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Will CTV Always Play Second Fiddle to Linear TV?

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Connected TV (CTV) has been attracting a great deal of new interest from viewers, media buyers, and advertisers. This has meant that CTV entertainment has grown significantly in popularity, and advertisers have taken notice. Ad spending on CTV is expected to spike by over 40% from $8.11 billion in 2020 to $11.36 billion in 2021, reaching $18.29 billion in 2024.

The big boost in CTV ad revenues can be linked to several factors from the past year in video entertainment. During the pandemic, people got a great deal more of their entertainment at home, and spent time getting acquainted with the capabilities of their CTVs. Additionally, consumers have for years been gravitating away from linear TV options (like cable and satellite subscriptions) and more towards OTT (over-the-top) options which connect viewers directly to the content providers they want to watch. Moreover, OTT video entertainment options allow advertisers to be far more precise with their ad targeting than with linear TV.

CTV still represents a relatively small share of advertisers’ video budgets, and the platform has a number of serious kinks to work out in how it offers ads. But with powerful winds blowing in its favor, it’s worth asking: to what extent will CTV emerge as an independent marketing channel, as opposed to being a mere extension or supplement to marketing on linear TV?

Why CTV Is Still Coming Out of the Starting Gate

As the growth statistics show, CTV is doing well as an emerging platform for entertainment and advertising. However, there are a few key obstacles standing in its way from becoming a dominant marketing channel.

CTV as a platform is still struggling with disparate, fragmented ad inventory. The amount of ads that have been developed or adapted for use on CTV platforms is still relatively low. Ad buyers need to have a wide set of advertisements to choose from if they want to do a good job placing ad inventory, or they’ll have to keep running the same few ads every time, to audiences which may not be keen on them. Marketers will need to develop more ads for a wider variety of viewers in order to make CTV a more competitive platform.

Another big problem is that CTV as a platform lacks a comprehensive, unified means of ad measurement. Most streaming services rely on their own proprietary protocols to measure ad engagement, in addition to the numerous third-party vendors selling ad verification and audience measurement services. If one wants to get a clear picture of how one’s ad campaign is performing across several CTV platforms and streaming services, one needs to unify all the measurements from all those sources. But those sources do not necessarily even share the same definitions of their metrics. This is as opposed to linear TV, which relies on long-established industry protocols like the Nielsen ratings that allow a much less detailed but nevertheless uniform way of tracking how many people watch various programs and ads. Thus, while CTV has the ability to show a far more granular view of what specific videos people watch, and to track all videos viewed by everyone watching (instead of just a sample of households), it currently lacks a common language with which to communicate this data to marketers.

The viewers are still there to be reached on CTV, and there are certainly opportunities to be made by reaching them. However, because of some of the problems facing CTV as a more nascent format for digital video, advertisers likely view CTV as more of a complementary channel along with linear TV, rather than as a standalone platform on which to launch advertising campaigns separate from other formats.

The Linear and CTV Convergence

As of right now, linear and CTV ad spots are not generally bought as part of the same process -- CTV is usually the responsibility of an agency’s digital ad team, while linear TV is still handled by its own people. As more people cut the cord tying them to linear TV and move towards digital video entertainment, ad budgets are likely to follow. The CTV universe can help move this process along by resolving its problems with targeting and ad inventory, as well as by implementing the protocols which make linear TV ad viewing smooth.

As more and more people shift their in-home digital video entertainment habits towards CTV viewing, and as the CTV industry works out its kinks in rating measurement, audience tracking, and addressability, CTV and linear TV are likely to merge into a single advertising domain. This means that advertisers will treat video entertainment -- both linear and digital -- as a unified avenue for reaching consumers. With the big analytical and targeting advantages conferred by CTV and digital video, this will make video advertising even more effective and profitable.

CTV is all but certain to expand in popularity and in utility as an advertising platform. However, it remains to be seen how long it will take for it to be able to offer the type and reliability of metrics that advertisers want to see. There is certainly momentum in favor of these issues being resolved, but it hasn’t been able to happen yet. However, the continued investment by marketers in more data-driven tactics indicates that they see the future of video content being OTT streaming. As this moves further along, the linear and CTV domains will eventually converge in order for advertisers to be able to sell their inventory more easily and put it in front of eyes, wherever they may be watching.

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

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