The future of Connected TV advertising

A Time for Television

The world of television is undergoing a profound transformation, as viewers shift from traditional linear TV viewing to online streaming services. This transition is being enabled by the proliferation of internet-connected smart TVs, as well as increasing viewership on tablets, laptops and smartphones. Collectively, this kind of internet-enabled video consumption is known as Connected TV (CTV). But that label – leaning as it does on the outmoded noun ‘television’ – fails to fully communicate the opportunity that the shift to online video consumption presents to advertisers.

By 2025, an estimated 86.3 million US households will be CTV viewers, surpassing the number of homes using traditional TV. Remarkably, this means that within the next 12 months the potential reach of CTV advertising will outstrip that of traditional TV.

In the UK the adoption of CTV has been so rapid that the market is already close to saturation. A 2022 survey by LG Ad Solutions found that 94% of British adults are reachable by CTV, with 71% of survey respondents watching ad-supported services. Not only this, but 68% of respondents preferred ad-supported streaming services – presumably thanks to the lower cost.

The CTV Advertising Boom is Already Here

Ad-supported subscriptions present a lucrative opportunity for CTV publishers. The number of streaming services and video platforms offering quality content has grown rapidly over recent years, and CTV viewers do not want to pay hefty subscription fees for all of them. Streaming platforms understand this, with giants Netflix, Amazon Prime Video, and Disney+ all now offering cheap ad-supported tiers while raising the price of ad-free subscriptions. Meanwhile, over two-thirds of viewers on Peacock, Paramount+, and Hulu will be on ad-supported subscriptions next year. This is in addition to the ad space available on other streaming services like YouTube and Twitch, which might not traditionally be considered ‘TV’, but nonetheless compete for CTV viewers’ attention.

For advertisers this is all good news. More competition on the supply side should, in theory, lower prices for the demand side. Hopefully market forces will bring down the relatively high CPMs which have historically been paid for impressions on streaming services.

What’s more, the growing availability of advertising space on CTV does not represent a simple like-for-like transition from linear TV. Connected TV advertising offers several advantages over traditional TV, which makes it considerably more efficient without sacrificing reach:

• Precision targeting: Advertisers can target CTV ads based on a wide range of factors, such as demographics, interests, and viewing behaviors. This allows them to reach the right audience with the right message at the right time, rather than relying on the crude viewership data of traditional TV.
• Engaged viewers: When a viewer chooses to stream a video, they have made an active decision to watch that content. This is a significant change from linear TV, where viewers have not necessarily chosen to watch the specific show which is being broadcast. This means CTV viewers are typically more engaged with the content, with studies showing CTV achieves an attention rate of 82% vs 69% for linear TV.
• Measurable results: CTV advertising campaigns can be measured using a variety of metrics, such as impressions, views, and click-through rates. This allows advertisers to track the performance of their campaigns and adjust as needed. This is a big improvement over traditional TV, where the impact of an ad campaign is much more difficult to measure accurately.

Considering all of this, it should be no surprise that CTV ad spend has skyrocketed. According to Statista, Global CTV ad revenue will reach an astonishing $29.6 billion this year, more than doubling from 2020, and is projected to reach $42.5 billion by 2028.

The Future of CTV

CTV advertising is here to stay. Serious advertisers must learn to work with it today to harness its massive, and growing, potential. As CTV viewership continues to expand, advertisers will have ever more opportunities to reach their target audiences with effective and engaging ads.

Competition for high-quality ad placements will probably increase over time, as more and more advertisers enter the space, but this is likely to be offset by improvements in targeting and creative. In such a scenario, the advertisers and marketing experts who have been utilising CTV for the longest will be best placed to take advantage of these technological developments and maintain efficiency.

Here are a few developments in the CTV space showing promise for the future:

• Programmatic TV is a growing technology which allows advertisers to buy and sell CTV ads in real time using automated systems, much like existing programmatic solutions for digital display ads. It is already transforming the way TV advertising is bought and sold, making it more efficient for both advertisers and publishers, and will only continue to become more effective as the tech stack matures.
• New ad formats are being developed that are specifically designed for CTV. These formats are expected to be more engaging and immersive than traditional TV ads. However, progress in this area is hampered somewhat by the need for scalability and industry-wide creative spec standards which are yet to emerge.
• Advertisers are using more data than ever before to target their CTV ads. This is expected to lead to more effective and personalised advertising campaigns, especially when deployed in combination with machine learning. PubMatic and Magnite have both recently announced collaborations with data providers to improve the accuracy of their CTV inventory targeting. 

The Revolution is Televised

The transition to CTV is a tidal wave that is transforming the way TV advertising is consumed, bought and sold. For advertisers, it is making TV more accessible, efficient, effective, and measurable. As CTV viewership continues to grow and regulatory restrictions make other channels less effective, CTV will become an even more important and powerful option for advertisers to reach their target audiences. By leveraging the latest technologies and data, advertisers will be able create CTV advertising campaigns that are both effective and engaging well into the future.

If you’re a brand or advertiser interested in leveraging the power of CTV, get in touch with equimedia now to find out how we can help.