Connected TV (CTV) gives viewers a new way to experience advertisements and advertisers a new way to reach their audience. As a result, CTV is an opportunity for agencies to deliver a ton of value to their clients. However, connected TV's strengths—precision targeting and accurate measurement—can trip marketers up if they aren't properly navigated. 

This article explains CTV and how it can be used effectively in media plans to provide the best possible ROI for your clients. 

What is CTV?

Simply put, connected television is just that: TV and the internet. We're talking about smart televisions, Roku, or any other television with a built-in internet connection. 

With most AdTech terms, there are a few buzzwords associated. For example, advanced tv and programmatic tv. Advanced TV is the umbrella term referring to all of the areas of CTV. CTV is the actual device that connects to the internet. Marketers can place programmatic ads through these CTV devices. 

If you're reading this article, you are most likely familiar with programmatic advertising. For those who are not, let's define the term. Programmatic advertising is the media buying process through automated technology, as opposed to the traditional (often manual) methods of buying advertising space. Programmatic placements use real-time bidding to buy and sell ad space on a per-impression basis. 

Combine programmatic advertising with CTV, and you get Programmatic TV. Unlike traditional television, where ads are targeted based on your neighborhood and individual networks, Programmatic TV ads are targeted to a particular household based on unique attributes and consumer behavior. Instead of generalizing an entire geographic area into the same demographic and interests, marketers target the individual. 

Everyone is cutting the cord. Surveys held between 2020 and 2022 found that the share of adult Americans who said that they were likely to cancel their pay-TV subscription increased by five percent. In addition, as of January 2022, one in three respondents stated plans to cut the cord (Statista, 2022). 

The modern television format is internet-connected devices with access to streaming services. CTV ad spend has a projected growth of 34.6% to $6.41 billion this year (eMarketer, 2022). Look at the downfall of traditional television and think about yourself. What do you watch TV on? What about online videos? It's likely your customer does the same. 

What is CTV Advertising?

In the simplest terms, CTV advertising is when advertisers reach their audience through an internet-connected television. If you've read the article this far, the following statement should make sense; CTV advertising refers to ads run programmatically through OTT services and accessed by an internet-connected television (CTV).

CTV… OTT… WTH?!

Digital advertising language is, if anything, a neverending list of acronyms. So, after learning all of the PPCs, ROIs, ROAS, CTAs, SEMs, SEOs, CPCs, CPCV, CPM, eCMP, vCPM, and UXs of the digital marketing world, we're going to add a few more to that list. 

Connected TV (CTV) lives within the over-the-top (OTT) media umbrella. How are these different? Let's break it down. We'll review these terms to develop a thorough understanding of the topic. 

What Is the Difference Between CTV and OTT? 

CTV is a television device that connects to the internet. OTT is the delivery mechanism for video advertising content online. OTT is content-based, and CTV is the actual device. For example, Roku, a CTV device, enables televisions to connect to Hulu, an over-the-top media service.

All of this is important because of how the modern audience views content. 92% of U.S. households are reachable via programmatic CTV advertising, according to this 2022 report.

What is OTT (over-the-top)?

Over-the-top (OTT) is the mechanism (or service) through which online video content is delivered. It is the replacement of traditional cable or satellite television. OTT content can be consumed on any device such as a TV, a phone, tablet, or computer. In addition, content is accessed through streaming services including Netflix, Hulu, Amazon Prime, Peacock, as well as other streaming on-demand services.

What is Linear TV?

Linear Television is the traditional way of accessing television content. Linear TV content is accessed through a subscription to cable or a free-to-air signal, as opposed to via the internet (OTT). As a result, linear TV content relies on the broadcaster's schedule.

The Elements of an Effective CTV Advertising Strategy

Given the growth trajectory of CTV advertising, marketers should be particular about their advertising strategy with these methods. What should we do for connected television versus browser, mobile, and in-app? CTV has its strengths and limitations, and the approach does have to be unique.

CTV advertising gives marketers direct access to their premium audience base. It is proven that CTV advertising extends a brand's audience reach, provides deeper interactivity, and provides more ad slots for advertisers to fill as needed, according to a 2020 study conducted by the ANA.

The Advantages and Challenges of CTV Advertising

In general, CTV advertising comes with a few key features - each of which has pros and cons.

CTV ads are non-skippable. Advertisements have higher completion rates with 100% viewability. Users can't scroll down or bounce to another tab in their browser. However, the viewer may not be as engaged. Much of your audience may be grabbing a snack or looking at their phone while the ad plays. To counter this, advertisers are testing a new ad format on select platforms, where viewers "choose their own adventure." The viewer has the opportunity to watch a shorter advertisement in exchange for manually selecting which commercial to play. 

CTV ads are typically non-clickable. Advertisers are forced to focus their creatives on the idea of brand development over direct lead generation. However, some clever advertisers are working around this by including a trackable CTA on their ads. For example, during Super Bowl LVI, the crypto trading platform Coinbase aired a commercial featuring a QR code bouncing around the screen like an old DVD player screensaver. Following this commercial, Coinbase saw app installs jumping 309% week-over-week (TechCrunch, 2022).

CTV has a premium audience base. Elevated brand recognition via blending retargeting of viewers who have seen your ad is the main driver behind campaign efficiency. For branding messages to be most efficient, tailored content should be delivered repeatedly to the target audience for reinforcement. Compared to Linear TV, CTV ads are substantially easier to track through cross-device technologies, and these technologies will only improve over time. 

The Future of CTV Advertising

Given the projected growth of CTV device sales, and ad spending budgets displaying a clear trend of moving from traditional platforms to streaming TV and other smart devices, the future of CTV/OTT advertising shines with positivity and growth.

While CTV ad spend is predicted to grow 34.6% this year, total digital video ad spend increased 49% in 2021 and is expected to reach nearly $50 billion in 2022, according to IAB's 2021 video ad spend and 2022 outlook report. CTV ad spend will continue to grow with digital video ad spend growth. Recently, OTT services have been experimenting with interactive ads, where the audience chooses their ad experience. This new feature provides advertisers with more data on users to match viewers with advertisements that spark an interest and, hopefully, lead to a conversion. 

How the Right Digital Media Partner Can Help

Like other advertising channels, strategy accounts for the first half of a successful CTV/OTT campaign. As mentioned above, CTV advertising has its pros and cons. Therefore, blended retargeting of viewers who have seen your ad, and successful follow-up, is the best way to maximize both CTV and OTT advertising campaigns. Working with a well-versed media execution partner means you have someone monitoring campaigns and executing media strategy for your agency, so you can focus on what is essential. Your agency and your clients.

Are you ready to explore the benefits of working with a digital media agency partner? Then, get in touch with Pathlabs to learn how we can become an extension of your team.