What Is Connected TV (CTV) Advertising?

CTV advertising refers to the delivery of ads on television sets that are connected to the internet, either directly through smart TVs or via streaming devices such as Roku, Amazon Fire TV, or Apple TV. This innovative form of advertising enables brands to serve targeted and often interactive ads to viewers who consume content via over-the-top (OTT) platforms and streaming services.

The Rise of CTV and Its Impact on Advertising

The rapid adoption of streaming services and internet-connected televisions has fundamentally altered the media consumption landscape. As viewers increasingly “cut the cord” and shift away from traditional linear TV to on-demand and streaming content, advertisers have adapted their strategies to reach these audiences effectively.

Key Statistics

CTV viewership surpassed linear TV in 2023, and almost 90% of US households have at least one CTV device. The CTV advertising market has been growing steadily, driven by factors including the increasing number of CTV users, expansion of streaming platforms, and shift in ad budgets from traditional TV to CTV. CTV ad spend in the US is projected to reach $40.9 billion by 2027.

CTV advertising has emerged as a transformative force in the world of television marketing, seamlessly blending the immersive experience of traditional TV with the precision and interactivity of digital advertising. As streaming services continue to gain popularity and smart TVs become ubiquitous, CTV advertising presents unprecedented opportunities for marketers to reach audiences in engaging, effective ways.

How CTV Advertising Works

CTV advertising operates on principles similar to other forms of digital advertising, utilizing programmatic technology to deliver targeted ads to specific audiences. This typically involves:

1. Ad inventory made available by streaming platforms or content providers
2. Advertisers bidding on this inventory through demand-side platforms (DSPs)
3. Real-time auctions determining which ads are served to viewers
4. Ads delivered seamlessly within the streaming content

This approach allows for more precise targeting and real-time optimization of ad campaigns, revolutionizing how brands reach their audiences through television.

Advantages of CTV Advertising

• Precise targeting: Advertisers can reach specific audiences based on demographics, interests, and viewing behaviors.
• Improved measurement: CTV provides more accurate data on ad performance and viewer engagement.
• Interactivity: Viewers can interact with ads, leading to higher engagement and conversion rates.
• Flexibility: Advertisers can adjust campaigns in real-time based on performance data.
• Cost-effectiveness: CTV often offers a lower cost per impression compared to traditional TV advertising.

Example: Successful CTV Advertising Campaign

A leading automotive brand leverages CTV advertising to promote a new electric vehicle model. By targeting eco-conscious consumers and using interactive ad formats, the campaign achieves significant lifts in brand awareness and purchase intent. The brand strategically utilizes demographic and behavioral targeting to reach viewers who have shown interest in sustainable living and electric vehicles. Interactive ad formats, such as virtual test drives and clickable features that provide detailed information about the vehicle’s eco-friendly attributes, spark viewers’ imagination. Additionally, the campaign includes retargeting efforts to remind viewers about the vehicle on device, further enhancing engagement. This comprehensive approach not only boosts brand visibility but also drives a measurable increase in consumer interest and intent to purchase the new EV model.

Challenges in CTV Advertising

• Fragmentation: The CTV landscape is fragmented across multiple devices, platforms, and content providers, sometimes making it difficult to achieve comprehensive reach.
• Standardization: Lack of universal measurement standards can make it challenging to compare performance across platforms and with traditional TV metrics.
• Ad fraud: As with other forms of digital advertising, CTV is susceptible to fraudulent activities, requiring robust verification measures.
• Privacy concerns: The collection and use of viewer data raise important privacy considerations, necessitating careful handling of user data.
• Ad fatigue: With the potential for increased ad frequency, there’s risk of viewer burnout. Frequency capping is important.

CTV vs. Traditional TV Advertising

While traditional TV advertising still captures immense value, CTV digital advertising technologies offer several distinct advantages:

Targeting

• Traditional TV: Broad audience targeting based on program content and time slots
• CTV: Granular targeting based on viewer data and behavior as well as programming environment, enabling more personalized ad experiences

Measurement

• Traditional TV: Often limited to panel-based ratings and broad viewership estimates
• CTV: Detailed performance metrics, including impressions, completion rates, and conversions, allowing for more accurate ROI calculations

Ad Formats

• Traditional TV: Standard 15-, 30-, or 60-second spots
• CTV: Various formats, including interactive ads, shoppable ads, and addressable TV ads, enhancing viewer engagement

Key Players in the CTV Advertising Ecosystem

The CTV advertising ecosystem comprises several key players:

• Streaming platforms such as Hulu & YouTube TV
• Device manufacturers such as Roku & Amazon
• Adtech providers such as The Trade Desk & Adobe Advertising
• Content providers and TV networks
• CTV measurement and analytics companies such as Kochava

Targeting and Measurement in CTV Advertising

CTV advertising leverages advanced targeting capabilities, including:

• Demographic targeting
• Behavioral targeting based on viewing habits
• Contextual targeting aligned with content
• Retargeting across devices

Measurement in CTV advertising is capable of providing comprehensive insights:

• Impression-level data
• View-through and completion rates
• Attribution modeling
• Cross-device attribution

Leveraging CTV Advertising Across Industries

Different industries can tailor CTV advertising to their specific needs:

• Retail: Showcase products with interactive, shoppable ads
• Automotive: Offer virtual test drives and local dealership information
• Travel: Provide immersive destination experiences and real-time booking options
• Finance: Educate viewers on financial products with interactive tools and calculators

Future Trends in CTV Advertising

As CTV advertising continues to evolve, several trends look to shape its future:

1. Adoption of addressable TV advertising: Allows different ads to be shown to different households watching the same program, maximizing relevance and efficiency
2. Integration of artificial intelligence for improved targeting and optimization
3. Growth of shoppable TV ads, enabling direct purchases through the TV screen
4. Enhanced personalization of ad experiences
5. Convergence of linear TV and CTV advertising strategies

CTV advertising represents a significant shift in the television marketing landscape. As technology continues to advance and viewer habits evolve, CTV advertising is poised to play an increasingly central role in media strategies. Marketers who embrace this medium and navigate its complexities stand to gain a huge competitive edge in reaching and engaging their target audiences.

Comprehensive CTV Solutions From Kochava

To fully harness the potential of CTV advertising, advertisers need to leverage advanced attribution techniques and comprehensive solutions like those offered by Kochava. Kochava provides out-of-the-box support for app measurement across major CTV devices, including smart TVs; streaming devices such as Roku, Amazon Fire TV, and Apple TV; and gaming consoles like Xbox and PlayStation. These tools give marketers deep insights into user engagement, attribute specific viewer actions back to CTV ads, and optimize ad spend. Kochava’s cross-device attribution capabilities allow for a holistic view of the customer journey, connecting ad exposures on CTV with actions taken on other devices. By adopting a test-and-learn approach and continuously optimizing campaigns based on attribution data, marketers can drive meaningful business outcomes.

Check out our Marketer’s Guide to Over-the-Top (OTT) and Connected TV (CTV)