What is CTV Advertising and How Should Brands Use It in Their Marketing Mix?
What is CTV Advertising
A Connected TV, or CTV, is any internet-connected TV. CTV allows viewers to watch content on streaming platforms like Netflix, Amazon Prime, and Hulu.
Connected TV advertising refers to advertising shown on these devices. Businesses are starting to use CTV advertising more and more to promote their brands. According to eMarketer, CTV ad spend hit $10.93B in 2020 and continues to grow, reaching $21.16B in 2022. Many marketers explore the channel thanks to its promises to combine TV’s visibility and storytelling capabilities with digital’s advanced targeting.
Who watches CTV?
The rise in multiple-screen technology has changed how people consume TV and video. Today, 87% of U.S. TV households have at least one Internet-connected TV device. 46% of adult viewers use it daily, compared to 40% in 2020.
Younger audiences are more likely to watch CTV than older audiences. The average age group for CTV viewers in 2022 spans 18- to 34-year-olds, and only 24% of viewers are over 55 years old. Older audiences still favor linear TV, with 84% of viewers over 55 watching broadcast or cable TV. CTV’s growth is a focus for advertisers, but Linear TV still offers tremendous value, depending on the audience a brand wants to reach.
CTV vs. OTT
Anyone researching CTV may encounter search results about OTT, or over-the-top advertising. Both CTV and OTT are popular methods to access video content, but they can be confused with one another.
The biggest difference is the device. OTT ads are featured on streaming platforms on any device, including smartphones, laptops and smart TVs. CTV advertising is displayed on streaming platforms through smart TVs only.
However, both CTV and OTT advertising provide precise targeting based on consumer behavior and campaign measurement in real-time.
Benefits of CTV Advertising
As CTV gains popularity in the industry, businesses are starting to leverage new tools and platforms to reach their target audience, drive sales, and meet yearly revenue expectations. Advertisers are shifting their budgets and preparing to transition media spend into CTV for a few reasons.
CTV’s targeting capabilities make it easier for advertisers to deliver personalized and relevant content to viewers. Consumer behavior is changing, and advertisers need to keep up and communicate with their customers. CTV enables them to share personalized content by connecting with audiences based on demographics, interests, behavioral data, and locations. CTV advertising can also help brands struggling to reach niche audiences.
Challenges of CTV Advertising
Despite its popularity, CTV advertising is still an emerging marketplace and advertisers continue to face some challenges. The leading concern for advertisers is ad fraud. According to DoubleVerify’s report, fraud schemes spiked by 70% globally from 2020 to 2021, with many schemes targeting CTV.
Measurement and reach are also challenges for advertisers, especially with the rise in bots and scams taking over viewership numbers. TVREV reported that 43% of industry leaders are concerned with the ability to measure campaign effectiveness.
Although CTV’s targeting capabilities serve as a benefit, advertisers sometimes make the mistake of tight targeting, or narrowing their audience too much, which can limit a campaign’s impact. Using narrow targeting means advertisers must be extremely confident they’re reaching the right people. Overall, CTV advertising is useful for many businesses, but still needs time for improvement.
Who should advertise on CTV
Advertisers understand that TV remains one of the most powerful channels to deliver brand messaging. But the evolution of technology pushes businesses to move digitally to connect with their audiences. With elements of both TV and digital, CTV can seem like an ideal solution.
Although CTV has proven to be valuable in some cases, it remains an emerging marketplace that can be confusing to maneuver. Regardless, brands are taking advantage of the overall benefits and opportunities it offers.
But what kind of brands find the most value in CTV?
- Brands that have younger audiences since they watch CTV the most.
- Brands that have niche audiences will also find CTV beneficial because they can make use of its targeting capabilities.
- Brands that want to experiment on the channel so they can learn what works as CTV continues to evolve.
Complement CTV Advertising with Linear TV
TV has the power to reach mass audiences and tell a story around a brand. However, content consumption has become more digital and is now redefining how people spend time watching TV.
Even so, Linear TV still claims the largest viewership. According to Nielsen, streaming usage reached up to 35% of total TV usage in August of 2022, compared to 34.5% of cable usage. Although this may sound like a victory for streaming platforms, these numbers fluctuate depending on the content featured. What they also don’t highlight is that broadcast TV usage is 22.1%, giving Linear TV a total of 56.6% of TV viewership.
Linear TV is still a primary channel for media consumption. And because it is a highly regulated channel, consumers view Linear TV as a trustworthy source of information. It also has the best ability to optimize reach, measurement, and application of first- and third-party data.
Viewers can now consume content wherever and whenever they want, so using both Linear TV and CTV advertising serves as a winning strategy for many advertisers.
How to Advertise on CTV
CTV advertising is definitely a new and exciting channel for brands. Still, there are gaps that exist. High ad frequencies not only negatively affect a viewer's experience, but also waste ad budgets. To prevent this, use frequency caps to prioritize reach over hitting the same customers repeatedly. Also, CTV ad inventory often has premium pricing. Advertisers can save by working with a DSP (Demand Side Platform) to find high quality CTV inventory at lower prices.
Television is changing, but the largest audiences are still using Linear TV. Advertisers make the mistake of focusing only on CTV, but then miss out on the larger audiences in their target market. CTV advertising does deserve consideration, but keep in mind that it is only one part of the bigger picture when it comes to your marketing strategy. Use both CTV and Linear TV advertising and reach your target audience with the right message.
Interested in learning more?
Click to read our “Future of TV” whitepaper and learn how advertisers are using both linear TV and streaming to drive business growth.