As the digital advertising landscape continues to evolve, a new player has emerged on the scene – CTV advertising. But what is CTV, and why are many hailing it as the future of digital advertising?
This article explains everything you need to know, whether you are an advertiser or a curious stakeholder, including tips and strategies we’ve learned running CTV ads for our clients, so you can learn from our experience.
What is CTV Advertising?
CTV advertising is short for Connected TV advertising. It is a highly effective form of digital marketing that targets audiences on connected TV devices. These devices include smart TVs, streaming media players that run on smart TVs, such as Firestick, Roku, and Apple TV. It provides advertisers with an opportunity to reach engaged viewers from the comfort of their living rooms.
One of its key aspects is its utilization of programmatic buying techniques. This means platforms deliver ads to specific audiences based on factors like demographics, interests, and online behavior. This targeting maximizes the relevance of the message and increases the chances of conversions.
Another significant advantage is its ability to leverage digital data. You can track and measure ad performance in real-time and gain valuable insights into viewer engagement, ad completion rates, and overall campaign effectiveness.
This data-driven approach allows for continuous optimization, enabling you to allocate your advertising budget wisely and receive a higher return on your investment.
In a world where traditional TV viewership is gradually shifting towards digital platforms, connected TV advertising presents a powerful and innovative way for you to connect with your target audiences in a personalized and measurable manner.
What is the Difference Between OTT and CTV?
Many use OTT (Over-The-Top) and CTV interchangeably, but they refer to distinct aspects of streaming video consumption.
OTT encompasses any content delivered over the internet, bypassing traditional cable or satellite providers. It includes streaming services like Netflix, Hulu, and YouTube, and is accessible on various devices such as smartphones, tablets, and smart TVs.
CTV refers to internet-connected TVs or devices that allow viewers to access OTT content on their big screens.
Platforms include smart TVs, streaming media players (e.g., Roku, Apple TV), and gaming consoles. These platforms provide a more immersive and TV-like experience for OTT content.
Connected TV vs Linear TV
Connected TV and linear TV are two different ways of consuming television content. They differ primarily in how networks deliver content and how viewers access content.
1. Content Delivery:
- Linear TV: In linear TV, networks broadcast content over the airwaves or through cable/satellite providers at scheduled times. Viewers watch the content during live broadcast, and they have limited control over what is playing at any given moment.
- CTV: Providers stream content over the internet to internet-connected television devices. Viewers have the freedom to choose what they want to watch from various apps and platforms. Additionally, they have the flexibility to watch at their own convenience.
2. Scheduling and Timing:
- Linear TV: Content on linear TV follows a fixed schedule. Viewers must tune in at specific times to catch their favorite shows or events.
- CTV: Viewers have the flexibility to watch content whenever they want. They can start, pause, rewind, or fast-forward through content as they desire.
3. Content Selection:
- Linear TV: Viewers have a limited selection of channels and programs and must choose from what’s available on the channels they have access to.
- CTV: Viewers have a broader range of content choices from various streaming platforms, including movies, TV shows, documentaries, live events, and more. They can also subscribe to specific streaming services based on their preferences.
4. Device and Platform:
- Linear TV: Viewers need a traditional TV, cable/satellite box, and possibly an antenna to watch linear TV.
- CTV: People can enjoy shows on internet-connected devices, such as smart TVs, streaming media players, and gaming consoles through apps and streaming services.
5. Advertising and Targeting:
- Linear TV: Advertisers purchase ad slots during scheduled broadcasts, often with limited or no targeting options.
- CTV: Platforms allow you to reach specific audiences based on demographics, interests, and viewing behaviors.
Which is Better for Advertising? Connected TV, OTT, or Linear TV?
The effectiveness of advertising on Connected TV, Over-the-Top (OTT), or Linear TV depends on various factors. These factors include your target audience, advertising goals, budget, and the type of message you want to convey. Each platform has its own advantages and considerations:
- Advantages: As mentioned, connected TV offers precise targeting capabilities, allowing you to reach specific demographics, interests, and behaviors on the big screen. Advertisers can measure engagement and track results more accurately. It’s effective for reaching cord-cutters and younger audiences who prefer streaming.
- Considerations: Advertising can be more expensive than traditional TV as competition for ad space can be high. Ad fatigue and ad-blocking could impact viewer engagement.
- Advantages: OTT is the overarching category while connected TV is a subset. OTT includes streaming services that offer content over the internet via CTV, mobile devices, tablets, desktops, and other devices. It provides targeted advertising, data insights, and the ability to reach viewers who’ve shifted away from traditional TV.
- Considerations: OTT platforms can encompass smaller screens, like mobile devices. Thus, if you only want ads to show on TV screens, utilizing CTV alone would be a better approach.
- Advantages: Linear TV still has a wide audience reach, especially for live events and popular TV shows. It’s a familiar and trusted advertising platform. Local businesses can benefit from reaching local audiences through traditional TV channels.
- Considerations: Linear TV ads can be costly, especially during prime-time slots. Targeting options are generally broader, and the effectiveness of ads may be harder to measure accurately. Additionally, Linear TV inventory is steadily decreasing as consumer behavior continues to shift towards streaming.
Ultimately, the choice between CTV, OTT, and Linear TV depends on your advertising objectives.
How Fast is CTV Advertising Growing?
Connected TV advertising is growing at a rapid pace. According to eMarketer, ad spend hit $20.69 billion in 2022. That is expected to increase to $29.29 billion in 2024 and over $40 billion (about $120 per person in the U.S.) by 2027!
Additionally, advertisers were able to reach approximately 92% of U.S. households in 2022. As more viewers cut the cord and turn to streaming platforms, advertisers are recognizing the value of CTV advertising in reaching their target audience.
The ability to deliver targeted ads to a large and engaged audience, combined with the benefits of programmatic buying and real-time ad performance measurement, makes it an attractive option for digital marketers.
Benefits of CTV Advertising
There are numerous benefits of connected TV advertising that make it an indispensable tool for digital marketers. Here are the top benefits:
- Precise Targeting: Connected TV allows you to target specific demographics, interests, behaviors, and even geographic locations. This targeting helps ensure that ads reach the right audience with relevant content.
- High Engagement: Viewers are often more engaged compared to traditional TV audiences, as they actively choose content to watch. This leads to higher ad recall and engagement rates.
- Measurable Results: You can track metrics such as impressions, click-through rates, conversions, and more, providing real-time insights into your campaign performance.
- Cost Efficiency: Advertising can be cost-effective, because you are reaching a very targeted audience for your ad spend and it can come with options for various budget levels.
- Interactive Formats: Interactive ads, such as shoppable ads or interactive videos, provide viewers with engaging and immersive experiences, increasing brand interaction.
- Cross-Device Reach: Through household extension or impression retargeting capabilities, CTV vendors can often reach audiences on other devices, including computers, tablets, and smartphones after CTV ad exposure
- Ad-Friendly Environment: Unlike some digital platforms where ad placement can be unpredictable, CTV provides a controlled and brand-safe environment for advertising.
- Reduced Ad Clutter: Platforms often have fewer ads compared to traditional TV, allowing for better ad visibility and reduced ad clutter.
- Reaching Cord-Cutters: As more viewers cut the cord and move away from traditional cable, CTV offers a direct way to connect with these audiences.
- Combining TV and Digital: Connected TV bridges the gap between TV and digital advertising, providing the impact of TV with the targeting and measurement benefits of digital.
Challenges of CTV Advertising
Connected TV advertising faces several challenges, including:
1. Limited ad inventory: CTV advertising is still a burgeoning technology. As a result, there currently is not as much scaling potential as there is with other channels like paid social and display ads.
2. Higher CPMs: CTV advertising often comes with higher costs per thousand impressions (CPMs) compared to other digital ad forms. You need to be prepared for potentially higher expenses when running these campaigns but reaching your audience on the big screen in a 100% share-of-voice environment has its advantages.
These challenges highlight the need for advertisers to carefully plan and strategize their advertising campaigns, keeping in mind the limitations and complexities of this emerging advertising medium.
How do CTV platforms help marketers?
CTV platforms offer invaluable assistance to marketers in achieving their advertising goals. Firstly, they grant access to a vast and engaged audience. This allows you to reach viewers who have shifted from traditional TV to streaming services.
Secondly, these platforms provide advanced targeting capabilities so you can deliver ads to specific demographics, interests, and behaviors. This targeting ensures better audience relevance. Thirdly, the use of programmatic buying on these platforms streamlines the ad placement process, optimizing ad spend and efficiency.
Additionally, CTV platforms offer real-time data and analytics, empowering you to measure performance, make data-driven decisions, and refine their campaigns for maximum impact. Overall, these platforms revolutionize digital marketing by offering precision, efficiency, and measurable results.
What is the best DSP for Connected TV/OTT?
Determining the absolute “best” Demand-Side Platform (DSP) for Connected TV and Over-The-Top advertising is subjective. Different advertisers have varying needs and preferences. However, several DSPs have gained prominence for their CTV/OTT capabilities and features.
One of the leading DSPs for CTV/OTT that Division-D uses the most is The Trade Desk. It is renowned for its robust targeting options, real-time bidding capabilities, and extensive access to premium CTV/OTT inventory. The platform offers sophisticated audience segmentation, allowing advertisers to reach their target demographics effectively.
Another prominent DSP is Amazon. Amazon’s inventory of audio, display, and video and access to Amazon’s proprietary first-party data make it an indispensable DSP for marketers and business owners.
Ultimately, the best DSP for CTV/OTT depends on your specific objectives, budget, and desired level of sophistication. We recommend you evaluate each DSP’s strengths, reach, and compatibility with your advertising strategy to make an informed decision.
How to Create a CTV Campaign
Creating a CTV ad campaign involves several steps to ensure its success. Here are helpful tips to help you begin the process.
Reach out here if you’d like Division-D to help with this process.
- Define your objectives: Begin by setting clear and measurable goals for your CTV ad campaign. Whether it’s increasing brand awareness, driving website traffic, generating leads, or boosting sales, knowing your objectives will guide your campaign strategy.
- Identify your target audience: Understand your target audience’s demographics, interests, and viewing behaviors on CTV platforms. This data will help you tailor your ad content and placement to reach the right viewers effectively.
- Choose the right Connected TV platform: Research and select the most suitable CTV platforms and streaming services that align with your target audience. Popular choices include Roku, Hulu, Amazon Fire TV, Max and Peacock.
- Create engaging ad content: Develop compelling and relevant video ad content that resonates with your target audience. Keep the message clear, concise, and visually appealing, considering that connected TV ads often have shorter time slots than traditional TV commercials.
- Identify a CTV Partner: Selecting the right CTV vendor or publisher is a vital part of a successful strategy. You’ll need to determine if you’ll run through a managed-service or self-serve platform to execute your strategy.
- Monitor and optimize: Regularly analyzing and optimizing toward relevant metrics like reach, completion rate, and conversions across variables like creative, streaming platform, daypart, audience, etc. is important to ensuring your campaign objectives are met. If you’re working with a managed-service partner, they’ll handle this data analysis and optimization on your behalf.
- A/B test: Conduct A/B testing on different ad creatives, targeting options, and ad formats to identify which elements drive the best results. Continuously iterate and improve your CTV campaign based on these insights.
- Track conversions: Implement tracking mechanisms to measure the impact of your connected TV ad campaign based on your business objectives. By leveraging conversion pixels, you can measure and optimize desired website actions after ad exposure.
How to Segment Your CTV Audience
Connected TV platforms offer a variety of targeting options to help you reach your desired audiences effectively. Some of the most common targeting options for CTV advertising include:
- Demographic Targeting: You can target viewers based on demographic characteristics such as age, gender, income, education level, language, and household composition.
- Geographic Targeting: Connected TV allows you to focus on specific geographic regions, cities, zip codes, or even radius-based targeting to reach local audiences.
- Behavioral Targeting: This involves targeting viewers based on their online behaviors and interactions, including browsing history, app usage, and content consumption.
- Interest-Based Targeting: You can target viewers with specific interests, hobbies, and preferences, leveraging data collected from user interactions.
- Contextual Targeting: With contextual targeting, you can have your ads displayed on specific types of content or channels, ensuring relevancy and alignment with the viewer’s current interests.
- Sequential Messaging: Implement a sequential messaging strategy to retarget CTV ad viewers with subsequent ads across CTV or other channels to guide them down the marketing funnel and create a cohesive campaign.
- First-Party Data: Harness the power of first-party data to personalize your CTV advertising, tailoring content to your existing customer base for more effective engagement and retention strategies.
- Retargeting: Re-engage viewers who have previously visited your website, reinforcing your brand message and encouraging conversions.
- Custom Targeting: Create highly specific audience segments by combining various targeting criteria to meet your unique advertising goals and reach a niche audience effectively.
How to Measure CTV Advertising Campaign Effectiveness
Effective CTV measurement is crucial for marketers to understand the impact of their efforts and make data-driven decisions for future campaigns. Several key metrics and methods can be employed to gauge effectiveness:
- Reach and Frequency: Determine the number of unique viewers (reach) and how frequently they were exposed to the ad (frequency). This allows you to understand the overall audience saturation and effectiveness of your campaign.
- Brand Lift: Measure the impact of an ad campaign by surveying two groups – those exposed to the CTV ad and a control group not exposed. This analysis lets you measure changes in brand awareness, consideration, ad recall, and purchase intent.
- Website Traffic and Conversions: Monitor website analytics to see if there was an increase in traffic and conversions during the campaign period.
- Call Tracking: Implement unique phone numbers in the ad to track the number of calls generated.
- Completion rate and CPCV: Completion rate is the amount of your ad the viewers watched (completed) while CPCV is the average price you pay for each completed view.
Combining multiple metrics and methods provides a comprehensive view of CTV advertising campaign effectiveness. Regularly analyzing these data points allows marketers to optimize future campaigns, allocate budgets more effectively, and achieve better results.
CTV Acronyms to understand
As connected TV ads continue to evolve, understanding key CTV acronyms is essential for you to navigate this dynamic space effectively. Here are the top CTV acronyms to know:
- CTV: Connected TV – Refers to television sets or devices connected to the internet, enabling streaming of digital content on big screens.
- OTT: Over-The-Top – Describes content delivered over the internet without the involvement of traditional cable or satellite providers.
- DSP: Demand-Side Platform – An automated platform that allows advertisers to buy and manage ad inventory from multiple sources.
- SSP: Supply-Side Platform – Provides publishers the ability to manage and optimize ad inventory to maximize revenue.
- DMP: Data Management Platform – Aggregates and analyzes data from various sources to create audience segments for targeted advertising.
- VOD: Video On Demand – Allows users to access video content at their convenience rather than following a scheduled broadcast.
- CPM: Cost Per Mille – The cost of 1,000 ad impressions, used as a standard metric for advertising costs.
- CPA: Cost Per Acquisition – Measures the cost of acquiring a customer through a specific ad campaign.
- ROI: Return on Investment – Evaluates the profitability of an investment, including advertising campaigns.
- PMP: Private Marketplace – A controlled and invitation-only ad marketplace where premium publishers offer ad inventory to select buyers.
Mastering these CTV acronyms empowers marketers to engage with industry professionals, stay informed on industry trends, and make informed decisions when crafting effective connected TV advertising strategies.
Connected TV CPMs
CTV CPMs (Cost Per Mille) refer to the cost of 1,000 ad impressions and are used as a standard metric for advertising costs. CTV CPMs vary based on factors such as the target audience, ad placement, and the demand for ad inventory, but from our experience, a $30 or $35 CPM (sometimes as high as $40) is typical.
It’s important we note that as CTV advertising becomes more popular, the competition for ad inventory will increase, which can lead to higher CPMs. You should carefully consider your budget and goals when planning your advertising campaigns to ensure you are getting the most value for your investment.
Top CTV Best Practices
Every CTV campaign — and digital marketing campaign in general — will be unique and have it own challenges, but here are the top best practices to consider when running Connected TV advertising campaigns:
- Optimize Creatives: Create visually engaging and high-quality ads that are optimized for large screens and high-definition displays. Keep ad formats relevant to the platform’s capabilities, such as interactive overlays and shoppable elements.
- Test Different Creatives: Experiment with different ad creatives, visuals, messaging, and formats to identify which resonates best with your target audience.
- Cross-Device Consistency: Consider your other marketing channels and ensure that your ad creative and messaging remain consistent across different devices and platforms for a cohesive brand experience.
- Avoid Repetitive Ad Experiences: Use frequency capping to prevent viewers from seeing the same ad too often, which can lead to ad fatigue.
- Align with Content: Ensure that your ad’s messaging and content align with the context of the content viewers are consuming, creating a seamless experience.
- Plan for Interactive Elements: If using interactive elements, like QR codes, design them to be intuitive and easy to engage with, enhancing the viewer experience.
- Leverage Data Insights: Use data collected from CTV platforms to refine your targeting strategies and optimize ad placements. Analyze performance metrics to understand viewer behavior and adjust campaigns accordingly.
- Utilize First-Party Data: Incorporate your own customer data to create personalized ads and target existing customers for retention and upsell campaigns.
- Include a Clear Call to Action (CTA): Clearly communicate what action you want viewers to take after seeing the ad, whether it’s visiting a website, making a purchase, or subscribing.
By following these best practices, you can maximize the effectiveness of your advertising campaigns and create meaningful connections with your target audience.
Division-D’s Inventory of 400+ CTV Channels Can Magnify Your Campaign
Connected TV advertising is a pivotal force in the dynamic world of digital marketing, and its influence will only increase. By 2027, CTV advertising may surpass $40 billion. The question is, are you ready for it?
Division-D is a leader in CTV media solutions for brands and agencies. We partner with over 50 of the industry’s leading publishers, including Hulu, Max, Paramount, ABC, Disney, ESPN, and more, to offer our clients over 400 premium CTV channels, as well as access to the industry’s most advanced CTV targeting and measurement capabilities.
Ready to get started? Reach out to us today for a customized proposal.