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Posted on Apr 14,  2022

The Rise of Connected TV and its Impact on Digital Advertisement

In recent years, “Connected TV” has become a buzzword in the home entertainment and digital marketing industries. It is not surprising as there is an increasing preference for CTV over linear television; people are simply pulling off the cords for wireless content viewing. According to a study, over 80% of TV-viewing families across the US have at least one CTV device. Beyond the US, other research also revealed that 78 percent of households across European countries, including France, the UK, and Germany, prefer Connected TV.

What is CTV?

CTV (Connected TV) refers to any type of device that can connect to the internet and support digital video streaming. They aren’t your typical television sets because they can broadcast content from multiple sources (internet, local stations, and cable TV). A CTV may be a smart TV with an embedded internet connection mechanism, or it could be a smart device that is plugged into a regular television to enable the TV to connect to the web.

Gaming consoles like the PlayStation and Xbox and adapters like Roku, Chromecast, Apple TV, and Amazon’s Fire TV are examples of smart gadgets and CTV platforms.

People are increasingly turning to CTV because of the convenience and improved entertainment value it offers. Connected TV is like a video-entertainment hub that allows you to watch regular TV, satellite TV, and stream internet-based media all on the same device.

In June 2021, eMarketer reported that households in the US spent 8.3 billion hours watching CTV that month. In another report, statistics showed that individuals spent an average of 1 hour daily in front of a CTV device.

What is connected TV advertising?

Brands and advertisers are excited and optimistic about CTV because it offers newer marketing opportunities and better campaign results than linear TV advertising. And as regular TV viewing declines further, CTV will be one of the most productive advertising channels in 2022.

In 2021, over three-quarters of advertisers made sufficient allocations in their ad budgets for CTV while reducing or removing allocations for traditional TV ads. Between 2019 and 2021, CTV ad spending in the United States surged by more than 100%, from $6 billion in 2019 to $14.4 billion. CTV advertising expenditure in the United States is expected to reach $27.5 billion by 2025.

While there has been a steady increase in CTV ad spend, research has reported a continuous decline in linear TV ad spend.

In a reported poll conducted in the United States, more than 80% of advertisers mentioned enhanced targeting and effectiveness as the main reasons for migrating from traditional, linear TV commercials to CTV ads in 2021.

What are the types of Connected TV ads?

Connected TV does not operate like traditional television; hence displaying ads on CTV works quite differently and may demand a digitally-inclined approach. The internet enables connected TV, suggesting that the programmatic ad approach will be the most effective method to publish CTV ads. An eMarketer projection suggests that Connected TV programmatic will make up 7 out of 10 CTV ads this year. According to the OpenRTB IAB specification, the device types for CTV are numbered as 3, 6, and 7 connected TV, connected device, and set-top box

Programmatic advertising enables the automated purchase and display of digital advertisements. You do not need to manually search for channels to display your ads with programmatic systems. Your ads are automatically served to the right audience thanks to a data-driven approach and real-time bidding. In this scenario, programmatic ad technology can assist you in purchasing ad inventories that have been specifically designed for Connected TV devices.

Also, programmatic CTV advertising enables marketers to deliver custom ads for different audiences. In this case, different ads can be displayed to different individuals who are viewing the same show broadcast on separate devices.

Let’s briefly consider the types of CTV ads and how they work.

In-stream video ads are usually integrated at the start or middle of video content. They are usually embedded in the original part of the content and cannot be skipped or removed by the viewer. In-stream ads usually last up to 30 seconds.

Interactive ads: Interactive ads are clickable ads that prompt the viewer to take action. These types of CTV ads are especially great for delivering discount offers or encouraging the audience to make certain actions (e.g like purchase).

Home screen placement ads: these are ads that are displayed on the home screen of a CTV device. These are usually static images, graphics or short videos that appear on the screen for a short time. Ads on the home screen frequently feature a call to action, encouraging the viewer to learn more or see more details.

Benefits of Connected TV advertisements

Connected TV advertising is a more result-oriented approach to TV media buying. It enables precise targeting based on data analytics and demographical preferences. Compared to traditional TV commercials, CTV ads provide superior insights, precision, and measurable results, especially when it comes to programmatic. While on liner TV advertisers can target only according to the context of the broadcasted TV show, CTV ads can be served programmatically to a preferred audience.

Below are specific benefits of CTV ads:

Access to a wider and engaged audience

As already emphasized in the previous sections, individuals and households prefer CTV to traditional TV, implying that ads projected on CTV channels have more views than ads on linear TV. Also, the CTV audience is more engaged because of the convenience and varying entertainment options it offers. This means that more people will see and interact more with a CTV ad.

Maximized ad spend

spent using connected TV advertising. CTV commercials are data-driven, ensuring that ads are aired at specified times. They target the right people instead of the spray-and-pray strategy of linear TV ads. With this data-driven method coupled with programmatic ad buying processes, your ad budget is spent only when necessary and based on insights.

According to some data, a marketing company reveals that CTV ads are 53% less expensive and more efficient than traditional TV ads.

Because people commonly watch TV with their families and friends, a CTV ad displayed from one device might reach numerous individuals simultaneously. This is a more efficient marketing approach than displaying ads on mobile devices.

Precise targeting

One of the major strengths of CTV advertising is its targeting capabilities. Smart TVs and other CTV devices often allow user experience personalization by requesting user data like email address, language preference, location, or other information. This data can be harnessed for more précised and insightful targeting.

In addition to targeting, the information can also be used for retargeting and cross-targeting. Users who have shown interest in a brand or ad on one digital channel can be retargeted on a CTV channel and vice versa.

Targeting and retargeting on CTV channels is more effective because it allows you to send more individualized ads to a specific and relevant audience rather than to a general audience.

Support for multiple ad formats

CTV advertising enables advertisers to explore different ad formats to know which is best for a particular campaign. Marketers can try static images, graphics, interactive video ad formats, etc. Most of these formats raise user engagement as they make it possible for ads to interact with the audience. This greatly promotes brand-user relationships, brand recall, and enhanced customer satisfaction.

Campaign performance measurement and tracking

With linear TV ads, it is impossible to track and measure ad performance precisely; this is not the case with CTV advertising. On the CTV programmatic platform, marketers can measure their campaign performance and track user engagement. 

Here are some important CTV measuring metrics you should know about.

Campaign impression: This is the number of times an advertisement was served..

Completion rate: The number of times an advertisement was watched to the end. This indicates how many individuals watched through the entire commercial. According to CTV Media, 98 percent of people watch a CTV advertisement all the way through.

Total reach represents all the unique devices and homes where the CTV ad is displayed.

Interactive and responsive advertising

Advertisements on connected TV can be broadcasted at times when viewers are most receptive. For instance, ads can be delivered when certain events are airing (to target viewers). Sports lovers can be targeted in a game final etc. Also, people can interact with ads by sending messages, choosing options on creative, or clicking on prompts. Interactive ads offer the advantage of higher engagement and conversion rates.

Conclusion

СTV advertising holds a lot of benefits up its sleeve and SmartHub owners can take full advantage of CTV media trading in their marketplaces. As an owner of the platform, you can magnify ad serving opportunities with CTV ads and thus, increase the effectiveness and profitability of your ad exchange. All you need is to have connected supply and demand partners that will sell and buy this type of inventory in your SmartHub. The endpoint configuration is standard, (in the previous article we showcased the process for audio ads).  

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