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.
Where Are Connected TV Ads Shown?
Connected TV ads reach viewers across a variety of platforms and devices, which makes it easier for advertisers to connect with their audience no matter where they choose to watch. These ads appear on major streaming services like Netflix, Hulu, Amazon Prime Video, and Disney+, as well as on smaller, niche platforms that cater to very specific interests or demographics.
Beyond popular streaming services, connected TV ads are delivered through devices such as smart TVs, Roku, Apple TV, Amazon Fire Stick, and gaming consoles like PlayStation and Xbox. This ensures that ads can be seen by viewers in different settings, whether they’re relaxing in their living rooms or gaming in their bedrooms.
Connected TV ads can also be run in mobile apps and on tablets to reach audiences on the go. This multi-device presence means that advertisers can maintain visibility across various screens, which enhances their chances of engaging with their audiences, who are increasingly moving away from traditional cable TV.
How Are Connected TV Audiences Targeted?
Connected TV ads use data-driven methods to ensure the right people see them. This is how targeting works:
First-Party Data
First-party data is collected directly from viewers through their interactions with streaming services or apps. This includes information on what shows they watch, their viewing habits, and demographic details like age and gender.
Since this data comes straight from user interactions, it tends to be highly accurate and valuable for creating targeted ad campaigns. Therefore, advertisers use first-party data to create tailored messages that are sent to specific audience segments to enhance the relevance and effectiveness of their ads.
Third-Party Data
This data is sourced from external providers that collect information about consumers across various platforms and services. It can include customers’ broader demographic information, interests, purchasing behavior, and more.
By integrating third-party data with their campaigns, advertisers can expand their targeting capabilities and reach audiences that closely match their ideal customer profiles. This additional layer of data allows for more precise audience segmentation and improved campaign performance.
Frequency Caps
What if you had to watch the same commercial multiple times in one sitting? Wouldn’t it be annoying? Frequency caps limit the number of times a single viewer sees the same ad in a specific timeframe. This is important to keep your audience engaged without overwhelming them and helps prevent overexposure, which can lead to ad fatigue and annoyance among viewers.
Advertisers can ensure their ads remain fresh and maintain a positive impression by setting frequency caps. For example, you might set a frequency cap so that a viewer sees your ad no more than three times per day. This balance helps keep your campaign cost-effective by spreading impressions across a broader audience rather than repeatedly targeting the same individuals.
IP Targeting
IP targeting allows advertisers to deliver ads based on the geographical location of the viewer, determined by their Internet Protocol (IP) address. This method is particularly useful for businesses that operate in specific areas or want to promote region-specific offers. By using IP targeting, you can ensure that your ads reach the right audience in the right place, making your campaigns more relevant and effective.
For instance, a local restaurant can use IP targeting to advertise a new menu to people in a certain radius of their location. Similarly, a retail store can promote a seasonal sale to customers in nearby neighborhoods or cities. This precise targeting helps maximize the relevance of your ads while increasing the likelihood of more engagement and conversions.
What Are The CTV Metrics and Measurement?
There are several ways to measure the success of a CTV advertising campaign. By analyzing and tracking some specific metrics, you can understand well how your campaigns are performing and optimize all future campaigns. These metrics include:
Impressions
Impressions measure the number of times your ad is displayed to viewers. This metric helps you understand the reach of your campaign by indicating how often your ad appears on screens. High impressions mean that your ad is being seen frequently, which can increase brand awareness.
Return on Ad Spend (ROAS)
This metric calculates the revenue generated for every dollar spent on advertising and helps assess the effectiveness of your CTV campaigns by showing how well your investment is paying off. A higher ROAS indicates that your ads are driving an impressive number of sales or conversions, which means your advertising efforts are highly profitable.
Cost per Completed View
Cost per Completed View (CPCV) measures the amount you pay each time a viewer watches your ad in its entirety. This metric is important for evaluating the engagement level of your video ads. A lower CPCV means you’re getting more completed views for your budget and that your content is compelling enough to hold viewers’ attention until the end.
Cost per Acquisition (CPA)
This metric tracks the cost of acquiring a new customer through your ad campaign. It helps you understand how efficiently your ads are driving conversions, such as purchases or sign-ups. Lower CPA values indicate that your campaigns are effectively converting viewers into customers.
Reach
Reach refers to the total number of unique viewers who see your ad in a specific time period. Unlike impressions, which count multiple views by the same person, reach focuses on the breadth of your audience.
A higher reach means your ad is being seen by more individuals, which can enhance brand visibility and awareness.
Frequency
This measures how often each unique viewer sees your ad over a set period. This metric is important for balancing exposure and avoiding ad fatigue, where viewers become tired of seeing the same ad repeatedly.
Finding the right frequency helps maintain viewer interest and keeps your brand top-of-mind without overwhelming your audience.
GRP (Gross Rating Point)
Gross Rating Point (GRP) is a traditional advertising metric that combines reach and frequency to assess the overall exposure of your ad campaign. It provides a single number that represents the total volume of impressions delivered to your target audience.
By analyzing GRP, you can make strategic decisions to enhance the visibility and impact of your ads.
CPP (Cost per Point)
Cost per Point (CPP) calculates the cost of reaching one percentage point of your target audience. This metric helps you evaluate the cost-effectiveness of your advertising campaigns relative to your specific audience size.
Lower CPP values indicate more cost-effective campaigns, which enables you to allocate your budget more strategically for maximum reach.
Cross-Screen Measurement
This is a key metric that tracks how viewers interact with your ads across multiple devices, such as TVs, smartphones, tablets, and desktops, and provides a comprehensive view of your campaign’s performance by showing your audience’s engagement with your ads in different contexts.
By analyzing cross-screen behavior, you can gain insights into viewer preferences and optimize your advertising strategies to enhance engagement and reach.
Target Rating Point
Target Rating Point (TRP) focuses on the exposure of your ad campaign to a specific target audience. Unlike GRP, which considers the entire audience, TRP zeroes in on the segments that are most relevant to your brand or product.
By tracking TRP, you can refine your targeting strategies to ensure that your advertising efforts are effectively engaging your intended demographic.
Connected TV Devices
Because CTV ad campaigns can reach viewers on various devices, let’s take a brief look at how each one offers a different user experience.
Tablets, Phones, Desktops
On these particular screens, ads need to be quick and eye-catching to grab attention immediately. Users often interact with their devices directly, which can lead to higher engagement as they might be more likely to click on a link or take action right away.
Therefore, these devices allow CTV ads to be integrated into various apps and websites, which provides multiple opportunities for viewers to encounter your message wherever they are.
OTT/CTV Devices
Since OTT and CTV devices like Roku, Apple TV, Amazon Fire Stick, and gaming consoles are designed specifically for streaming content, they offer a focused viewing experience, which makes ads delivered through them more immersive.
Users typically watch content on these platforms in a dedicated setting, so the ads can use the full screen and high-definition quality to leave a strong visual impact. OTT/CTV devices also support detailed targeting based on viewing habits and preferences, which means your ads reach the most relevant audience.
Smart TVs
Smart TVs integrate internet connectivity directly into the television, which allows users to stream content without using additional devices. This setup provides a straightforward way for ads to appear alongside high-quality video content. The large screen size of smart TVs ensures that ads are highly visible and can leave a lasting impression.
Smart TVs often come with built-in analytics, which helps advertisers gain valuable insights into how viewers interact with their ads. This data can help them refine their ad strategies to better engage the audience and improve overall campaign performance.
CTV Marketing Best Practices
To make the most of CTV advertising, you must follow these best practices:
1. Know Your Audience: Use data to understand who your viewers are and what they like. Tailor your ads to meet their preferences and interests
2. Create Compelling Content: Invest in high-quality, engaging ads that capture attention quickly. Use clear messaging and strong visuals to communicate your value proposition.
3. Optimize for Different Devices: Ensure your ads look great on all connected devices, from large TVs to mobile screens. Adapt your creative elements to fit different screen sizes and formats.
4. Leverage Data for Targeting: Use first-party and third-party data to reach specific audience segments. The more precise your targeting, the more effective your campaigns will be.
5. Test and Iterate: Continuously test different ad formats, messages, and targeting strategies. Use the insights gained to refine your campaigns and improve performance.
6. Monitor Metrics: Keep a close eye on key performance indicators like impressions, ROAS, and CPA. Use this data to make informed decisions and optimize your advertising strategy.
7. Integrate With Other Channels: Combine CTV advertising with other marketing channels to create a comprehensive marketing strategy to enhance overall campaign effectiveness and reach.
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.