CTV Advertising's Performance vs. ‘Premium’ Conundrum
Everyone in advertising knows that streaming and connected TV are the future of the industry. One only has to look at the recent upfront closings for NBC, Fox, and Disney, with each boasting about streaming ad sales.
That perfect marriage of digital delivery and TV engagement is the kind of thing that marketers have dreamt about for years. Yet it’s this dual nature that creates a conundrum.
Yes, CTV is the future of advertising, but no one is sure yet what that future will look like. Will it be the TV side of the equation, where premium content and channel names are all that matter to ad buyers? Or will it be the data-driven side, where performance is key, regardless of content channel?
The premium halo
Conventional wisdom is that there are fewer than 10 streaming platforms that matter when it comes to advertising. While these platforms may garner the most eyeballs and household name recognition, limiting yourself to them undoes any of the potential of making a performance-oriented programmatic ad buy.
When Netflix launched its advertising initiative in 2022, it was widely seen as a limited offering. Netflix offered very little in the way of measurement, which made it hard for brands to judge whether or not their advertising worked. Still, because Netflix is the biggest streaming platform with an extensive library of content, advertisers lined up to buy into it.
It worked - for Netflix, at least. The platform now has 94 million active monthly users who subscribe to an ad-supported plan.
But did it work for advertisers? On some level, yes, absolutely. Brand advertising still has a place in the world, and it would be foolish to dismiss the power of TV in keeping a brand name top of mind with consumers. But did this kind of premium ad buy drive conversions, or foot traffic, or other KPIs? It’s hard to say.
Performance-oriented
The sheer number of CTV channels available right now makes it an ideal performance channel. When brands can identify audience targets that match their criteria and then reach those audiences via programmatic CTV buys, they unlock that mythic combination of data-driven targeting and lean-in engagement.
Brands may find this performance ability on second-tier channels, or those that fall outside of the top 10 streaming platforms. This strategy matches how programmatic display grew out onto the long tail of web content. On paper, that should be OK, so long as the content is suitable and the impressions hit the right performance KPIs.
In practice, we all know it’s more complicated than that. Many DTC brands are comfortable with this strategy because they value consumer acquisition cost more than anything. Luxury retailers, on the other hand, may feel split. These brands want to drive in store visits while getting the imprimatur of premium content.
CTV is teaching us that it doesn’t always work like this. The channels that lead to the best results may not match the channels that brands feel are important for their brand.
Ultimately then, this comes down to brands and the tradeoffs that they feel comfortable with. Advertising has always been about balancing art and science, the rapid rise of AI is pushing things hard in the direction of science. When media plans are dictated by robotic logic, the logic will prioritize campaigns that meet their goals.
Yet it remains true that brands will always value aligning their brand with a well-known, trusted media entity. That’s never a bad thing. Nearly all of the reported upfront closings have seen huge revenue due to live sports, and brands are willing to pay to have their message associated with the events that draw people to watch.
What really needs to happen isn’t a business or investment shift, but an evolution in brands’ understanding. AI promises efficiency and performance, while the human heart wants premium associations. Brands can – and probably should - continue to include both in their media plans. But they need to enter with the expectation that vanity buys need to come from their own separate budget, so that they don’t damage the performance numbers that come from the science.
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