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As CTV Advertising Evolves, Here’s What It Can Learn from the $200B Paid Search Model

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Driven by COVID-19, consumers have drastically shifted the bulk of their purchasing habits to online. In response, brands and advertisers have had to pivot their business models to reach those digitally reliant consumers. Companies also have to grapple with getting the attention of consumers who are constantly plugged into content on digital devices.

As of 2022, 92% of households were reported to be reachable by CTV programmatic advertising. Additionally, 85% of consumers report using second devices such as smartphones or tablets while watching television. And while marketers have always intuitively grasped television’s ability to influence sales, the arena has been historically dominated by a handful of advertisers who could afford the medium’s high cost-of-entry and smaller businesses have been forced to sit on the sidelines.

CTV advertisers are certainly doubling down. Digital ad spend increased by 49% and CTV advertising spend is expected to reach $50 billion by the end of 2022. That number is only forecast to grow as we enter into the 2023 planning season. Marketers of all sizes have before them a unique opportunity to capitalize on this evolving format.

But before they do that, it’s important to take a look at where innovation currently lies within CTV advertising, where it has room to grow, and how marketers of all sizes can find their place in the medium. Ironically, it’s likely going to require the industry to think back to the early days of paid search—and apply some of those same market principles to today’s formats—to usher in the renaissance of CTV advertising.

Where we’re at as an industry now

Television has never been inclusive of smaller brands and measurement of its effectiveness has always been elusive since it is not “clickable.” Traditionally, it has been anchored in 1:1 sales processes, expensive ad buys, and notoriously poor measurement and attribution.

These factors have resulted in the roughly $75 billion TV market being dominated by 500 advertisers who drive 85% of TV ad spend. Largely because of that, the market has stagnated while performance-based digital media, with its sophisticated approaches to precision ROI, has seen virtually unimpeded growth, and now accounts for over $200 billion in annual spend.

This does not have to be the case.

An important look back to understand how we got here

For the last 20 years, as consumers have spent more time online, ecommerce has exploded. And the key driver of online commerce is a concept that was introduced 25 years ago by marketing visionary Bill Gross in an Internet incubator in Pasadena, California. The advent of this revolutionary model would forever impact how goods and services were sold.

From today’s vantage point, his thought process behind this at-the-time startling innovation was fairly straightforward: What if consumers could identify people who already had a need for or an interest in something and put a relevant ad in front of them at the exact moment when they expressed it? And what if media were sold in an automated marketplace, where any marketer could reach a global audience instead of just a few, a few hundred or even a few thousand people?

This marketplace model was first implemented in Bill’s paid search engine, GoTo.com, which launched in 1997 and generated quick adoption by enabling millions of businesses to advertise to mass audiences. And that was just for starters—the marketplace model ultimately led to the re-invention of all digital media, from paid search (Yahoo, Google, Bing) to social media (Facebook, Snap, etc.) to display and video advertising (Yahoo, The Trade Desk, etc.), as well as new categories including ride sharing (Uber), food delivery (Instacart), event tickets (StubHub), real estate (Realtor.com) and property rentals (Airbnb). Today, nine million businesses participate in digital marketplaces like Google and Facebook, spending more than $200 billion annually.

History repeats itself; it will take marrying the old with the new to advance

So as the global marketplace becomes even more reliant on digital advertising, how can digital advertisers reach audiences that have become increasingly tech-savvy over the past few years?

Streaming TV is quickly becoming the dominant way consumers watch TV—today there are nearly half a billion paying subscribers between Netflix and Disney+ alone. This trend will only accelerate. And to reach these consumers, advertisers are flocking to TV in record numbers, enabled by search-like, self-managed CTV buying and measurement consoles that can measure actual business outcomes (e.g., website visitors and sales) and ROI that result from TV ad viewing on a deterministic basis. By 2024, more than 200,000 search and social advertisers will be active on CTV. Digital-first marketers that move to TV will usher in a new renaissance period of television advertising, benefiting content producers and consumers. And it starts today.

[Editor's note: This is a contributed article from tvScientific. Streaming Media accepts vendor bylines based solely on their value to our readers.]

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