It’s no surprise to hear that digital TV is ascendent, while traditional broadcast television is in decline. Even if you know this instinctively, however, the actual numbers can be bracing. For starters, just consider the fact that, by 2025, advertisers are projected to spend $30 billion annually on digital TV advertising. In 2022 alone, digital TV ad spend increased by a staggering 40 percent. Additionally, eMarketer data shows that, for the first time, digital video has actually overtaken linear TV in terms of total percentage of advertising budgets. These numbers do not represent blind faith or wishful thinking on the part of advertisers. Rather, they reflect a real sea change in how people consume TV content.
To put it as succinctly as possible, digital TV (which includes both connected TV and online video) is dominant, and it provides advertisers with an ideal avenue to connect with targeted viewers. In this post, we’ll take a closer look at this phenomenon, and explain some of the reasons why 2023 may be your year to make a big digital TV ad investment.
Connected TV, Linear TV, and Beyond: What Does it All Mean?
It may be helpful to start by clarifying some terms. Advertisers like to toss around terms like connected TV (CTV), linear TV, and over-the-top (OTT) TV. What do these terms really mean?
- Linear TV just refers to traditional television, the kind you might have watched pre-Internet. With linear TV, everyone is watching the same scheduled programming, delivered on air, via satellite, or by cable.
- Connected TV, or CTV, refers to a device that connects or is embedded in your television allowing you to connect and watch online content. Roku and Apple TV are two examples. So are the Xbox and PlayStation. Another term to know is over-the-top, or OTT, which is essentially the same thing as CTV.
- Online video is a term that encompasses pre-roll advertisements, which automatically play before a user-selected video, as well as mid-roll, which refers to ads that automatically play in the middle of a user-selected video. Online video ads may be served through mobile and desktop devices. They’re in a slightly different category from digital TV, but are essential to any video advertising strategy.
Together, online video and CTV have exacerbated the phenomenon of “cord cutting,” dealing a near-fatal blow to linear TV. In doing so, they’ve also upended the world of TV advertising, shifting the center of gravity from cable and satellite to the digital realm.
Why Advertisers are Flocking to Digital Video
Now let’s take a closer look at why that center of gravity is shifting. There are a few factors that explain why more and more advertisers are investing in digital video as opposed to linear TV.
Digital Video is Where the Viewers Are
We’ll start with the most obvious one: Advertisers want to go where the viewers are, and that’s obviously digital video. The current projection is that, by 2024, more than a third of all U.S. households will have cut the pay TV cord altogether, relying on CTV and online video for all of their entertainment and news programming.
Even as the number of streaming services continues to proliferate (and prices continue to rise), viewers still prefer to choose their preferred streaming networks a la carte as opposed to paying a big, expensive, bundled price for a bunch of cable or satellite networks they’ll never watch.
Digital Video Advertising is Easier than Linear TV Advertising
To be clear, there is still plenty of potential upside to advertising for big televised events, like the Super Bowl or the Olympics. The first problem with this is that it’s very expensive. The second is that it requires a lot of advanced planning; often, these linear TV ad campaigns must be mapped out months in advance.
By contrast, online video allows advertisers to use the programmatic method, something that’s much nimbler and requires less runway. In fact, advertisers can easily upload their digital video to a programmatic ad platform and start personalizing their campaign more or less immediately. Online video is especially easy to adopt in this regard.
Digital Video Offers Greater Reporting and Targeting Options
Linear TV advertising has always been limited by the lack of real-time reporting options, and by the paucity of audience targeting features. These are both areas where digital video excels, allowing advertisers to be much more judicious and strategic in how they allocate their campaign resources.
A well-run programmatic ad campaign not only lets advertisers zero in on the viewers they want to reach, based on anything from demographics to online viewing and purchasing behaviors, but it also provides options to track user interactions in real-time, allowing for on-the-fly campaign adjustments.
Furthermore, one of the things that we offer at enCOMPASS is the unique ability to layer audiences of any data, such as first-party CRM lists third party audiences from thousands of data partners, and target users across all formats including display, online video, CTV, and digital audio. We can then attribute conversions, foot traffic, and brand sentiment across multiple channels and track activities or online purchases that result from that ad. This is something that just can’t be done on the linear TV model.
Embrace Video Advertising in 2023
The trends are clear: For advertisers looking for the best, most efficient way to connect with an audience, digital video is the way to go.
We’d love to provide our services, whether that’s consulting on your digital video campaign or providing full campaign management. At enCOMPASS Agency, we’ve long championed the value in programmatic ad buying, and we’ve found it to generate consistently stellar results on behalf of our clients.
Ready to talk further? Reach out to the team at enCOMPASS Agency today. We’re here to answer any questions you may have about getting started with digital video advertising.
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