What is Connected TV Advertising and How to Use It

There were days when television was solely a passive experience. You’d sit back, tune in to your favorite channel, and let the content wash over you. Well, those days are long gone. Today, television has become a much more interactive and personalized experience, thanks to the development of internet-connected devices. Instead of connecting to cable or satellite providers, it’s connected directly to the internet. This means you can stream your favorite shows and movies from platforms like Netflix, Hulu, Apple TV+, or Disney+.

Now, why is this important for advertisers? Millions of U.S. households are cutting the cord from traditional pay TV and turning to streaming services. These services offer viewers more choices and flexibility at a lower price. It’s becoming a prime spot to reach a massive audience. CTV advertising allows brands to target viewers based on their interests, demographics, and viewing behavior.

CTV advertising is on the rise, and if you are not yet familiar with it, you should be. We are going to discuss everything you should know about CTV advertising and its importance.

What is Connected TV Advertising?

Connected TV advertising is a form of digital advertising that targets viewers on streaming devices. It is similar to traditional TV advertising but with a digital perspective. While traditional TV ads are broadcast over the airwaves, CTV ads are served directly to the viewer’s device through the Internet. This could be a smart TV, a streaming device like a Roku or Fire Stick, or a gaming console with streaming capabilities.

These are mainly video ads served during commercial breaks on streaming platforms. They can come in different formats, including pre-roll, mid-roll, and post-roll ads. Pre-roll ads play before content, mid-roll ads play during content, and post-roll ads play after content.

CTV ads are more targeted than traditional ads. Marketers can reach a specific segment of the audience using data-driven targeting. So, the ads can be seen by people who are actually interested in what you have to offer.

CTV and OTT advertising might seem similar, but they have differences. OTT refers to all viewing that takes place on connected devices, including smartphones, tablets, and laptops. But CTV specifically refers to viewing that happens on TV sets.

Understanding Connected TV (CTV)

Connected TV means any television that can connect to the internet. It could be smart TVs or traditional TVs that are connected to streaming devices like Roku, Apple TV, or Amazon Fire TV.

CTV has become a popular way for people to consume video content. It offers viewers a more personalized and flexible experience. With streaming services like Netflix, Hulu, and Disney+, viewers can choose what they want to watch, when they want to watch it, and how they want to watch it.

CTV also has changed the way advertisers reach audiences. Traditional TV advertising is usually limited by factors like channel availability and viewership data. CTV doesn’t have such limitations. It offers advertisers more targeted reach and better measurement.

Key Components of CTV Advertising

With CTV advertising, businesses can reach highly targeted audiences in a premium inventory. However, there are a few major components that make a CTV campaign successful.

These are:

Ad Formats

A CTV ad can be in different formats with different values.

Some of the most common formats are:

• Pre-roll ads: These ads play before the content starts.
• Mid-roll ads: These ads play during commercial breaks within the content.
• Post-roll ads: These ads play after the content ends.
• Interactive ads: These ads allow viewers to engage with the ad directly, such as by clicking on a button or playing a game.
• Skippable ads: Viewers can skip these ads after a certain amount of time.
• Non-skippable ads: These ads cannot be skipped.

The best ad format for your campaign will depend on your goals and the type of content you are advertising.

Targeting Options

One of the biggest advantages of connected TV ads is their ability to target specific audiences. Linear TV is a good option if you want to run ads for a broad audience during specific programs, no matter who in the household is watching it. But CTV lets you use audience data to reach particular demographics, interests, and viewer behavior. This targeted approach reduces wasted ad spend, increases engagement, and improves campaign performance.

But you need to consider that CTV is not limitless. There’s a finite number of ad slots available, and excessive targeting can shrink your reach within a designated market area (DMA). So, if brand awareness is your primary goal, diversify your publisher list to maximize while still attracting the right viewers.

Measurement and Analytics

CTV advertising uses different KPIs depending on the campaign goals and industry. Common metrics are cost per completed view (CPCV), video completion rate (VCR), unique device breakdown, and view-through conversions.

But reach and frequency are arguably the most critical CTV metrics to track:

• Reach measures the number of unique viewers who see your ad campaign during a specific period. Higher reach means more customers being exposed to your brand.
• Frequency measures how many times a unique viewer sees your ad. Monitoring frequency helps prevent ad fatigue, but a certain level of repetition is necessary for brand awareness and recall.

Ad Creatives

Connected TV advertising gives a more captivating experience than traditional video ads. Viewers watch on larger TV screens in high definition (4K) and in a more relaxed setting. This can lead to higher engagement. If you want to make the most of this opportunity, you must invest in high-quality, attention-grabbing ads that stand out.

You don’t have to create block-buster-level production. But you can repurpose existing video ads, keep them short (ideally grab attention within the first 3 seconds), and experiment with CTAs and creative variations.

Here are some best practices to follow when creating CTV ads:

• Resolution: Use HD resolution (1280 x 720 for 720p, 1920 x 1080 for 1080p)
• Ad length: 15 to 30 seconds is the standard
• Aspect ratio: 16:9
• File format: MP4 (preferred)
• File size: Below 1 GB

Ad Placement

Demand-side platforms (DSPs) automate the process of purchasing ad inventory across multiple CTV exchanges, networks, and publishers. Look for a DSP that provides access to different channels, including native, display, video, CTV, audio, in-game, and digital out-of-home for multi-channel campaigns. Also, premium inventory from top-tier publishers like Disney+, Hulu, and CNN should be easily available.

Premium publishers offer the best quality content and engaged audiences. But, they usually have limited ad slots due to their focus on user experience. This can restrict your reach. Don’t discount free ad-supporting streaming TV (FAST) platforms like Pluto TV and Tubi. These platforms offer scale due to their vast content libraries. Also, the platform should be user-friendly, so you can find publishers and activate ads quickly.

The Evolution of TV Advertising

Television advertising has come a long way since its inception. From black-and-white commercials to advanced targeted campaigns, the industry has undergone a major change.

From Traditional to Digital

In the early days of TV, advertising was limited to a handful of channels and a few commercial breaks during each program. Advertisers had little control over who saw their ads, and there was no way to measure their performance. Advertisers would purchase time slots during specific programs, so their messages could reach millions of viewers at once.

However, linear TV advertising caused wasted impressions, as ads were exposed to audiences who were not the intended target. Also, measuring the performance of linear TV campaigns was challenging, as it was difficult to understand whether viewers actually saw an ad, let alone whether they took any action as a result.

The development of digital technology has made it easy for advertisers to reach specific audiences. As viewers have become increasingly accustomed to streaming content on demand, the popularity of linear TV has declined. According to a survey, only 56% of Americans now watch TV via cable or satellite, down from 76% in 2015.

This decline can be caused by many factors, like:

• People can access the content they want to watch online.
• Streaming platforms offer a vast library of on-demand content, so they can choose from a variety of movies and shows and watch whenever they want.
• They can even access live streaming of sports, news, and other events.

Growth of Connected TV

As linear TV audiences decline, advertisers are increasingly turning to connected TV advertising. They are recognizing the need to follow their viewers to CTV platforms, where they can reach more targeted audiences and achieve better results. As a result, CTV advertising is gaining traction. eMarketer has predicted that combined spending on linear and CTV advertising will surpass $100 billion by 2026 despite a decline in linear TV ad spend.

Improvements in technology, such as high-speed internet and better streaming devices, have made CTV a more accessible and enjoyable experience. Advertisers can target specific audiences based on a variety of criteria, including demographics, interests, and behavior. CTV ads can be served during commercial breaks on streaming platforms, just like traditional TV ads. However, CTV ads offer more targeted reach, better measurement, and increased flexibility than traditional television.

5 Key Advantages of CTV Advertising

CTV advertising offers numerous advantages over traditional TV advertising. Many advertisers are using them daily.

Here are the top five benefits of CTV advertising :

Targeted Advertising

This is one of the main advantages of CTV advertising. It has an unmatched ability to accurately target specific audiences. Traditional TV advertising reaches a broad range of viewers, but CTV allows advertisers to narrow down their focus to specific segments. This level of targeting is made possible by the data-driven nature of CTV. Advertisers can use different types of data points, like age, gender, income, location, viewing habits, and purchase history, to identify and reach their ideal customers.

The benefits of targeted advertising are:

• Ads have a higher probability of resonating with viewers when they are according to their specific interests.
• Targeted advertising helps advertisers maximize their return on investment when the right people see their ads.
• By targeting specific audiences, advertisers can avoid wasting ad spend on viewers who are unlikely to be interested in their products or services.

Interactive Features

CTV advertising offers interactive features that can improve the viewer experience and drive engagement. For example, advertisers can include clickable elements within their ads that direct viewers to specific websites or landing pages. The interactive features include:

• Click to call: Allow viewers to call a business directly from an ad.
• Click to website: Redirect viewers to a specific website or landing page.
• Video overlays: Display additional information or calls to action within the video advertising.
• Companion ads: Show complementary ads alongside the main video content.

Incorporating these interactive features can create a more engaging experience for viewers and encourage them to take action.

Cost Efficiency

CTV advertising could seem more expensive than traditional TV advertising. But it can actually be more cost-effective in the long run. This is because CTV allows advertisers to target specific audiences and measure the performance of their campaigns. This can help them optimize their spending and avoid wasting money on ineffective ads. Also, CTV advertising offers lower CPMs (cost per thousand impressions) than traditional TV. It makes it a more affordable option for many advertisers.

Measurable Results

CTV advertising provides detailed measurements and analytics. This allows advertisers to track the performance of their campaigns and make data-driven decisions.

Key metrics that can be measured in CTV advertising include:

• Impression
• Clicks
• Viewability
• Completion rates
• Conversions

Tracking these metrics helps advertisers identify what is working and what is not and adjust their campaigns accordingly.

Flexibility and Creativity

CTV advertising offers a high degree of flexibility and creativity. It allows advertisers to experiment with different ad formats and messaging. This can help stand out from the competition and capture viewers’ attention.

Some of the creative possibilities available in CTV advertising are:

• Dynamic ad insertion that gives the ability to insert ads into live content in real time.
• Personalized ads that are created according to individual viewer’s preferences and behavior.
• Interactive experiences that encourage viewers to engage with the content.

These creative options allow advertisers to create memorable and impactful CTV campaigns.

How Does CTV Advertising Work?

CTV advertising allows you to reach customers while they are enjoying their favorite shows on popular streaming platforms like Hulu or YouTube. You have probably seen these ads yourself while binge-watching your latest obsession.

There are multiple steps involved in the process behind it. You choose the platform where you want to showcase your products or services. Then, you select the ad format, such as a video or a display ad. Next, you can use targeting features to make your ads reach the right people. And finally, you can track and measure the performance of your campaign to fine-tune your strategy for maximum impact.

Let’s explore the steps:

The CTV Advertising Ecosystem

There are multiple players involved in CTV advertising. Each of them has a specific role in the process. Here’s how it works:

1. Advertisers decide their goals and target audience.
2. They work with DSPs (demand-side platforms) to set campaign parameters and budgets.
3. DSPs access available ad inventory from publishers through SSPs (supply-side platforms) and ad exchanges.
4. Advertisers use data from data providers to target audiences.
5. DSPs bid on ad impressions based on targeting criteria and campaign goals.
6. The highest bid wins the impression, and the bid is delivered to the publisher’s platform.
7. Measurement and verification providers track campaign performance.

Ad Formats and Placement

CTV advertising comes in different formats. They could be skippable, non-skippable, companion, overlay, or interactive ads. All these formats address different campaign goals and viewer preferences. These ads can be placed in different parts of a streaming platform, like pre-roll, mid-roll, or post-roll. The placement of an ad impacts its performance. For example, viewers who are eager to watch the content may see a pre-roll ad but may skip a mid-roll ad if it interrupts an exciting scene.

Data Collection and Usage

Advertisers and publishers use data to successfully target ads, measure performance, and optimize campaigns. Data can be collected from sources like viewer behavior, demographics, first-party data, etc. They use this data to create audience segments and target ads to specific groups of viewers. This data can also be used to measure performance and make decisions.

How to Buy CTV Advertising

To make CTV advertising campaigns successful, marketers need to know the right way to buy and have the right tools.

Identifying Your Target Audience

The audience you want to reach should be clear. Who do you want to see your ads? What kind of individuals are you trying to reach with your message? When you have a clear understanding of your target audience, you can create targeted ads that cater to every person watching your ads.

Choosing the Right Platform

There are many CTV platforms with features that address different audience segments. Analyze the type of content available on each platform. Check if it aligns with what your target audience prefers. You also have to evaluate the platform’s targeting options. The better the targeting options it offers, the more relevant viewers you can reach. Explore different pricing models provided by each platform. Some platforms use cost-per-mile (CPM) impressions, and some use cost-per-acquisition (CPA) models. Choose a model that works best for your campaign goals.

Setting Your Budget

Set a realistic budget based on your overall marketing goals and campaign duration. CTV advertising can be cost-effective, but you need to keep in mind that you get what pay for. Higher quality inventory and more advanced targeting options will have a premium price.

Creating Effective Ads

When you have a target audience, platform, and budget, it will be easy for you to create better content. CTV viewers have short attention spans, so create short and captivating ads, ideally under 30 seconds. High-quality visuals with clear messaging are essential for grabbing attention quickly. Adapt your ad tone and style to the type of content typically consumed on the chosen platform. Also, include a strong CTA that states what you want your viewers to do after watching your ad.

CTV for Local Advertisers

Connected TV ads have generally been used for large-scale campaigns targeting national audiences. However, CTV also gives local businesses a platform to reach their target audience in specific geographic areas.

Opportunities for Local Businesses

CTV platforms allow local businesses to target particular geographic areas, including cities, neighborhoods, and zip codes. So, they can set their preferences to reach the most relevant customers through their ads.

Local businesses can differentiate themselves from competitors. This can be done by using CTV advertising to reach a larger audience and increase brand visibility. It also provides essential analytics to track the performance of their campaigns and adjust their strategies. These ads can be customized according to local audiences. Businesses can use local references and imagery to create a more relevant and engaging experience.

CTV platforms feature premium content, like popular TV shows and movies. When local businesses associate their ads with high-quality content, they improve their brand perception and reach a more engaged audience.

Budget-Friendly Strategies

Local advertisers usually have limited budgets. But, they can still use CTV advertising by implementing smart strategies.

Here are a few pocket-friendly ways to get the benefits of CTV advertising:

• Instead of running continuous campaigns, create targeted campaigns for different products or services.
• Shorter ads can be more cost-effective and still deliver a strong message. So, use short durations for your ads.
• Target specific geographic areas to reduce ad spend and reach a more relevant audience.
• Use programmatic buying platforms to automate the ad buying process, strategize their spending, and access more affordable ad inventory.
• Some CTV platforms offer performance-based pricing models, in which advertisers pay only based on measurable results, such as clicks or conversions.

Measuring Local Ad Performance

To check whether your CTV advertising campaigns are working, you need to measure KPIs. They help you understand areas where you can improve and change your spending accordingly.

Some of the most relevant metrics for local advertisers are:

• The number of viewers who have seen your ad. (Viewership)
• The percentage of viewers who clicked on your ad. (CTR)
• The level of interaction viewers have with your ad, like time spent watching or clicking on elements. (Engagement)
• The number of viewers who took a desired action, like visiting your website or making a purchase. (Conversions)

Conclusion

Viewers are increasingly opting for streaming services over traditional cable TV. This creates a great opportunity for businesses to use CTV advertising for precise targeting and to reach a wider audience base. From small enterprises to local businesses and big players in the market, every business can benefit from CTV advertising. It just needs innovative strategies and advanced technologies to make connected TV advertising work in its favor.