Digital advertisers clearly have a lot of confidence in connected TV (CTV). According to data compiled by eMarketer, connected TV advertising will surpass $17 billion this year, and is expected to hit $21.4 billion by the end of 2023. Still, the question remains: Exactly where does connected TV advertising fit within your overall marketing strategy?
At enCOMPASS, we have been proponents of connected TV advertising for some time now and have guided many of our clients into effective CTV advertising strategies. Here’s a crash course in all things CTV, written with total beginners in mind.
What Is Connected TV?
A connected TV is simply any device that you can use to watch video streaming service. This may be a smart TV, or it may be a device that transforms your TV into a “smart one.” Think Roku, Apple TV, Amazon Fire Sticks, PlayStations, and Xboxes.
So, when we talk about connected TV advertising, we’re simply referring to the paid ads that brands place on these connected devices.
In recent years, connected TV has been heralded as an incredible new opportunity for advertisers to connect with audiences. The reason for this is simple: More and more households are cord-cutting, abandoning cable in favor of streaming platforms. Indeed, cord cutting is no longer a trend; it’s simply the norm. About four out of five Americans now consider streaming to be their primary way for watching TV. Connected TV advertising allows brands an entry into those households.
How Popular Is Connected TV Advertising?
It’s plain to see why viewers might prefer connected TV over traditional broadcast and cable options. Streaming content over a Roku or an Apple TV gives viewers more control to choose the channels and shows that they care about, rather than having their viewing preferences dictated by cable companies.
Certainly, streaming platforms have exploited this. YouTube, Roku, and Hulu currently make up about 50 percent of all ad revenues for connected TV. With that said, this is still a nascent field, and it’s sure to undergo some shifts and power trade-offs in the years to come.
For now, the one thing that cannot be denied is that a lot of people are watching connected TV. The data from eMarketer indicates that the average U.S. viewer now spends about 80 minutes each day streaming programming via connected TV, an increase of more than eight percent over the previous year.
Connected TV’s rising tide has lifted the prospects of even tiny, little-known streamers. For example, a small streaming company called Tubi saw their ad revenue increase by more than 111 percent in 2021. With that said, the big player in connected TV advertising remains Hulu, which saw $2.1 billion in ad revenues last year. Paramount+ is in second place. (Here, it’s probably worth noting that some of the most sizable streamers, including Disney+ and Netflix, don’t currently host third-party ads.)
How Does Connected TV Advertising Work?
So, what about brands that want to capitalize on connected TV’s rise?
With traditional TV advertising, you place ads (and determine ad costs) based on specific shows, air times, or channels. With connected TV, ads are broadcast based on the viewer. In other words, advertisers target and retarget based on user behaviors and demographics. So, ads aren’t tied to a show or a channel so much as to specific individuals. There’s an obvious benefit here, allowing advertisers to zero in on the consumers they wish to reach, without wasting ad dollars on a more general/unfocused audience.
As for the logistics of connected TV advertising, advertisers upload their creative to the platform of their choice, then choose their audience targeting options. The advertiser will also select launch time and budget.
Advertisers can work with a self-service platform, like Hulu’s ad manager, or else work with a robust DSP, like Stack Adapt, or The Trade Desk.
Another key consideration is tracking the effectiveness of a connected TV advertising campaign. Different brands will be interested in different metrics, but some of the most common ways to assess connected TV ad results include:
- Ad impressions (the number of times the ad is shown)
- Completion rate (the number of times the ad is actually watched to the end)
- Cost per completed view (or CPCV; the cost of the ad per completed view)
- Cost per thousand impressions (CPM)
Getting Started With Connected TV Advertising
As more and more viewers cut the cord and lean into streaming content, connected TV advertising represents a golden opportunity for businesses and brands. We’ve seen the incredible results that a well implemented and managed connected TV advertising strategy has yielded on behalf of our own clients.
Are you ready to explore options for including connected TV in your media mix? We’d love to chat with you whenever you’re ready. Reach out to the enCOMPASS team at your convenience.
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