-supported tier, allowing advertisers to engage with its massive audience through various strategies, including branded content and product placements. Popular original programming includes Stranger Things, The Crown, and The Witcher.
- Paramount+: Paramount+, owned by Paramount Global, is a subscription video-on-demand service that replaced CBS All Access. It offers a vast library of current and past seasons of CBS and Showtime shows, live sports from the NFL and UEFA Champions League, a library of movies from Paramount Pictures, as well as original programming like The Offer, Halo, and Star Trek: Strange New Worlds.
- Peacock TV: Peacock TV, a venture by NBCUniversal, is a streaming service that offers a rich blend of current season programming, classic TV shows, and movies from NBCUniversal studios and other third-party content providers. It provides a tiered service model, including a free, ad-supported version as well as premium subscription options featuring a larger content library from NBC Sports, Hallmark Channel, and WWE. Original programming includes Bel-Air, Brave New World, and Girls5EVA.
- Prime Video: Prime Video is a popular streaming service from Amazon offering a vast selection of TV shows, movies, and exclusive content available to Amazon Prime members. While primarily a subscription service, Amazon recently announced plans to introduce ads on Prime Video in 2024 and, with it, an ad-free tier at additional cost. It hosts a vast array of movies and TV shows, including original programming such as The Boys, The Marvelous Mrs. Maisel, and Tom Clancy’s Jack Ryan, along with licensed content and live sports events like the NFL’s Thursday Night Football.
FAST Services
FAST (Free Ad-Supported Streaming TV) represents a streaming monetization model that allows viewers to access content for free, generating revenue through advertising. FAST services typically offer a limited selection of movies and TV shows licensed from the back catalogs of studios and networks. Although the content on FAST services is limited compared to AVOD/SVOD, FAST provides a viable alternative for consumers seeking older content or those reluctant to take on additional subscription costs.
- Crackle: Crackle, owned by Chicken Soup for the Soul Entertainment (also the parent company of Redbox Entertainment), offers a mix of original and licensed programming. In addition to a library of over 20,000 movies and TV shows, Crackle also features originals like Chosen, StartUp, and The Oath.
- Freevee: Freevee, owned by Amazon and formerly known as IMDb TV, offers a wide variety of television shows and movies, all available for free to viewers. Part of Amazon's broader initiative to expand its advertising revenues through the creation of the Amazon Fire TV ecosystem, Freevee features licensed content as well as original programming like Jury Duty, Judy Justice, and Alex Rider.
- Pluto TV: Pluto TV, a Paramount Global company, offers a unique blend of television and digital channels, featuring more than 250 live channels and on-demand content. The channels are organized into categories, such as movies, TV shows, news, sports, kids, and lifestyle. Its user-friendly TV guide interface, resembling traditional TV layouts, facilitates easy navigation. Pluto TV originals include Pluto TV Presents: Murder on the Bayou, The Lost World, and The Film Vault.
- Roku Channel: The Roku Channel, available on any Roku device, offers a wide range of free content, including movies, TV shows, and live TV. The Roku Channel offers a diverse range of licensed programming, including linear channels from major networks such as ABC, NBC, CBS, and FOX, as well as specialized channels for genres like game shows, sci-fi, anime, and crime. Much like Pluto TV, the Roku Channel also features a TV guide, making it easier for viewers to find their favorite channels and shows. The platform's original content primarily consists of short, 10-minute programs, previously hosted on Quibi, acquired by Roku in 2021.
- Tubi TV: Tubi, a Fox Corporation company, is a free ad-supported streaming service offering a large library of movies and television series. The service provides a diverse selection of genres including action, comedy, drama, horror, mystery, and reality TV. Like other FAST providers looking to mimic the linear TV experience, the service also offers live TV along with a TV guide interface. Original programs include The Freak Brothers, The Last Drive-In with Joe Bob Briggs, and Murder House Flip.
- Xumo Play: Xumo Play, a Comcast-owned service, offers over 190 live TV channels of free content, as well as on-demand movies and TV shows. While the service primarily features older programming, it has begun to introduce exclusive original content, including titles from indie studio Magnolia Pictures. Notable Xumo originals include The Good Fight, The Resident, and Instinct.
Live Streaming Services
Live Streaming Services offer real-time broadcasting of television content over an internet connection, enabling viewers to enjoy their favorite shows, sporting events, and other programs as they are broadcast, similar to the traditional TV experience. These OTT services often provide the added benefit of accessing a variety of content without the need for a subscription from cable providers. Advertisers find these platforms appealing as they can connect with audiences who favor the flexibility of streaming while still maintaining the familiar live broadcast experience.
Let's delve into some of the prominent players in this sector:
- DirecTV Stream: DirecTV Stream, rebranded from AT&T TV when AT&T spun off the service into a separate company, is a streaming service that offers a blend of live TV, online streaming, and apps. It provides a cable-like experience with more than 65 channels, including sports, news, entertainment, and kids’ channels. DirecTV Stream offers two packages: the “Entertainment” option, which includes channels such as ESPN, TNT, and HGTV, and the “Choice” option, featuring Fox Sports, CNN, and Food Network.
- Fubo TV: Fubo TV started as a soccer streaming service and has evolved into a comprehensive live TV streaming provider focusing on sports content. It offers a mix of live television channels, including sports, news, and entertainment networks. Available in three packages (Starter, Pro, and Elite), Fubo TV offers a customizable approach to channel selection. This focus on sports content makes it a prime platform for advertisers aiming to reach sports enthusiasts with interactive and engaging advertising experiences.
- Philo: Initially founded to provide streaming TV services to Harvard students in 2010, Philo has blossomed into a significant player in the OTT streaming television sector, offering over 60 channels that feature a range of content including AMC, A&E, the Discovery Channel, Food Network, and Nickelodeon, among others. Starting at a competitive price of $25 per month, Philo stands as one of the most affordable live TV streaming services available. Its lower price point is due to the lack of popular sports, news, and local channels, making it a favorable option for cord-cutters seeking a wide variety of channels without a hefty price tag.
- Sling TV: Sling TV, a live TV streaming television service operated by Dish Network, offers a selection of major cable channels and facilitates both live and on-demand streaming. With its two packages (Sling Orange and Sling Blue), Sling TV positions itself as a cost-effective alternative to traditional cable television, providing a customizable channel lineup.
- YouTube TV: YouTube TV, developed by Google, offers live TV from over 85 networks, including news, sports, and entertainment channels. YouTube TV allows consumers to watch live TV as well as on-demand content from YouTube. As of 2023, YouTube TV is the exclusive distributor of NFL Sunday Ticket to consumers in the United States.
(For a full timeline of the rapid growth of CTV and the scale of each of the above platforms, please see our "What Marketers Need to Know About CTV and OTT in 2024" infographic.)
/// Benefits of CTV Advertising
CTV advertising offers numerous benefits that extend beyond simple reach and targetability. This platform is not only reshaping how viewers engage with ads but also revolutionizing the ease and efficiency of campaign management for advertisers. In this section, we outline the substantial benefits that establish CTV advertising as a transformative force in the industry.
Data-Driven Targeting
CTV advertising facilitates advanced audience targeting. Utilizing platforms like Connection Points, advertisers can create custom viewer segments based on various parameters such as demographics, viewing habits, and interests. This level of customization ensures that ads reach the most receptive audiences, optimizing the results of ad campaigns.
Incremental Reach
CTV advertising serves as a potent tool to extend the reach of linear TV advertising campaigns. By integrating CTV into their strategy, advertisers can capture the attention of viewers who have migrated from traditional TV platforms, thereby extending the reach and impact of their campaigns. This strategy ensures that the advertising message resonates across a broader spectrum of viewers, potentially increasing its effectiveness.
Premium Inventory
In contrast to online video (OLV) platforms where the content surrounding the ads can be user-generated or otherwise inappropriate for brands, CTV ads are primarily featured during high-quality content, akin to traditional TV ads. This ensures that ads are viewed in a premium, brand-safe environment, which can enhance the viewer's perception of the advertiser and potentially lead to higher engagement levels.
Measurable Results
One of the standout features of CTV advertising is its ability to provide measurable results. Advertisers can track a variety of metrics including impressions, clicks, and conversions, allowing for real-time adjustments and optimizations to enhance campaign performance.
Cost-Efficiency
While the cost per thousand impressions (CPM) for CTV can be comparable to high-reach networks such as HGTV or Fox News, its real advantage lies in frequency control. Unlike traditional TV, where a single media buy might bombard a user with repeated ads across various channels, CTV allows advertisers to cap the frequency of ads seen by individual users. This not only prevents ad fatigue but also optimizes the cost per unique viewer, facilitating savings that can be redirected to expanding reach.
Digital Integration
Another way in which CTV enhances cost-efficiency is through integration with other digital tactics like online video advertising or display ads across a variety of digital content. This integration allows advertisers to retarget consumers across different, more economical media channels after an initial CTV exposure. For instance, a viewer who first encounters an ad on Hulu can be re-engaged through a digital video ad while browsing a local news website, potentially at a lower CPM. This strategy not only offers cost-effective re-messaging options but also supports creative sequencing to build upon the initial narrative presented to the viewer.
Rich Media and Interactive Ads
CTV advertising platforms facilitate the creation of rich media and interactive ads, which can engage viewers more effectively than standard TV ads. These ads can include interactive elements such as clickable links, forms, and even shoppable features, providing a dynamic and immersive advertising experience.
Flexible Campaign Management
CTV advertising platforms provide flexible campaign management tools, allowing advertisers to make real-time adjustments based on performance data. This flexibility allows for ongoing optimization, ensuring the highest possible return on investment (ROI).
Enhanced Viewer Experience
With CTV advertising, viewers can enjoy a more personalized and engaging advertising experience. The targeted nature of CTV ads means that viewers are presented with ads that are more relevant to their interests, potentially enhancing viewer satisfaction and engagement with the ads.
Programmatic Efficiencies
Programmatic platforms significantly amplify the efficiencies of CTV advertising, both from a performance and operational standpoint. By automating the ad buying and selling process through real-time bidding technology, these platforms facilitate the delivery of ads to the right audience at the optimal moment, thus bypassing the manual intervention commonly found in traditional advertising methods. This streamlined approach not only optimizes the operational workflow but also enhances the overall effectiveness and performance of ad campaigns.
Growing Audience
As increasing numbers of viewers migrate from traditional TV to streaming platforms, CTV advertising offers access to a growing and engaged audience. This shift in viewing habits presents a significant opportunity for advertisers to connect with a younger, tech-savvy audience who are increasingly consuming CTV content.
Strategies and Best Practices
/// Target Audience Segmentation
As noted earlier, one key advantage of CTV advertising is the precise segmentation of target audiences. Unlike traditional TV where ads are broadcast to broad demographics, CTV purchased utilizing audience platforms like Connection Points allows advertisers to focus on a specific audience segment. This precise targeting means that brands can tailor their messages to reach the right people at the right time, maximizing their ad spend and increasing engagement rates.
Some of the more standard segmentation options include:
- Demographic: This strategy involves categorizing the audience based on fundamental characteristics such as age, gender, education, and income levels. For instance, a luxury goods brand might target individuals in higher income brackets, while a tutoring platform might focus on specific age groups or education levels.
- Geographic: This strategy involves tailoring campaigns to target viewers in specific locations or regions. It could be as broad as targeting viewers in a particular country or as narrow as focusing on a specific city or neighborhood. This segmentation is particularly beneficial for local businesses or when promoting region-specific products or events.
- Behavioral: This approach focuses on categorizing viewers based on their viewing habits, preferences, and past interactions with ads. It involves analyzing data such as the types of shows they watch, the time they usually engage with content, and their response to previous advertisements. For instance, viewers who frequently watch cooking shows might be targeted with ads for kitchen appliances or other gourmet food products.
- Psychographic: This approach involves segmenting the audience based on more intangible factors such as lifestyle, personality traits, and values. For instance, a brand promoting eco-friendly products might target individuals who lead a sustainable lifestyle and value environmental conservation. Similarly, a travel company might focus on individuals with adventurous personalities, offering them ads for exciting travel packages.
- Lookalike: This strategy involves identifying and targeting individuals who share similar characteristics and behaviors with a brand's existing customer base, thereby making them potentially more likely to be interested in the product or service and convert. For example, by implementing a Connection Points audience tracking pixel on a purchase success page, an ecommerce advertiser would be able to build a profile of consumers that match the attributes of previous converters, ensuring that their prospecting efforts reach the most qualified audience.
In addition to the above, advanced segmentation techniques allow for a more nuanced approach to reaching hypertargeted audiences. These include:
- First-Party Data: Utilize advertisers’ own accumulated data to re-engage customers whose subscriptions have lapsed, offering them incentives or highlighting new features to win them back. This data can also facilitate cross-selling strategies by targeting existing customers with ads for complementary products or services, thereby enhancing customer lifetime value. In addition, advertisers’ own first-party data can also be used to influence Lookalike models, enabling advertisers to customize their Lookalike audiences based on segmented CRM lists of their most valuable customers.
- Proximity Targeting (Geo-Fence): Proximity targeting, also known as geo-fencing, takes geographic segmentation a step further by focusing on the real-world behaviors of consumers. It's not just about where consumers are located, but understanding and targeting them based on the places they visit frequently, such as specific retail stores, fitness centers, or events. This strategy might involve sending special offers to consumers who frequently visit related retail spaces or crafting campaigns that resonate with the lifestyle and preferences reflected by their visited locations. By analyzing this data, advertisers can craft highly contextual and relevant campaigns that resonate with consumers on a deeper level.
- Campaign Extension: The campaign extension strategy in CTV advertising is about creating a cohesive advertising narrative that spans across various platforms, both digital and traditional. It involves extending the frequency of ad exposures based on a consumer's interaction with various advertising mediums. For instance, if a consumer has been exposed to a brand's message through linear ads or direct mail, CTV ad campaigns can be designed to build upon that narrative, offering more detailed information or emphasizing different facets of the product or service.
/// Personalization and Customization
One notable benefit of CTV advertising is the capability to tailor ad content to viewer preferences and consumer behavior. By collecting important metrics such as viewing history, device usage patterns, and even geographical location, advertisers can craft messages that resonate with each viewer's interests and needs. This level of personalization not only increases the likelihood of engagement but also enhances the overall user experience.
Following are some tips on how to harness the power of personalization and customization in your CTV advertising campaigns.
Dynamic Content
Dynamic content is fundamental to personalization. This strategy involves utilizing content that adapts and changes based on viewer data, creating a more tailored and engaging viewing experience. For instance, an ad for a clothing brand might highlight alternative styles or outfits based on the viewer's previous browsing or purchase history. This not only makes the ad more relevant to the viewer but also increases the likelihood of engagement and conversion, as the content aligns more closely with the viewer's preferences and interests.
Interactive Ads
Interactive ads take viewer engagement to a new level by encouraging active participation. These ads might feature interactive elements such as polls, quizzes, or clickable links that lead to more information or exclusive offers. For instance, a car advertisement might allow viewers to virtually customize the car's features, giving them a sense of ownership and personal connection with the product. By fostering active engagement, interactive ads can create a more immersive and memorable advertising experience, enhancing brand recall and affinity.
Customized Messaging
Creating messages that align with individual viewer preferences and needs is a crucial aspect of customization. This strategy involves creating ad content that speaks directly to the viewer, addressing their specific needs, desires, or pain points. For instance, a health and wellness brand might craft different messages targeting various age groups, addressing the unique health concerns of each group. This approach fosters a more personal connection between the brand and the viewer, as the messages feel more tailored and relevant, enhancing the overall impact of the campaign.
/// Cross-Platform Advertising
Consumers access content across a myriad of platforms, ranging from traditional television sets to various digital mediums like smartphones, tablets, and laptops. This fragmentation presents both a challenge and an opportunity for advertisers. The challenge lies in crafting cohesive campaigns that resonate across diverse platforms, and the opportunity is in the potential to reach consumers at multiple touchpoints, enhancing the overall impact and reach of advertising campaigns. Here, we explore the nuances of cross-platform advertising in the context of CTV.
Unified Messaging
One of the fundamental principles of cross-platform advertising is maintaining a unified message across all platforms. This approach ensures a consistent core message, fostering stronger brand recall and recognition, regardless of whether consumers encounter your ad on CTV, social media, or linear TV.
Sequential Messaging
This strategy involves crafting campaigns where messages are delivered sequentially across different platforms, creating a narrative that builds upon itself. For instance, a viewer might first see a teaser ad on social media, followed by a more detailed ad on a CTV platform, creating a cohesive and engaging narrative that fosters deeper engagement.
Audience Segmentation and Targeting
Cross-platform advertising allows advertisers to segment and target audiences more effectively, leveraging data insights from various platforms to create more nuanced and targeted campaigns. This might involve using data from social media platforms to inform CTV advertising strategies, creating a more holistic and effective approach to audience targeting.
Analytics and Measurement
To gauge the effectiveness of cross-platform campaigns, it’s essential to implement robust analytics and real-time measurement tools like Abacus by Media Culture®. These tools can help advertisers track campaign performance across different platforms, providing insights into what's working and what's not, and facilitating more informed decision-making and optimization. For instance, advertisers should analyze the customer journey to understand the cumulative impact of multiple exposures across various channels and platforms, as consumers are unlikely to convert after a single advertising touchpoint. By doing so, advertisers can discern the contribution of each touchpoint in the conversion pathway, allowing for a more comprehensive view of overall performance and a clearer roadmap for future strategy and budget allocation.
Cost-Efficiency
By leveraging the strengths of different platforms and creating synergies between them, cross-platform advertising can also be more cost-efficient. It allows advertisers to optimize their ad spend and more effectively reach their target audience across multiple touchpoints by better controlling the frequency and limiting overlap across platforms.
/// Measuring Advertising Effectiveness
As with all marketing channels, the ability to accurately measure the effectiveness of CTV advertising campaigns is paramount. It not only helps in optimizing current strategies but also in planning future campaigns more effectively. Here, we delve into some critical aspects of measuring advertising effectiveness.
Cross-Device Measurement
Cross-device measurement serves as a cornerstone in understanding the consumer journey across a multitude of devices such as smartphones, tablets, and connected TVs. This approach allows advertisers to distinguish between new and returning users across devices, paving the way for more personalized and cohesive advertising narratives. Moreover, it enables the judicious allocation of budgets by analyzing the consumer journey, focusing on those touchpoints that yield the highest engagement and conversions, thereby optimizing ad spending.
Linear Audience Overlap
For advertisers with dual CTV and traditional TV campaigns, measuring the audience overlap between the two is a vital strategy. It helps advertisers understand how CTV campaigns can complement and even enhance traditional TV campaigns. By identifying opportunities where both mediums can work together, advertisers can create a more cohesive and impactful advertising strategy. Insights from audience overlap analysis allow for more targeted advertising strategies, effectively reaching viewers who are active across both platforms. Additionally, this analysis assists in making informed decisions on resource allocation, optimizing the distribution of advertising budgets between CTV and traditional TV.
Brand Lift Studies
Brand lift studies are instrumental in assessing the influence of advertising campaigns on vital metrics such as brand awareness, consideration, and purchase intent. These studies can reveal nuanced perspectives on how advertising campaigns are shaping consumer perceptions and behaviors. Particularly beneficial for advertisers aiming to evaluate the long-term impact of their campaigns beyond immediate conversions, these studies shed light into how campaigns resonate with the target demographic.
Short- vs. Long-Term Contribution
In CTV advertising, striking a balance between short-term gains and long-term brand building is imperative. While short-term metrics focus on immediate responses such as click-through rates and initial sales spikes, the long-term contribution encompasses the gradual build-up of brand equity, loyalty, and customer lifetime value. Utilizing platforms like Abacus by Media Culture®, advertisers can adeptly navigate this balance, developing campaigns that not only yield immediate results but also foster sustained growth and brand affinity. This dual focus facilitates a more nuanced and comprehensive approach to CTV advertising by ensuring campaigns are holistically evaluated, considering both their immediate impact as well as their enduring influence on consumers.
For additional insight on CTV measurement, please read Measuring Success: Tools and Metrics for CTV Advertising.
Current Trends and Challenges
/// Latest Trends in CTV Advertising
The Connected TV (CTV) advertising landscape is undergoing a paradigm shift towards a more nuanced blend of data-driven decision-making and flexible buying options, allowing advertisers to optimize their campaigns with greater precision. In addition, advertisers are looking to further integrate linear TV ads and CTV strategies, enabling advertisers to reach wide audiences while also leveraging the targeted capabilities of digital platforms.
Evolving Dynamics of the CTV Marketplace
Traditionally, a substantial portion, upwards of 70-80%, of commercial inventory is sold during what are referred to as “upfronts”, the advertising industry practice of purchasing television advertising time several months before the new television season begins. This method has been a preferred buying strategy for brand advertisers seeking guaranteed audience reach, allowing them to secure prime advertising slots at potentially lower rates compared to the scatter market rates.
Despite the apparent cost-effectiveness of upfronts, the “scatter” market, whereby advertisers purchase inventory on an as-need basis closer to program airings, holds its appeal, especially for direct-to-consumer advertisers who prioritize the immediate ROI of their media buys. These advertisers value the flexibility that the scatter market offers, allowing them to adjust their strategies based on real-time performance data. This performance-driven approach prioritizes campaign optimization rather than securing audience guarantees.
Whereas the majority of CTV inventory is often sold through the scatter market, the dynamics of the CTV marketplace are changing. As viewers increasingly gravitate towards on-demand content streaming, the traditional model of upfront buying is undergoing a transformation. A growing number of advertisers are now prioritizing CTV or a blend of CTV and linear TV in their upfront TV-buying strategies. This shift not only helps them avoid potential rate hikes in the scatter market but also ensures access to their preferred inventory.
The Demand for Live Sports
The COVID-19 pandemic of 2020 catalyzed a significant shift in consumption habits among U.S. households, with a notable pivot towards streaming platforms. While the relaxation of stay-at-home mandates has moderated some of those trends, consumers increasingly expect their content to be available on streaming platforms.
Sporting events are no exception. Acknowledging this shift, advertisers are increasingly exploring live sports advertising opportunities on CTV platforms, as evidenced by significant deals such as Amazon Prime Video acquiring the rights to NFL’s Thursday Night Football, Apple’s deals to carry Major League Baseball and Major League Soccer games on Apple TV+, and YouTube TV becoming the exclusive U.S. distributor of NFL Sunday Ticket. CTV is gradually gaining access to the inventory and audiences that many advertisers seek, challenging the long-standing dominance of pay TV in sports broadcasting.
Expanding Opportunities in CTV Advertising
As increasing numbers of consumers move from linear to CTV, major TV networks are releasing more ad inventory through programmatic channels to cater to the growing demand. Opportunities for advertising across leading TV broadcasters have seen a significant increase recently, indicating a trend towards a more balanced approach in CTV advertising.
/// Challenges Faced by Marketers
As the CTV marketplace continues to evolve, advertisers find themselves navigating a complex landscape fraught with new challenges. The rapid shift from traditional TV platforms to modern streaming services has brought forth a series of hurdles that marketers must overcome to effectively reach their target audiences. From grappling with fragmented data and escalating costs to mitigating ad fraud and adapting to changing buying processes, advertisers are tasked with mastering a dynamic and multifaceted environment. Following are some of the prominent challenges they currently face.
Transparency and Flexibility
Marketers are pushing for enhancements in the TV and streaming upfront buying processes. They are looking for greater transparency and increased flexibility in budget allocation across linear and streaming TV. Furthermore, they are keen to leverage data more effectively for campaign execution and optimization, aiming to combine the reliability of traditional methods with a data-driven approach, which allows for agile adjustments based on real-time data and performance insights.
Fragmented Viewing and Data Silos
The CTV landscape is marked by fragmented viewing experiences across a range of platforms, which poses a challenge for advertisers in consolidating data and achieving a unified view of their audience. This fragmentation often leads to data silos, where valuable information is confined to specific platforms, hindering comprehensive analysis and optimization efforts.
Mitigating Ad Fraud
According to DoubleVerify, the CTV sector saw a notable increase in ad fraud in 2022. Marketers are now tasked with implementing strategies to detect and prevent fraudulent activities, thereby maintaining the integrity and effectiveness of their advertising campaigns.
Measurement Challenges
Advertisers in the CTV ad space are facing difficulties in accurately measuring the performance and reach of their campaigns due to the lack of standardized measurement tools and methodologies. This issue adds complexity to the process of evaluating the true impact of their CTV advertising initiatives.
Reselling Issues
The practice of reselling ad inventory has become more common in the CTV marketplace, often leading to a lack of transparency and sometimes causing advertisers to inadvertently purchase the same inventory multiple times, escalating costs and diminishing campaign effectiveness.
Premium Pricing
The growing demand for CTV advertising slots has resulted in increased prices, with advertisers sometimes facing substantial costs for premium ad spaces. This rise in costs can potentially restrict the ability of smaller businesses or niche online stores to compete effectively in the CTV arena, posing a challenge for those with limited budgets.
/// Strategies to Overcome Challenges
The good news is that these challenges are not without their potential remedies. In the face of an evolving marketplace, marketers are proactively adopting strategies to stay ahead and maximize their advertising efficacy. Here are some proactive strategies emerging in response to current trends and challenges.
Embrace Programmatic CTV
Marketers are gradually moving towards programmatic CTV, which allows for optimizations and budget adjustments in real time, avoiding the lengthy negotiations associated with adjusting linear commitments. This approach offers more flexibility and agility, enabling marketers to shift gears based on delivery data and performance.
Implement Data-Driven Insights
Marketers are leveraging the power of data to gain deeper insights into their audience and fine-tune their campaigns. By utilizing platforms like Connection Points, they can effectively bridge various data sources, offering a comprehensive view of the consumer journey and fostering more insightful and informed decision-making processes.
Adopt Unified ID Solutions
To counter the challenges posed by fragmented viewing and data silos, marketers are increasingly adopting unified ID solutions. These solutions serve as a centralized system that assigns a unique identifier to users across different platforms and devices, facilitating a more cohesive and targeted advertising strategy. By leveraging unified ID solutions, advertisers can track user interactions across various platforms more accurately, thus creating a seamless and personalized consumer experience.
Utilize Ad Verification Tools
To safeguard against ad fraud, marketers are increasingly utilizing secure platforms and ad verification tools like DoubleVerify to maintain a vigilant approach in monitoring campaigns and ensuring the authenticity of advertising engagements.
Adopt Unified Measurement Solutions
Addressing measurement challenges head-on, advertisers are adopting unified measurement solutions like Abacus by Media Culture®. This innovative tool facilitates a holistic view of campaign impacts across diverse platforms and devices, leveraging advanced analytics to provide insights into both short- and long-term contribution, thereby ensuring that ads resonate with the right audience and achieve the desired ROI.
Forge Partnerships with Trusted Entities
To prevent reselling issues, advertisers are forming alliances with reputable data providers, ad networks, demand-side platforms (DSPs), and supply-side platforms (SSPs), crafting clear contracts and maintaining a proactive stance in monitoring campaigns for any signs of reselling and ensuring a smooth advertising process.
Conclusion
/// The Future of CTV Advertising
The CTV advertising landscape is undergoing significant transformations, driven by changing consumer behaviors and technological advancements. The marketplace is evolving to offer advertisers a more diversified range of opportunities, with major TV networks increasingly utilizing programmatic channels to release a substantial volume of ad inventory. This shift indicates a trend towards a more integrated approach in CTV advertising, allowing advertisers to utilize both traditional and modern advertising strategies to meet the growing demand in this sector by merging the strengths of both realms.
Moreover, the recent surge in live sports' popularity on streaming platforms presents a promising avenue for CTV advertising. This development is disrupting the previous monopoly of pay TV on sports rights, providing advertisers with a fresh and engaging platform to connect with their audience.
Additionally, the introduction of more affordable ad-supported tiers by major streaming companies like Disney+ and Netflix is expected to broaden the ad inventory and reach of AVOD platforms, offering greater value for advertisers.
As CTV advertising inventory expands and the industry adopts a more data-centric approach, it sets the stage for innovation and collaboration, nurturing a vibrant and responsive CTV advertising ecosystem that meets the needs of both advertisers and consumers.
/// Harnessing the Future of Television
In a landscape where television is not just a living room fixture but a dynamically evolving platform, businesses that align with CTV advertising today are paving the way for unparalleled engagement and success in the future.
Contact us today to leverage the potential of CTV, foster genuine engagement, and explore new avenues of growth in the connected television space.
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