Five Reasons You Can’t Ignore Connected TV

Last Updated on August 18, 2022 by Valerie Jennings

Connected TV is everywhere, and it’s only the beginning! While Connected TV (CTV) Marketing is a new experience for consumers, marketers see it as an innovative way to reach a new, unique audience. Keep reading to learn why you shouldn’t pass on CTV ads.

What is Connected TV?

Connected TV is when TV content is streamed over the internet on devices like phones, tablets and laptops. While similar to traditional TV, Connected TV is over the internet and usually free or very affordable. Unlike traditional TV, Connected TV includes game consoles (ie. Playstation and Xbox),  SmartTVs, streaming devices (ie. Apple TV, Amazon Fire TV and Samsung Allshare Cast), and HDMI sticks (ie. Amazon Fire TV Stick, Roku and Chromecast).

CTV has three consumer groups:

• Paid TV households – households that pay for subscriptions to linear TV but use some CTV channels.
• Cord-cutters – households who switched from a pay-TV subscription to an internet-based streaming service.
• Cord-nevers – households that would never pay for TV and have solely adopted CTV channels.

What are Connected TV Ads?

Connected TV Advertising, also called Over-the-Top (OTT) advertising, allows marketers to show different ads to different viewers who are streaming the same show on Connected TV. These ads appear on streaming services like Netflix, Amazon Prime Video, Hulu, Disney Plus, YouTube TV and HBO Max. Connected TV ads are short, skippable online advertisements targeted to relevant content channels and/or audience groups, that are bought and sold programmatically. These are popular to advertisers as they allow for detailed targeting capabilities to help reach cord-cutting households. As more than 164 million Americans access video content through online streaming and more than 1 billion American households own Smart TVs, advertisers are seeing enormous opportunities, according to Choozle.

Not only do Connected TV ads allow for 100% view-ability — meaning all ads run full screen — it also allows for brand safety. Since ads are delivered during live TV or on-demand, viewers are reached across top-tier networks and popular content. According to ctvmedia, this has lead to an average completion rate of 98%!

 

Why is this interesting to marketers?

1. CTV is everywhere, and it’s only the beginning! Along with the many trends of 2021, CTV is definitely a huge one.The massive growth of Connected TV is creating huge opportunities for video advertising. In the past month alone, Connected TV has grown by 300%, meanwhile, it only accounts for 1% of TV ad dollars. eMarketer predicts CTV’s monthly users will reach 197.7 million by 2022. As CTV continues to grow, TV ad dollars are predicted to shift in the direction of Connected TV. According to 10thDegree, more than 60% of American households own a Connected TV and the numbers are only expected to grow. Yet only 15% of advertisers include CTV in their media plans! This means an enormous opportunity for marketers who get into the CTV-sphere early.
2. Reach your target audience. Connected TV is seen as the perfect strategy to achieve both scale and precision targeting, without sacrificing one or the other, according to Mediatel. Following strict analytical techniques, CTV allows marketers to target users depending on their geographic areas, demographics and interests — contrary to traditional TV advertising. Connected TV also leverages digital-like targeting through 3rd party audience data. These include:
   • In-market purchase intent: allows you to determine your audience based on whether they’re in the market to buy a specific type of service.
   • B2B Events: allows you to target users who have read about or attended a B2B event, webinar or conference on technology, retail, finance, and healthcare.
   • Decision Makers: allows you to target users based on their industry and ensure your ads get in front of people who control budgets and have the authority to purchase.
   • Past Purchases: allows you to target people who have made purchases in different categories.
3. Millennials love CTV. Millennials spend more time with streamed content than any other generation. According to Hubspot, one-third of all TV viewing among millennials goes to CTV content, and eMarketer reports 86% of millennials (and Gen Z) watch their favorite programs on CTV. Studies also show 67% of millennials are more likely to be in a CTV-only house and 25% do not even have pay-TV, as most millennials feel they don’t need conventional TV packages. What about the ads, you ask? A study by Hubspot shows that 45% of millennials are happy to watch ads on CTV, and 30% even share ads with others, like friends and family.
4. People don’t mind CTV ads. While Connected TV services are so affordable, people don’t seem to mind the ads. Not only are they aware that the cheap subscriptions come with ads, but due to the advertisers’ ability to target their audiences more closely on Connected TV, the ads are more appealing to each individual viewer. This helps provide a much higher ROI (return on investment) on Connected TV compared to traditional TV. According to 10thDegree, a recent study showed that “half of the respondents said they felt that watching ads is a fair value exchange for low-cost content. Moreover, ads on Connected TV were ‘less annoying’ than those on linear TV, according to the respondents.” Also, according to Martech Today, 56% of consumers cited TV ads as “the most important factor in driving their awareness of a service or product.”
5. Fully trackable. It’s important to understand how your advertisements are performing. Connected TV ads are fully trackable and let you measure both digital and traditional metrics such as ROAS, cost per acquisition, site visit rate, video completion rates and more. CTV ads are also fully integrated with Google Analytics so you can track your ad performance with the rest of your marketing strategies and efforts. As CTV ads are highly efficient in tracking the number of views, there is also flexibility in budgeting.
   Strategus also reports that you can cross-device track on Connected TV, which means that someone who is watching one of your CTV ads can be retargeted directly after a completed ad view on one or more of their other devices. According to Criteo, “consumers, on average, visit a website 4.1 times before making a purchase. Without cross-device tracking, single-device analytics might only show 2.9 total visits, which is 41% less than what’s actually happening. This could mean that the ads that are dropping in front of the consumer are irrelevant and not conscious of that prospect’s true position in their customer journey.” And no company wants that because irrelevant ads mean wasted money.

Concerns

While Connected TV brings a lot of potentials, there are still some challenges and concerns that need to be worked on. Firstly, according to Knorex, with more than 200 providers and more platforms scheduled to be released, there is a need for guidelines and operational standards for smooth implementation. There is also a lack of features, like flash and cookie support, which creates limitations when targeting viewers and attributing conversations.

Many marketers don’t believe the Connected TV channel will be commercially viable and are concerned about the scale and costs. TheDrum also points out that while different publishers use different platforms, not all platforms talk to each other which can make the targeting and some of the frequency capping not optimal.

We’re also seeing a lack of trust and confidence in OTT and CTV ads due to fraud issues. According to Business Insider, “over 20% of the OTT inventory has frauds.” However, various organizations are working on fraud protection. Knorex came up with “fraud protection techniques that are dedicated to helping clients confidently capitalize on the OTT/CTV opportunity.”

 

The Future of Connected TV

The potentials of CTV are undeniable, and IAB predicts big iterations for CTV in the next few years. These include ad targeting based on viewing information from OTT providers and matching it with other devices in the users’ homes, hoping to optimize the efficiency of ad campaigns. This will also help promote intent-based targeting.

Another predicted change for the future is that ads will be clickable. According to Strategus, ads that aren’t skippable allows for a “higher view rate and completion at almost 100%, but the drawback is the inability to take action and “click” on a CTV ad.” Marketers believe mobile devices will be connected for clickable CTV ads, but report a need for a “massive shift in creative strategy to create a smooth (and effective) transition from device to device.” (Strategus)

 

While there are some uncertainties about CTV and changes that will be happening over the next few years, what we do know is that Connected TV is the next big thing! What do you think about CTV and will you be implementing it in your marketing efforts? Let us know in the comments below. If you have any questions about CTV, contact us at 816-221-1040 or on our website. We’d be happy to help with your strategy!