We all know that TV viewership has undergone a significant transformation in the last few years, with more people “cutting the cord” and opting for non-traditional viewing experiences via over-the-top (OTT) platforms, or streaming services. And as the vast majority of viewers stream content on Connected TV (CTV) devices, such as smart TVs, Roku, and gaming consoles, advertisers who are looking to tap into this growing audience must learn to navigate the CTV landscape to execute high-performing ad campaigns.
The rapid expansion of the OTT landscape has helped to propel the CTV market’s growth. In 2023, an astounding 88% of US households owned at least one internet-connected TV device, according to Statista. This shift in consumer behavior has helped usher CTV advertising — a dynamic, fast-growing, and cost-effective media channel — into rapidly growing prominence.
With CTV advertising, brands have a unique opportunity to reach a wider audience of cord-cutters, cord-nevers, and other digital content consumers, while increasing brand awareness and cost-efficiency. Similar to OTT advertising, this advertising format enables advertisers to deliver “in-stream ads” to precisely targeted audiences, which appear before, during, or after a streaming video.
While OTT ads are delivered on premium OTT platforms like Netflix or YouTube and can be viewed across multiple devices, CTV leverages programmatic advertising to deliver ads on CTV environments, like smart TVs and Roku, and are typically viewed on a TV screen. And compared to traditional TV commercials, CTV advertising provides an immersive viewing experience, as ads often blend seamlessly with the content. This typically leads to higher engagement and receptivity to ads among viewers, making CTV advertising an optimal media format for advertisers.
While the CTV landscape may seem complex at first glance, this guide will provide expert tips on understanding the CTV landscape, including how fast it is growing, the advantages of CTV advertising, the top publishers, and trends.
How Fast is CTV Advertising Revenue Growing?
With the increasing popularity of streaming services, more people are departing from traditional linear TV and streaming content through CTV devices. Today, less than 50% of US households subscribe to traditional pay-TV services and that rate is steadily declining. In contrast, around 85% now have at least one subscription to a video streaming service, such as Netflix, Hulu, or Amazon Prime Video.
As a result, streaming services are shifting their focus from increasing subscribers to boosting profits. Not surprisingly, more of these platforms are adopting an Advertising-based Video On Demand (AVOD) media distribution model: offering ad-supported subscription plans and increasing their ad loads.
To capitalize on this shift in the advertising industry, brands are turning to CTV to improve their targeting capabilities and maximize their ad budgets. As such, CTV ad spending is growing at an unprecedented rate.
In 2023 alone, global CTV advertising revenue was expected to reach nearly $26 billion US dollars, a 13% increase from the previous year. A recent report from Group M forecasted continued growth, with an expected 9.5% Compound Annual Growth Rate (CAGR) for CTV through 2028. A different report by BIA Advisory Services has predicted CTV to be one of the fastest-growing media channels in 2024, with an increase of 39.5% in ad spending from 2023.
What Are the Advantages of Advertising Through CTV?
There are several benefits for advertisers looking to enter the CTV landscape, from access to highly targeted and engaged audiences to cost-effective ad campaigns. It’s important to note, however, that the success of your CTV ad campaign is based on your specific campaign goals, media budget, ad creative, market trends, and other key factors. Below we’ll discuss a few key advantages of running ads on Connected TV devices:
Higher Ad Completion Rate and Exposure
In general, people have low attention spans, and many viewers will skip an in-stream video if there’s an option to do so. For this reason, video completion rate and exposure are critical attention metrics that’ll help determine the impact and success of your CTV campaign.
The completion rate and exposure are often higher for CTV advertising than other digital advertising formats for several reasons. With CTV, advertisers can expect viewers to watch video ads from start to finish because typically viewers must watch the entire ad before resuming their content. This feature helps drive an impressive video completion rate of 97% for CTV ads, compared to 70% for other video ads, leading to more ad exposure and visibility.
CTV ads are also highly targeted, delivering ads to a relevant audience that is more likely to pay attention to them. Lastly, people engaging with CTV content are most likely in a relaxed environment, which increases the chances they’ll watch the entire ad.
Robust Audience Behavioral and Interest Data
Connected TV has a massive global audience, with over 183 million viewers across the globe. This gives CTV publishers access to a variety of data points on individual viewers, including geographic location, viewing history, and psychographics. With access to robust and reliable audience data, advertisers can deliver highly targeted ad campaigns to consumers who are most likely to engage and convert. In fact, 23% of CTV viewers purchased after seeing an ad, compared to a 12% conversion rate for linear TV.
Increased Reach and Cost-Effectiveness Compared to OTT
OTT and CTV are both effective digital advertising methods; however, CTV provides more opportunities for advertisers to tap into new audiences. CTV ads can run on streaming services, smart TV apps, gaming consoles, and even on-demand video platforms, while OTT ads reach the same audience on their different devices.
CTV also provides more value for your money by leveraging programmatic advertising. This allows advertisers to set a budget and control costs while maximizing the impact of their campaigns through automation and real-time bidding. In addition, CTV advertisers typically have access to more premium, ad supported content compared to the limited inventory on OTT platforms. With less competition, CTV yields lower CPMs and can help you reach your target audience at a lower cost.
Real-Time Performance Tracking
When it comes to campaign measurement and reporting, CTV has an undeniable advantage over linear TV advertising. CTV placements can take advantage of real-time reporting and measurement, enabling the rapid review of performance metrics and optimization throughout campaigns. In contrast, linear advertising typically relies on overnight ratings and delayed reporting, making it difficult to make timely adjustments. With this feature, advertisers can improve their campaign’s efficiency and improve key metrics like conversions, acquisition costs, and return on ad spend (ROAS).
Who Are the CTV Ad Publishers You Should Consider and Why?
While there are several publishers in the CTV advertising space, a select few have established themselves as top players. These publishers give advertisers access to large national or global audiences, an inventory of quality content, and advanced targeting and measurement capabilities. Below are some of the largest CTV publishers for you to consider:
Netflix
Netflix is one of the most popular streaming services, with over 200 million subscribers across the globe and an inventory of premium and original content. The streaming giant recently launched an ad-supported plan to provide a more affordable subscription for price-sensitive users. Within a year of its launch, Netflix had amassed 15 million monthly active users on its cheaper, ad-supported tier.
With this broad viewership, expansive content inventory, advanced targeting functionality, and top-notch measurement capabilities, Netflix gives advertisers a unique opportunity to deliver highly relevant ads to diverse audiences.
Amazon Prime Video
Amazon Prime Video is another top CTV publisher, as the streaming giant boasts an average monthly audience of more than 155 million viewers across Amazon ad-supported streaming TV. The service offers full-screen, non-skippable streaming TV ads that appear before, during, or after popular streaming content across its inventory, including Amazon Freevee, Twitch, Thursday Night Football, and Fire TV channels.
Disney+
With its vast library of movies, TV shows, and original content, Disney+ is a strong contender in the CTV landscape. Currently, Disney+ with ads has 5.2 million subscribers. That number is expected to grow –– and quickly –– since about half of new Disney+ subscribers are choosing the ad-supported plan when they sign up for an account, according to the company. Even more, the service reported a 35% increase in engagement on this tier from March to September 2023.
ABC
ABC is a major broadcaster that has positioned itself as a top player in the CTV landscape. The platform offers a mix of live programming and on-demand video content, including popular shows like Grey’s Anatomy and Scandal, which attract loyal and engaged viewers from across the US.
HBO Max
Max, formerly HBO Max, bundles iconic series like Game of Thrones and Succession, box-office hits, sports, and more into one platform. The streaming service recently added more news content with CNN Max and more than 300 live events annually with the Bleacher Report sports add-on –– allowing advertisers to reach more diverse audiences with different interests.
Max’s viewership is expected to grow with the merger of its parent company, Warner Bros., with Discovery and its expansion into Latin America and Europe in 2024.
Hulu
Hulu, which is owned by Disney, has also staked its claim as a top player in the CTV advertising space. Similar to ABC, it offers a mix of live and on-demand video content. The streaming service has nearly 44 million paid subscribers for its on-demand product and features an extensive collection of original hits like Jack Ryan and The Marvelous Mrs. Maisel. It also has the second-largest live TV streaming service in the US at 4.6 million subscribers, which is a great option for cord-cutters who still want access to live programming.
Peacock
With 28 million subscribers, Peacock is emerging as a top CTV publisher in the market. With fan favorites like The Office and Law & Order, original shows, live sports, and hits from NBC, Bravo, and Telemundo, the streaming service is becoming a popular destination for on-demand content consumption.
Its base plan, Peacock Premium, is an ad-supported tier, which drove nearly 70% of the platform’s sign-ups in 2023, according to recent data. That’s more than double the industry average, as only one-third of streamers overall chose an ad-supported option in the same year.
Which Platform to Use?
Working with an advertising partner, such as AUDIENCEX, can help you make data-driven decisions on which platform, or combination or platforms, is most effective to help you meet your specific campaign goals. For all of our client campaigns, including those on CTV, we use our extensive data, AI, and machine learning technology access to empower unbiased recommendations across channels. Our tools enable us to make the ideal channel mix decisions for every custom holistic strategy, saving our brand and agency clients significant amounts of time and ensuring optimized performance from their spend.
Which CTV Trends Should You Take Advantage of to Increase ROI?
CTV advertising is a rapidly growing media channel with ample opportunity for advertisers to reach a precise audience and maximize their ad spending. As we look ahead to 2024, there are several CTV trends to follow, and we’ve highlighted a few below:
- The rise of free ad-supported streaming TV (FAST) networks: As subscription video-on-demand (SVOD) services, such as Netflix and Hulu, continue to raise their prices, viewership is shifting to low-cost or completely free options like Pluto TV and Freevee. As of 2023, 57% of TV viewers watch content on FAST channels, according to eMarketer.
- The value of advanced, real-time reporting: It’s more important than ever for advertisers to understand exactly how well campaigns are performing in real-time and how to optimize them for success. This enables brands to maximize their impact while improving their ROI. And with an effective attribution model, advertisers can make data-driven decisions when planning future campaigns.
- Taking an audience-first approach: With more streaming services coming to market, viewers have more choices than before, leading to an increase in fragmentation. To be successful, advertisers must implement an audience-first strategy that focuses on targeting specific audience segments –– rather than specific platforms –– to reach viewers with relevant ads.
With these trends in mind, CTV advertising provides powerful features that can help advertisers take advantage of these trends, create a winning ad strategy, and boost ROI. Let’s explore two of them below:
Dynamic Ad Insertion to Deliver Ads to Individual Viewers
Today’s consumers demand personalized experiences from the brands they choose. In fact, 71% of consumers expect a certain level of personalization and 76% get frustrated when they don’t find it, according to a recent McKinsey study. Brands benefit too, as personalization drives campaign performance — including increasing marketing ROI by 10 to 30% — and improved customer outcomes.
With dynamic ad insertion (DAI), advertisers can meet consumers’ expectations and boost ROI by delivering personalized and targeted ads that perform well by driving engagement.
How does DAI on CTV platforms work?
This is accomplished by gathering user data on individual viewers, such as their preferences, location, demographics, and past viewing behavior. Typically, CTV publishers will provide access to first- and third-party audience data that deliver valuable insights to help you hone in on specific audiences. Next, a database is created of different ad creatives, with varying messaging, imagery, or calls-to-action, that will resonate with each audience segment.
As someone is viewing a TV show or movie in real time, the DAI technology evaluates the available user data, selects the most relevant ad from the creative stack, and dynamically inserts it into the content stream. As a result, each viewer sees an ad that’s personalized to their profile and preferences.
Programmatic Advertising for Highly Accurate Targeting
CTV leverages programmatic advertising, a data-driven, technology-automated method of purchasing and delivering ads to viewers through demand-side platforms (DSPs). It enables advertisers to automate the ad-buying process while delivering a more personalized and relevant brand experience to consumers. Through programmatic advertising, you’re able to buy and place video ads in real time, based on user data, to increase the cost-effectiveness and efficiency of your ad campaigns.
How does programmatic advertising on CTV platforms work?
Similar to using dynamic ad insert, you must start with compiling user data to build precise audience segments based on criteria like demographics, interests, location, and consumer behavior. Using these audience segments, programmatic ad buying uses automation and advanced algorithms to help advertisers pinpoint when and where to deliver content based on the pre-defined audience segments, enable real-time bidding (RTB), and automatically buy media space relevant to their audiences in milliseconds.
Programmatic advertising not only saves time compared to traditional TV advertising tactics; it also helps you reach your target audience at the right moment and at a competitive price, increasing your overall ROI. Working with a partner like AUDIENCEX, you can gain access to experts who can leverage programmatic buying effectively for your specific, individual campaign needs and goals. With advanced custom AI technology, privacy-safe data partnerships, and extensive expertise across channels and verticals, working with a partner can give you a clear advantage over your competition and ensure that you’re maximizing the performance of any budget.
Master Connected TV Advertising Campaigns Easily with AUDIENCEX
The CTV landscape is evolving, and it presents a massive opportunity for advertisers to reach a highly engaged and targeted audience while making the most of their budgets and resources. With an ever-increasing viewership, the CTV market isn’t showing any signs of slowing down. Our team at AUDIENCEX can help you take advantage of the burgeoning CTV space and all it has to offer. As an AI-enabled digital advertising partner, we leverage emergent technology to build custom audiences, optimize campaigns in real time throughout their lifecycles, and provide full transparency into performance throughout the digital landscape. With behavioral insights, predictive analytics and forecasting, we enable data-driven decisioning on any channel.
Our strategic experts can help you create and deploy a custom, holistic ad strategy that reaches niche audiences on CTV while integrating it effectively into your overarching, omnichannel strategy. Leveraging our seamless media access across mobile, social, display, digital out-of-home, and other advertising channels, we can scale performance rapidly throughout the entire customer journey, finding your ideal audience and driving conversions anywhere they are.