As the journey of digital advertising continues, connected TV (CTV) is unlocking the door to a new era of efficient and effective premium video. It is offering buyers the chance to reach deeply engaged audiences with highly viewable and personalised ads in a relatively uncluttered environment. While there are still some challenges to overcome to make the most of this opportunity, the year ahead will see substantial progress in CTV advertising.
The CTV opportunity
CTV is a term used to describe any TV set connected to the Internet, through which content can be consumed. CTV devices can be broadly divided into three groups – attached devices such as Apple TV, Chromecast, Roku and Amazon Fire TV; gaming consoles such as PlayStation, Xbox and Switch; and smart TVs that stream on-demand content without additional devices.
Viewer demand for CTV is surging as it provides both live and on-demand access to large volumes of made-for-TV content in a lean-back, living room environment. Publishers are also embracing a platform that delivers a premium user experience and allows them to reach new audiences via the TV screen.
According to a recent CoLab survey for FreeWheel in September 2020, including 506 marketing ad spend decision makers or influencers from UK, France, Germany, Italy and Spain, advertisers are making the most of this growth and CTV ad spend is expected to increase over 13% in the next 12 months.
CTV advertising combines the best elements of TV, such as the size of the video player and the viewing experience, with the strength of digital, which enables programmatic buying with targeting capabilities on an impression-by-impression basis. It allows campaigns and creative to be optimised in-flight, in response to real-time performance data, and has exceptional viewability, engagement and completion rates, with viewers watching 97% of ads to the end. What’s more, CTV advertising has a remarkable ability to drive brand metrics such as awareness and favourability.
While linear TV remains the most effective tool for mass reach, CTV complements this perfectly, allowing advertisers to access harder to reach audiences that aren’t necessarily watching traditional channels. It also enables smaller brands to access viewers in a TV environment that previously required bigger budgets.
With the year ahead expected to be a transformative one for CTV advertising, here are five trends the industry can expect to see.
Ongoing industry collaboration: While CTV inventory is plentiful, it is often fragmented across publishers and platforms, making it challenging for advertisers to achieve scale. Industry mergers and partnerships are already underway to address this situation, especially in the US, where last year saw acquisitions for Viacom (PlutoTV) and Disney (21st Century Fox), and the merger of CBS and Viacom. The OpenAP Market, launched in October 2019, allows advertisers to plan and buy campaigns across Viacom, NBCU, Fox and Univision, improving scale, reach and targeting capabilities. In Europe the European Broadcaster Exchange (EBX) is a multi-country joint venture between Mediaset, ProSiebenSat.1 Media, TF1 Group and Channel 4. Over the coming months these collaborations will make it easier to integrate multiple endpoints with unique specifications and allow advertisers to access premium, brand-safe CTV environments at scale.
Particular emphasis on addressability: With precise audience targeting one of the key benefits of CTV advertising, advancing addressability will be high on the agenda. In the US, project OAR (Open Addressable Ready) is a consortium that is establishing a common technology for dynamic, addressable advertising management and it includes FreeWheel, NBCUniversal, Discovery, Disney, CBS, AT&T and AMC Networks. It debuted its linear dynamic ad insertion technology at the Consumer Electronics Show (CES) in January, and live market trials were announced in June, marking the first time the OAR specification was used to deliver and manage addressable TV ad inventory in linear programming in the US.
Innovation in CTV: While traditional measurement solutions for TV and digital weren’t designed with CTV in mind, innovation in CTV measurement is now advancing rapidly, particularly through programmatic channels. The ability to target users through a device ID is a major step forward, allowing advertisers to leverage their first-party data to reach identified audiences. In addition, new solutions are emerging that enable advertisers to combine a viewer’s IP address and a user-agent string to create audience profiles, which is useful in the absence of a device ID.
Progress in industry standards: Advances in CTV measurement will drive progress towards industry standards in how to evaluate campaign reach, targeting and performance, but these aren’t the only areas where CTV standards will make headway. There will also be increased verification around viewability and fraud. Despite CTV being an inherently viewable format, with full screen ads and little opportunity for multitasking, advertisers expect the same viewability standards as other forms of digital advertising. Equally, there is demand to prove ads are seen by real people, despite CTV having high authentication rates due to logged-in environments. The industry is working with measurement companies to establish standards for CTV in line with the rest of the digital advertising world.
Education around the channel: As with any emerging channel, understanding and experience of CTV advertising is relatively low. Agencies, marketers and publishers all need to increase their knowledge around the benefits and limitations of CTV to intelligently buy and sell in the channel, so education will be paramount over the coming months. Advocates for CTV advertising that can deliver training and increase understanding of industry best practice will be vital to make the most of the channel’s potential.
CTV is advertising’s next frontier, combining the best of TV and digital to offer a premium viewing experience combined with unique targeting capabilities and exceptional reach. Over the coming year industry collaboration, an emphasis on addressability, progress in standardisation and a focus on education will allow the industry to begin the next stage in its journey, tackle any challenges head-on and realise its full potential.