Connected TV (CTV) advertising has grown exponentially in recent years. This has been largely driven by changing preferences towards streaming services over traditional linear TV. As audiences seek greater flexibility and control over their viewing experiences, they are increasingly turning to CTV platforms for entertainment.
Consumer preference for streaming services
Consumers have a plethora of options when it comes to consuming content. Subscription-based streaming services like Netflix, Amazon Prime Video, and Disney+ have changed the way people watch television shows and movies. These platforms offer a vast library of on-demand content, allowing viewers to watch what they want, when they want, without the constraints of scheduled programming.
The widespread adoption of CTV devices has further fueled the shift away from linear TV. Smart TVs, gaming consoles such as Xbox and PlayStation, and dedicated streaming devices like Roku and Amazon Fire TV have become ubiquitous in households around the world.
As a result of this shift and these new platforms, linear TV viewership has declined in recent years. Traditional television networks, which once dominated the media landscape, are now facing stiff competition from streaming platforms. Advertisers are recognizing the need to adapt their strategies to reach audiences where they are spending more of their time—on connected TVs.
Benefits and challenges of CTV advertising
Benefits
Precise targeting:
CTV advertising offers marketers the ability to precisely target their desired audience using first-party data. Unlike traditional linear TV, where advertisers largely rely on broad demographic groups tied to broadcast schedules, CTV allows for granular targeting based on specific user characteristics and behaviors.
According to a report by eMarketer, 74% of marketers believe that audience targeting is the most significant benefit of CTV advertising. This clearly displays the importance of precise targeting in maximizing the effectiveness of advertising campaigns.
Enhanced engagement:
One of the key advantages of CTV advertising is its ability to engage audiences through interactive features and immersive storytelling. Unlike traditional TV ads, which are often passive viewing experiences, CTV ads can incorporate interactive elements such as clickable overlays, interactive polls, and shoppable content. Research conducted by Innovid found that interactive CTV ads drive 47% higher engagement rates compared to non-interactive ads.
Measurable data:
One of the significant advantages of CTV advertising is the ability to measure campaign performance and gather actionable insights in real-time. When making use of advanced analytics tools and tracking technologies, marketers can track key metrics such as ad impressions, click-through rates, and conversions.
According to a study by Nielsen, 78% of CTV advertisers believe that the ability to measure campaign effectiveness is a critical factor in their decision to invest in CTV advertising. The availability of measurable data lets marketers make data-driven decisions, iterate on their strategies, and maximize the ROI of their advertising investments.
Challenges
Ad fragmentation:
One of the primary challenges facing CTV advertising is ad fragmentation, stemming from the proliferation of streaming platforms and devices. Unlike traditional linear TV, where ads are delivered through a handful of channels, CTV ads must contend with a fragmented landscape comprising numerous streaming services, connected devices, and operating systems.
This fragmentation complicates ad delivery and targeting, as advertisers must navigate multiple platforms and formats to reach their intended audience. Moreover, viewers’ fragmented attention spans across various platforms pose challenges in capturing audience attention and achieving optimal campaign reach and frequency.
Privacy concerns:
Privacy concerns are another significant challenge for CTV advertising, particularly regarding the collection and use of user data for targeted advertising. As CTV platforms gather user information, including viewing habits, preferences, and demographics, there is a growing risk of consumer backlash and regulatory scrutiny.
Recent data privacy regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), have heightened awareness around data privacy issues and placed restrictions on the collection and use of personal information for advertising purposes.
Technical limitations:
Technical limitations present another hurdle for CTV advertisers, encompassing issues related to ad delivery, compatibility, and creative capabilities across different platforms and devices. Unlike traditional TV advertising, which adheres to standardized formats and delivery methods, CTV ads must accommodate a diverse range of streaming protocols, screen sizes, and interactive features.
For example, advertisers may encounter challenges in making sure that their ads display correctly across various CTV platforms, such as Roku, Apple TV, and Amazon Fire TV, each with its unique specifications and requirements. Additionally, the lack of support for interactive or dynamic ads on certain CTV devices limits advertisers’ creative flexibility and hampers the effectiveness of their campaigns.
Strategies for CTV marketing
Content-centric approach
CTV advertising can craft compelling and tailored content that aims to drive engagement and improve brand visibility. Creating content that resonates with viewers’ interests and preferences lets marketers effectively capture their attention and leave a lasting impression.
Tailoring content for viewer engagement
One of the primary advantages of CTV advertising is the ability to deliver highly targeted content to specific audience segments. Marketers can leverage data analytics and insights to understand viewer demographics, interests, and behaviors, allowing them to tailor their ad content accordingly.
Multi Platform integration
Consumers interact with brands across multiple channels and devices. To maximize reach and effectiveness, marketers must adopt a multiplatform approach that integrates CTV ads with other digital marketing strategies seamlessly.
Amplifying reach across channels
Integrating CTV ads with complementary digital platforms helps marketing channels such as search engine marketing, social media, email campaigns, and influencer marketing. With cross channel advertising, brands can amplify their reach and engage with audiences at various touch points throughout the customer journey.
CTV ads paired with other digital marketing channels lets marketers gather valuable insights and optimize campaign performance across platforms. Analyzing cross-channel data and metrics means brands can identify trends, measure attribution, and refine targeting strategies to maximize ROI.
For instance, a subscription-based streaming service may track user engagement metrics across CTV, social media, and email channels to gauge the effectiveness of its promotional campaigns.
Customer loyalty improvements from interactive experiences
Interactive ads engage viewers while creating deeper connections and drive customer loyalty. Interactive experiences that are fun, informative, and relevant to viewers’ interests, brands can strengthen brand affinity and encourage repeat engagement.
This can be demonstrated by a streaming service that may create interactive ads that allow viewers to vote on upcoming content or participate in exclusive behind-the-scenes experiences. When offering unique and interactive opportunities, brands can reward loyal viewers and cultivate a dedicated fan base.
The future of CTV advertising
Privacy-compliant targeting
In the wake of increasing concerns about data privacy and regulations surrounding online advertising, CTV offers a privacy-compliant alternative that lets marketers reach target audiences effectively without relying on third-party cookies.
Increased spending
Predictions indicate a significant increase in CTV ad spending, driven by the shift towards privacy-compliant targeting and the growing popularity of streaming services among consumers.
Consumer preferences
Consumer surveys explore the importance of CTV advertising, with a majority of respondents expressing willingness to watch ads in exchange for free, high-quality content.
Accelerated adoption
The pandemic and the rise of streaming services have accelerated the adoption of CTV, presenting lucrative opportunities for marketers to connect with audiences in innovative ways and drive better campaign results.
Main takeaways
As advertisers reallocate their budgets towards CTV and adapt to the changing demands in advertising, staying informed about the latest trends and technologies is paramount for maintaining competitiveness and driving successful campaign outcomes. Embracing effective strategies and anticipating future developments means marketers can leverage the power of CTV to engage audiences, drive brand growth, and achieve their marketing objectives.
