April 21, 2024

Connected TV - What and why?

What is Connected TV Advertising?

Connected TV (CTV) advertising refers to video ads delivered via a streaming service during a viewer’s movie, TV show, or other video content—viewed on an actual TV set. This viewing could be either directly on a smart TV or via a connected device like a Roku or Fire Stick.

On most streaming TV services, CTV represents over 80% of all viewing. The remainder happens on other devices connected to the internet (laptops, smartphones, and tablets).

While the terms “CTV” and “OTT” are often used interchangeably, “OTT” technically refers to all viewing, while “CTV” only refers to viewing that takes place on a smart TV set.

The Evolution of TV Advertising

Traditional, linear TV advertising allows advertisers to reach millions of viewers at the same time. Unfortunately, this means a lot of waste—rather than just reaching their intended target, linear advertisers reach everyone watching a particular show. It also means less-than-optimal campaign measurement (did anyone go buy something after watching the ad?).

Viewer behavior has changed, and cable and satellite TV use has dropped dramatically over the past decade:

  • Only 56% of Americans say they watch TV via cable or satellite (down from 76% in 2015)
  • 71% of those who don’t use cable or satellite say it’s because they can access the content they want online
  • 61% report they had a cable or satellite subscription in the past
  • 39% say they have never been subscribers

As linear audiences decline, wasted impressions and a lack of measurable performance are becoming bigger issues. Advertisers are following their viewers to CTV—adding CTV advertising to their mix at the expense of linear spend. According to eMarketer:

“US linear TV ad spending will hit $67.17 billion this year and fall to $64.94 billion in 2026. Despite that decline, ad spending on linear and connected TV (CTV) combined will increase from $87.24 billion this year to more than $100 billion in 2026 due to the surge in CTV viewing.”

5 Key Advantages of Connected TV (CTV) Advertising

As advertisers follow their audiences to CTV, they realize major benefits in programmatic TV advertising, particularly in targeting, optimization, and measurement.

Precise Targeting

Targeting on linear TV is limited to finding shows that index best against Nielsen’s broad age and gender metrics (e.g., women 18-49, men 25-54). CTV advertisers can take advantage of digital targeting similar to Facebook and Google, allowing audience segments based on education level, income level, personal interests, consumer behaviors, or any combination of these factors.

Brands can also bring their own first-party data into the mix to reach current customers, people who have visited their website, and even members of their loyalty programs. Some of the best CTV targeting options include:

  • Retargeting
  • Lookalike targeting
  • Contextual targeting
  • Geolocation targeting
  • Time-of-day targeting

Local Targeting—Beyond the Zip Code

Digital capabilities of CTV make it much easier to pinpoint consumers based on location via their IP address. This means ads can be hyper-localized and served to viewers in a much smaller geographic region than on linear. It also allows messaging to be customized based on the viewer’s location. For instance, an auto dealership with three locations can send the appropriate commercial to the viewers closest to each location.

High Video Completion Rates

With superior targeting, CTV ads are more relevant to viewers—leading to higher engagement and completion rates. Using Automatic Content Recognition (ACR) technology from smart TVs, CTV providers offer real-time, second-by-second data on completion rates, helping advertisers fine-tune campaign effectiveness.

Detailed Measurement and Accurate Attribution

CTV advertising allows advertisers to more accurately measure campaign effectiveness through conversions. With attribution, advertisers can see who visited their website and made a purchase after viewing an ad. Footfall attribution enables tracking of viewers who visited a physical location and made a purchase.

For example, a leading quick-service restaurant brand used footfall attribution to measure CTV performance. They could see how many viewers visited a restaurant location after seeing their CTV ads, as well as which creatives, publishers, and dates worked best to drive traffic.

In-Flight Optimization

Linear TV advertising is typically planned and executed well in advance, with limited flexibility for changes mid-campaign. In contrast, CTV ads can be adjusted on the fly, allowing advertisers to react to real-time performance data for better optimization.

How Does CTV Advertising Work?

When advertisers buy CTV advertising, their ads are shown during streamed content. Streaming networks and publishers like Hulu, Peacock, Tubi, and Pluto TV provide the video content. CTV ads are shown through various CTV devices such as smart TVs, Roku, Apple TV, and Amazon Fire TV Stick.

Many CTV ads are served programmatically through a complex auction system, ensuring they reach the most relevant audiences.

3 Connected TV (CTV) Examples

Cross-Channel Marketing Success

A regional credit union integrated CTV and linear TV ads, targeting 25,000+ new viewers. This resulted in a 36% higher conversion rate and 3,500+ new members, showcasing the power of cross-channel marketing.

Leveraging First-Party Data for Better Targeting

A global travel site optimized its CTV campaigns using first-party data. This improved targeting and reduced cost per conversion by 51%, leading to $10.9 million in revenue from 36,700+ hotel bookings.

Enhancing Brand Awareness Through Audience Segmentation

A local retailer used advanced audience segmentation to increase brand awareness by 19.8%, improving ad recall and purchase intent—highlighting CTV’s effectiveness for local business growth.

How to Buy CTV Advertising

Planning and executing CTV campaigns involves five key steps:

  1. Start with a Strategy
    • Define your target audience, objectives, and how CTV fits into your marketing mix.
  2. Choose a CTV Advertising Platform
    • Options include smart TV manufacturers (Vizio, Samsung), streaming sticks (Roku, Fire TV), and demand-side providers like OBD.
  3. Choose a CTV Ad Type and Produce the Ad
    • Decide on ad length (6, 15, or 30 seconds) and consider interactive elements like QR codes.
  4. Define the Target Audience and Execute
    • Use first-party or third-party data to refine audience targeting.
  5. Measure and Optimize Performance
    • Track key performance indicators like location attribution, site conversion, and foot traffic.

CTV is the Future of TV Advertising

More consumers are shifting their viewing habits to streaming. That makes it essential for brands—especially local brands—to understand CTV advertising. OBD’s technology helps local networks and advertisers transition to CTV, ensuring they reach the right audiences efficiently.

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