As more Americans “cut the cord” on traditional & cable TV services, Connected TV users have formed a new and powerful market for advertisers. Learn more about it here.
How Connected TV Advertising Works for Advertisers
Connected TV (“CTV”) is simply explained as the streaming of video content through an internet-connected television. However, advertising on Connected TV can get complicated. For starters, there are numerous ways to buy the ad space that gets you in front of the same person in the same piece of video content.
- You could partner with the network or publisher that directly produces and streams the content (like CBS, NBC, Discovery, etc.)
- You could partner with the service provider that offers access to that streamed content, which in many cases is not the network or publisher themselves (examples include services like Sling, YouTube, DirecTV, etc.)
- You could partner with the technology company that powers the connection of that content to the television, which is either something that plugs into the TV or the TV manufacturer themselves (Roku, Amazon Fire, Apple TV, LG, VIZIO, etc.)
CTV versus OTT
Connected TV is a subset of OTT, which stands for Over-the-Top television. That name caught on because it was content that was delivered “over-the-top” of a cable subscription. OTT is more broadly the streaming of long-form content (i.e. TV shows and movies) across any internet-connected devices. OTT includes mobile, tablet, and desktop viewing, whereas CTV is just streaming to the connected TV device.
CTV versus Traditional TV
Connected TV is almost identical to Traditional TV. The differences are really all about the viewer’s experience, and how they access that experience. People were long frustrated by rising cable and satellite TV bills and a dizzying proliferation of networks that they didn’t watch but had to pay for as part of those bundled services. At the same time, the on-demand world was taking off. People wanted to watch the shows they wanted to watch at the times and places they wanted to watch them. Technology and capital caught up to those force, adding to the rise of CTV.
CTV brings a different way to connect to the TV and movie content people want, at the time they want to watch it.
Currently, about 30% of all TV viewership is Streaming viewership (Nielsen, February 2022), which includes Connected TV. CTV already offers strong reach across key demographics, with the ability to reach 71% of adults 25-54, and even 66% of adults 35-64.
Even more importantly, 44% of U.S. Households have cut the cord on Traditional TV services (see Nielsen article here). Those cord-cutters can’t be reached at all with Traditional TV. The cord-cutting trend is even more pronounced with younger generations, which means this is a trend that is here to stay.
Advertising Metrics on Connected TV
There are great metrics available for CTV advertisers. “Media” metrics include the basics, like spend, impressions served, and completed views. In CTV media, the vast majority of video views end up being completed views (98%+ in internal benchmarks), which makes sense given the longer-form viewing environment. I.e. people won’t bail on their TV show just to avoid seeing a :15 or :30 ad. That means that the cost per completed view for CTV is very similar to the cost per view, which is very different from advertising in online video environments with shorter-form content.
CTV also enables more advanced attribution and business metric tracking. Many CTV viewers have tracking enabled on their devices that allows for that person to be connected to other devices in their household, like their desktop computers, tablets, and mobile phones. In addition, many CTV viewers opt-in to subscriptions that use their email addresses or phone numbers. Each of these connection points offer opportunities to track someone exposed to a CTV ad all the way through to a store or website visit and purchase.
Audience Targeting on CTV
Targeting very specific audiences is another powerful capability enabled through Connected TV that was previously impossible through Traditional TV. CTV devices are unique to a person and/or household, versus being “aired” to all the people in an entire market at the same time. Connected TV is an “addressable” media, which is the term that means it can be targeted down to a person or household level. Those targeting options include:
- First-Party Data. Thanks to the connection points noted above, along with IP address (which is the unique digital address that a device uses to connect to the internet), CTV advertisers can use their own information collected on their customers, website visitors, and mobile app users to power their targeting options. 1st party data uses include things like retargeting recent website or store visitors, upselling recent buyers, or even using that customer data to find “look alike” audiences that resemble current customers but have not yet purchased from the brand.
- Third-Party Data. Third-party data is collected by and rented from massive data and technology companies like Oracle, Experian, Acxiom, etc. They offer bundled audiences that are easily accessed in the automated ad buying marketplace of connected TV. Examples of 3rd party data uses might include audience sets like New Movers, Pet Owners, Recently Engaged, or even buyers or visitors of competitive brands.
Connected TV is the Future
TV is not dead, nor will it be. It is just different, and that difference is on-demand, internet-enabled connectivity. Quality TV networks and publishers are doing just fine. People and advertisers are also both in great shape for the Connected TV future. People have the choices they wanted all along, while advertisers benefit from better audience targeting and media accountability.
Even as the world begins to grapple with more immersive experiences (virtual reality, augmented reality, metaverse, etc.), CTV looks future-proof. Indeed, the concepts of on-demand, internet-based connectivity by people to high-quality content provided by well-funded entertainment companies is a solid combination for continued growth and significant importance. At some point, Connected TV will become Immersive TV, but the mechanics that have been built and many of the dominant players today will likely remain the same.
Now is a great time to get the most from this rapidly expanding media channel!
