Why CTV Is One of Digital Advertising’s Fastest-Growing Channels
Talk to a demand-side platform, marketing agency, or user acquisition manager about advertising trends, and you’re likely to hear about marketers clamoring for connected TV (CTV) inventory.
But CTV advertising has some room for improvement. Publishers struggle with frequency capping. Fraud, as on other digital advertising channels, remains an issue. And while digital channels like search and social produce highly measurable outcomes, the path to measurement on CTV is visible but more complex.
So, why is CTV one of digital advertising’s fastest-growing channels, and where is CTV advertising heading?
The channel is likely to keep growing fast thanks to larger audiences and viewer demographics, rich storytelling possibilities in a medium poised to capture consumer attention, and evolving measurement capabilities that will make CTV a go-to for both brand and performance marketing.
Meeting customers where they are
CTV is where consumers are flocking. In other words, advertisers and ad tech companies are not driving the shift to CTV. Audiences are, and the digital advertising industry is following suit.
There are two main cohorts, especially in the U.S., driving CTV adoption: cord-nevers and cord-cutters. Cord-nevers include the young people, mostly Gen Z and millennials, who have never paid for cable and are accustomed to watching TV on digital devices. As those young consumers start their own families and become heads of households, many are opting for CTV, not cable, as they seek to watch their favorite programs on a larger screen.
The other major CTV adoption group, especially in the U.S., is cord-cutters. These are often older viewers used to traditional TV who are consciously making the switch to cheaper delivery methods. Plus, with CTV, audiences can get more targeted in the programs to which they buy access, prioritizing channels of their choice.
The last key point to understand about CTV viewership is that it is not just premised on evangelism of a new technology but on a widespread transition from the old way (linear) to the new. This means CTV viewership is likely to grow even during an economic downturn because it does not depend on convincing consumers that they need an entirely new product; CTV delivers a similar product with a more curated selection of content via cheaper, on-demand delivery.
Telling rich stories that get the viewer’s attention
It is not just more eyeballs driving advertisers to CTV. CTV is growing so fast as an advertising channel because it provides a powerful medium for storytelling and has several advantages in getting the viewer’s attention.
First, screen size matters. It is much easier to get the viewer’s attention and drive ad recall on a 40-inch television screen than on a mobile device. Audio also helps CTV advertising cut through the clutter, as sound is almost always on when viewers are watching CTV.
Second, consumers routinely watch CTV with their friends, families, and colleagues. CTV viewers are ready to hear, discuss, and share stories, amplifying the value of advertising on the channel. So, CTV advertising fosters a social experience, which can increase its efficacy by orders of magnitude over similar messaging in isolated environments.
Finally, consumers are more tolerant toward advertising in a TV context than on mobile or desktop. That’s because on the latter devices, consumers are generally trying to get tasks done, and advertising can get in the way. But when watching TV, viewers are generally in a relaxed, entertainment-oriented mindset, so advertisers can expect a more receptive audience. Indeed, video completion rates on CTV are as high as 96%.
Combining brand and performance capabilities
The third pillar of CTV advertising’s growing popularity is that it offers a rare opportunity to combine powerful brand storytelling with the granular measurement of performance channels. There are a few elements to this performance story.
For one, audience targeting is much more precise on CTV. With CTV, audiences make conscious, active decisions about what to watch. They are more critical and engaged, so advertisers can be confident that when they purchase ads against a specific kind of programming, they are targeting viewers likelier to be in the market for their products and services. Plus, the fact that CTV audiences make conscious, active choices allows CTV platforms and streaming services to generate massive amounts of first-party data, which advertisers can use to target viewers.
This more engaged, conscious viewership also comes with the possibility of interactivity. QR codes, for example, are making CTV ads interactive, allowing viewers to respond directly to what they see on screen. Ultimately, CTV advertising will become much more of a two-way conversation as consumers buy items not only via shoppable ads but also by interacting with the content they are watching. For example, viewers may be able to buy attire donned by their favorite TV character.
CTV advertising’s measurement capabilities are just beginning to take flight. Dual screening—where viewers watch TV while using mobile devices—will allow advertisers to spur action on mobile, and measure the correlation between CTV exposure and mobile installs or purchases. More sophisticated measurement models will help advertisers gauge how CTV affected sales or installs, even if CTV was not the last touch prior to conversion. Because it is rarely the last stop on the path to purchase or install, CTV cannot be measured like other digital channels; it should be measured in relation to those channels as one that largely assists them.
CTV’s rapid growth will not be short-lived. With audiences heading from linear to CTV, the channel’s affinity for storytelling, and its growing measurement capacities, the channel is poised to occupy a more central role in the marketing mix. Advertisers quick to expand their CTV purchases, partnerships, and analytics will gain a competitive advantage on this channel—where the consumer attention wars are already being won.
Broadcasters are watching digital and trying to bring the best of digital ad tech into their "broadcast" environment-even if that broadcast environment is on CTV. While it is becoming more and more confusing to differentiate between broadcast and streaming, one thing that's clear is that digital—and the ad tech supporting it—are responsible for the success of one of streaming's standard business models.