Have you heard about CTV advertising but aren’t quite sure what it is or how it works? Don’t worry; you’re not alone! CTV (Connected TV) advertising is a hot topic in the marketing world, and it’s an area that’s rapidly growing. In this blog post, we’ll break down everything you need to know about CTV advertising in simple terms.
CTV advertising refers to the delivery of advertising content through internet-connected television devices, such as smart TVs, streaming devices (e.g., Roku, Amazon Fire TV), gaming consoles, and even some blu-ray players. As more and more people shift away from traditional cable and satellite TV towards streaming services like Netflix, Hulu, and Disney+, advertisers are following suit by shifting their ad dollars to CTV platforms.
The beauty of CTV advertising lies in its ability to combine the lean-back, big-screen experience of traditional TV with the targeting and measurement capabilities of digital advertising. This means that advertisers can serve highly relevant and engaging ads to specific audiences based on factors like demographics, interests, and viewing behaviors.
In the following sections, we’ll dive deeper into the world of CTV advertising, covering topics such as the benefits, targeting options, ad formats, measurement, and best practices. Whether you’re a marketer looking to expand your advertising reach or just someone curious about this emerging trend, this blog post will provide you with a comprehensive overview of CTV advertising.
Understanding CTV Advertising
CTV, or Connected TV, advertising refers to delivering ads to viewers who are watching video content on internet-connected devices like smart TVs, streaming media players (Roku, Apple TV, Amazon Fire TV), gaming consoles, and even some blu-ray players. As more people ditch traditional cable/satellite TV in favor of streaming services like Netflix, Hulu, and Disney+, advertisers are shifting budget to CTV to reach these audiences.
How is it Different from Traditional TV Ads?
Traditional TV ads are delivered through cable/satellite providers during live TV broadcasts or pre-recorded shows. CTV ads, on the other hand, are served through internet-connected apps and platforms that people use to stream video content. This allows for more precise audience targeting abilities.
The Rise of CTV Advertising
CTV advertising has exploded in popularity for several reasons:
1) Surge in cord-cutting – More households are canceling cable/satellite TV and relying solely on streaming services, making CTV a necessity for advertisers.
2) Advanced targeting – Advertisers can use data around viewing behaviors, demographics, locations, interests and more to serve super relevant ads.
3) Measurability – CTV provides more detailed analytics on ad performance compared to traditional TV buys.
4) Innovative ad formats – Interactive CTV ads allow viewers to engage directly with branded content.
5) Incremental reach – CTV enables advertisers to extend their reach beyond linear TV to audiences they may have missed.
At its core, CTV advertising combines the premium, lean-back viewing experience of television with the precision targeting and measurability of digital advertising. This powerful combination is why CTV is rapidly becoming a must-have for any effective video advertising strategy.
Targeting and Personalization
One major advantage of CTV advertising is the ability to precisely target and personalize ads for specific audience segments. Unlike traditional TV ads that are shown to a broad viewing audience, CTV leverages data to serve up relevant ads tailored to each viewer.
How Targeting Works: CTV platforms collect data on viewing behaviors, demographics, locations, interests and more. Advertisers can then use this data to define their ideal target audiences through criteria like:
- Age/gender/income
- TV shows/content categories they watch
- Interests/hobbies
- Geographic locations
- Streaming device/platform used
This allows ads to be precisely targeted and personalized to the specific household or viewer seeing them, leading to more relevant and effective ad experiences.
For example, a sports apparel brand could target ads specifically to viewers who watch a lot of sports content and live in certain cities. Or an auto brand could personalize ads based on data signals that indicate someone is in-market for a new vehicle purchase.
The data-driven targeting of CTV contrasts starkly with traditional TV’s more scattershot approach. This precision drives better campaign performance and ROI for advertisers.
Here’s an in-depth guide on CTV Ad Formats with popular examples from USA, written in a simple tone:
Targeting and Personalization
The advancement of Connected TV advertising has paved the way for innovative ad formats that go beyond traditional commercial breaks. CTV ad formats offer a fresh way for brands to engage with viewers in an environment they’re naturally inclined toward – streaming high-quality video content. Let’s explore some popular CTV ad formats:
Pre-Roll Ads
These play before the video content, similar to YouTube pre-roll ads you may have seen. A well-known example is the animated pre-roll ads from Progressive Insurance featured across various CTV apps and platforms.
Mid-Roll Ads
Inserted during natural breaks in longer content like movies or episodes, mid-roll ads allow brands to re-engage viewers. Hulu has mastered this format with frequent ad breaks in their streaming shows.
Post-Roll Ads
Less interruptive than pre-rolls, post-roll ads play once the main video Content concludes. Sports streaming services like ESPN+ and NBC’s Peacock utilize post-roll ads.
Interactive Ads
The internet connectivity of CTV enables innovative ad experiences like shoppable ads with e-commerce integrations. Samsung’s Smart TV platform offers this with Shoppable TV options.
Branded Content/Sponsorships
Going beyond traditional ads, brands can seamlessly integrate their products/messaging into actual streaming content. A great example is Nike’s branded content series on Amazon Prime Video.
Some other creative CTV ad formats gaining popularity include:
Pause Ads : Static ad displays that appear when viewers hit pause while streaming.
Dynamically Inserted Ads : These swap out static ad placements with dynamically-targeted ads based on viewer data.
Advertisers are just scratching the surface of engagement possibilities using these innovative ad formats on CTV platforms compared to linear TV’s limitations.
Let's look at some stats around CTV ad format engagement in the US market:
– Pre-roll ads have up to 98% completion rates on CTV (FreeWheel)
– 87% of CTV/OTT ad views are completed, vs 67% for non-CTV/OTT (Extreme Reach)
– Interactive CTV ads have 32% engagement rates (Innovid)
The combination of big-screen, premium viewing experiences and interactive ad capabilities is catalyzing CTV advertising’s rapid growth and adoption by major US brands across verticals like finance, CPG, auto, travel and more.
Here’s a practical, real-time guide on measuring CTV ad performance using simple language:
Measuring CTV Ad Performance
Unlike traditional TV’s limited metrics, CTV advertising provides robust data and tools to accurately measure your campaign’s effectiveness. The ability to prove clear ROI is a major advantage driving CTV’s popularity.
Common CTV Metrics
- Impressions: Total number of times your ads were displayed on CTV apps/platforms
- Completed Views: Number of times your video ad was viewed to completion
- Video Completion Rates (VCR): Percentage of impressions that were completed views
- Reach: The total number of unique households or viewers exposed to your ads
- Effective Cost per Thousand (eCPM): Calculates cost efficiency based on impressions delivered
Engagement Metrics
- Click-Through Rate (CTR): How often viewers clicked/interacted with your interactive CTV ad
- Time Spent Viewing: Total watch time for your branded/sponsored CTV content
- Conversion Rate: For campaigns with a direct response element like app downloads or e-commerce purchases
Setting Up CTV Measurement
- Define Goals & KPIs
First, clearly define your campaign goals (awareness, engagement, conversions, etc.) and set the corresponding KPIs to measure performance against those goals.
- Integrate with Ad Partners
Work with your CTV ad platform/publisher to implement tracking pixels or integrate with their data solutions to capture and report on the metrics important to you.
- Tag Creative Assets
Your video ads, display units and interactive assets need to be properly encoded and tagged to ensure they can be tracked across CTV apps and devices.
- Access Analytics Dashboards
Leverage the analytics dashboards and reports provided by your ad partners, DMPs, and ad servers to view and analyze CTV performance data in real-time.
Pro Tip: To accurately measure reach and frequency across CTV publishers/apps, explore cross-platform measurement solutions that utilize device graphs and household IDs.
Measuring CTV performance is light years ahead of age/gender TV ratings. With granular, real-time data at your fingertips, you can continually optimize your CTV buys, creative and overall investment to drive better results.
CTV Ad Buying Strategies
As more viewers shift to streaming content on Connected TV devices, advertisers need effective strategies to buy ads and reach these audiences across the fragmented CTV landscape. There are several buying approaches brands can take:
Programmatic Buying :This automated method allows you to purchase CTV ad impressions across multiple apps and publishers through demand-side platforms (DSPs) and ad exchanges.
How Programmatic CTV Buying Works:
1) Connect your DSP to CTV ad exchanges/supply-side platforms (SSPs)
2) Use the DSP to create your campaign, set targeting, budgets, etc.
3) The DSP will automatically bid on and buy targeted CTV ad impressions in real-time auctions across apps/publishers
4) Use data for precise audience targeting like demographics, interests, streaming behaviors
5) Leverage the DSP’s optimization capabilities to boost performance
Benefits of Programmatic:
– Massive reach across thousands of CTV apps
– Precise data-driven audience targeting
– Automated optimization for best performance
– Flexibility to adjust budgets and targeting in real-time
Direct Deals With Publishers : Some brands choose to buy CTV ads directly from major individual publishers/platforms like Hulu, Roku, Amazon, etc. through direct upfront commitments.
How Direct Publisher Buys Work:
1) Negotiate fixed CPM rates and total committed ad spend with each publisher
2) Get preferential access to their premium CTV ad inventory and audiences
3) Leverage the publisher’s first-party data for targeting
4) Option for custom sponsorships, branded content integrations
Benefits of Direct Buys:
– Access to high-quality, brand-safe inventory on top CTV properties
– Transparency into exactly where your ads will run
– Simpler managed service compared to self-serve programmatic
– Ability to strike custom branded content deals
Private Marketplaces (PMPs)
These are invite-only private ad exchanges where groups of CTV publishers offer their inventory packages to select buyers at fixed pricing.
How PMPs Work:
1) Publishers grant you access to their “premium” inventory packages in the PMP
2) Use your DSP or work directly with pubs in the PMP
3) Get benefits of both programmatic pipes and preferential treatment
4) Transparency into where ads run with prioritized access to supply
PMP Benefits:
– Competitive, fixed pricing and prioritized access to CTV supply
– Combo of data targeting and premium CTV inventory
– More transparency vs. open exchange
The best strategy depends on your goals, audience, budget and internal capabilities. Many brands utilize a hybrid model combining programmatic, direct publisher buys, and PMPs to effectively reach CTV viewers.
What’s key is having a diversified CTV buying approach to penetrate the fragmented streaming landscape. With smart audience targeting and the right media strategy, CTV offers a huge opportunity for advertisers.
Monetization Models for CTV Content
As more viewers flock to streaming video on Connected TV platforms, content creators and publishers are exploring different business models to generate revenue. The main monetization strategies are:
1.Subscription Video on Demand (SVoD)
This model relies on monthly/annual user subscription fees to access the CTV content library with limited or no advertising.
Examples: Netflix, Amazon Prime Video, Disney+, HBO Max
Revenue Model: 100% of income comes from recurring subscriber payments, scaling as more users sign up. Highly dependent on quality/quantity of content offering.
2.Ad-Supported Video on Demand (AVoD)
Content is available to viewers for free, funded entirely by advertising shown during or around the streamed videos.
Examples: Pluto TV, Tubi, The Roku Channel, Crackle
Revenue Model: Monetized through digital video ads sold programmatically or direct to brands. More inventory/viewer engagement = more ad revenue.
3.Hybrid/Ad-Supported Subscription (ASV)
Combines a paid subscription fee with ad-supported viewing. Viewers can pay less with some ads, or eliminate ads with higher subscription tiers.
Examples: Hulu, Paramount+, Peacock, Discovery+
Revenue Model: Diversified income from subscriber fees and ad sales. Often different content availability windows based on plan.
3.Live TV Streaming Services
Virtual MVPDs recreating the live cable bundle experience, but streamed over the internet to any device.
Examples: YouTube TV, Hulu + Live TV, DirecTV Stream
Revenue Model: User subscription fees cover costs of licensing live channel content, with income also from ad inventory across live feeds.
4.Transactional/Rental (TVoD)
Viewers pay per movie/show they want to watch, similar to old home video models. Content windowed before subscription availability.
Examples: Apple TV app, Prime Video, Google TV
Revenue Model: One-time rental fees, electronic sell-through of movies/shows. Can also package ad inventory.
Each model has pros and cons, with many CTV publishers exploring hybrid approaches combining subscription, advertising, and transactional revenue streams to drive growth and profitability as the landscape evolves.
Conclusion
There’s no denying that Connected TV advertising is transforming the video advertising landscape. As more viewers embrace streaming, CTV has become an essential platform for brands to reach engaged audiences in a premium, innovative and measurable way.
While still a nascent space, CTV offers powerful capabilities that traditional TV advertising lacked – precise data-driven targeting, interactive ad experiences, granular measurement, and advanced programmatic buying models. It bridges the gap between digital and linear, providing the best of both worlds.
However, the CTV ecosystem is highly fragmented and complex, with numerous players vying to solve its challenges around scale, ad interference, measurement standardization, and data privacy compliance. Brands entering this arena need to carefully evaluate their advertising strategies, creative approaches, and technology/data partnerships.
Despite its growing pains, the future of CTV advertising shines brighter than ever. Emerging innovations like AI optimization, immersive ad formats, shoppable TV experiences and more are set to captivate streaming audiences. As adoption rapidly accelerates, CTV represents a huge frontier for marketers to explore new boundaries in telling engaging stories.
By staying abreast of CTV’s evolution and following best practices around audience targeting, ad experiences, measurement and more, brands can forge powerful connections with viewers in their living rooms. For those willing to embrace change, CTV promises to elevate video advertising to incredible new heights.
