CTV Advertising: What is it and How Does it Work?

 

What is CTV Advertising?

Connected TV advertising refers to advertising shown on any internet-connected TV (also known as a Connected TV or CTV). A CTV allows viewers to watch content on streaming platforms like Netflix, Amazon Prime, and Hulu.  

Businesses are starting to use CTV advertising more and more to promote their brands. According to eMarketer, CTV ad spend hit $20.69B in 2022 and is predicted to nearly double by 2027. Many marketers are exploring connected TV advertising thanks to its promises to combine TV’s visibility and storytelling capabilities with digital’s advanced targeting. 

 

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 spending into CTV for a few reasons:

1. 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.
   
   
2. CTV enables advertisers to share personalized content by connecting with audiences based on demographics, interests, behavioral data, and locations.
   
   
3. CTV advertising can also help brands struggling to reach niche audiences. 
   
   

Overall, Connected TV advertising is useful for many businesses, but needs to be used thoughtfully, with an understanding of the channel’s limitations and challenges, while it continues to improve.

 

Challenges of CTV Advertising  

Despite its popularity, CTV advertising is still an emerging marketplace and advertisers continue to face some challenges:

1. 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. 
   
   
2. 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 a CTV advertising campaign’s effectiveness.  
   
   
3. Connected TV advertisers may 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.

How Does CTV Advertising Differ from Other Types of TV Advertising?

Anyone researching CTV advertising may encounter search results about other popular methods of TV advertising. Although there is some overlap, many ways to advertise on TV have slight variations.

 

CTV vs. OTT Advertising  

The biggest difference between CTV and OTT ("over the top”) advertising 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.  

 

CTV vs. Linear TV Advertising  

Linear TV advertising refers to advertising you might see as traditional broadcast or cable. While Linear TV has the power to reach mass audiences and tell a story around a brand, CTV has advanced targeting capabilities and personalization opportunities. These differences mean brands reach niche audiences through CTV and large populations through Linear TV.

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. 

 

CTV vs. Addressable TV Advertising  

Addressable TV advertising is the use of data to target households through cable providers. While addressable TV advertising offers more narrow targeting than traditional linear TV, the targeting capabilities CTV advertising provides are even more advanced.

 

Who Watches CTV?

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, while only 24% of CTV viewers are over 55 years old.

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 Connected TV device. 46% of adult viewers use it daily, compared to 40% in 2020.  

However, older audiences still favor linear TV, with 84% of viewers over 55 watching broadcast or cable TV. Connected TV’s growth is a focus for advertisers, but Linear TV still offers tremendous value, depending on the audience a brand wants to reach.  

 

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.  

What kind of brands find the most value in CTV advertising?  

1. Brands that have younger audiences since they watch CTV the most.  
   
   
2. Brands that have niche audiences will also find CTV beneficial because they can make use of its targeting capabilities.  
   
   
3. Brands that want to experiment on the channel so they can learn what works as CTV continues to evolve. 

 

How to Advertise on CTV  

The opportunity around advertising on TV is undeniable. Connected TV advertising is definitely a new and exciting channel for brands. Still, there are gaps that exist. Television is changing, but the largest audiences are still using Linear TV.  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 to reach your target audience with the right message.

 

Here are some tips for advertising on CTV:

1. Don’t focus solely on CTV. Advertisers make the mistake of focusing only on CTV, but then miss out on the larger audiences in their target market.
   
   
2. Prioritize reach over frequency. 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.
   
   
3. Work with a Demand Side Platform. 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.  
   
   
4. Find a TV partner that supports your goals. The best partner will support your goals, listen to your concerns and most importantly, help you grow. At Marketing Architects, we’re all about pairing our TV expertise with your marketing knowledge. Because no one knows your brand better than you!

 

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. Or reach out to talk about how TV could grow your business!