Exploring the Meaning and Benefits of Connected TV (CTV) Advertising
Connected TV (CTV) has finally emerged from the shadows and is becoming a key player in the advertising world. The number of millennials using CTV reached 60.5 million in 2022, and this figure is set to rise to 62.6 million by 2025.
A report by Nielsen reveals that prior to Covid, 76% of US households had at least one connected device, and there were 12.5 billion hours of use per month. During the pandemic, this figure increased by 81%, with users clocking up to 4 billion hours of CTV use each week.
Also, research suggests that 86% of consumers are willing to view CTV ads that are relevant to them or entertaining. However, 40% of viewers may reject CTV ads if they are too frequent.
This is why marketers are planning to significantly increase their CTV ad budgets in 2023. According to the Interactive Advertising Bureau (IAB), buyers are shifting ad spend from broadcast (53%) and cable TV (52%) to CTV advertising.
To stay ahead of the curve, it is crucial for brands to include CTV advertising in their omnichannel marketing mix. This blog will delve into the details of CTV advertising and explain why it is a must-have for advertisers in 2023.
What is Connected TV (CTV)?
To understand CTV advertising, it’s important to first define what a connected TV is. Essentially, a connected TV is a device that allows users to stream video content over the internet. There are several types of connected TVs:
- Smart TVs: These are internet-connected television sets that come with pre-installed apps and services like Netflix, Hulu, and YouTube, eliminating the need for an additional streaming device.
- Connected Devices: These are over-the-top (OTT) devices that connect to a television set and offer free and paid streaming programs such as Roku, Amazon Fire Stick, and Google Chromecast.
- Gaming Consoles: Popular gaming consoles like Xbox, Playstation, and Nintendo also offer streaming apps that allow users to broadcast video content to their television sets.
CTV advertising involves displaying ads on these connected TV devices during the streaming of video content. As more people are using connected TVs for streaming, CTV advertising has emerged as an effective way for advertisers to reach their target audience.
Understanding CTV Advertising
Connected TV advertising, also known as CTV advertising, is a form of advertising that allows brands to reach their target audience on connected TV and over-the-top (OTT) devices. This is done through downloaded applications that stream video content, such as television shows. Brands can target their audience on CTV by displaying ads on premium, ad-supported shows provided by top-tier networks, ensuring complete brand safety on CTV.
How are CTV and OTT Different?
It’s important to understand the difference between CTV and OTT.
According to the Video Advertising Bureau (VAB), OTT refers to premium long-form video content that is streamed over the internet through an app or device onto a smartphone, TV, PC, or tablet, without the need for users to subscribe to a wired cable, telco, or satellite TV service.
In contrast, connected devices are internet-streaming players, game consoles, and connected TVs. Therefore, CTV advertising specifically targets users who access video content on connected TVs, while OTT advertising targets users who access long-form video content through streaming apps on any device.
Must-Know Advantages of CTV Advertising
Find below the top 5 benefits of CTV advertising making it the most demanded platform by brands to reach their target audience:
- Meet your Audience on the Right Platform
Around 80% of U.S. households have at least one connected device, CTV advertising can help brands reach their target audience where they are spending the most time. This is supported by the fact that streaming has seen a global increase of 266% in the last three years, with over 500 million unique users watching 200 billion streams annually.
- Cost-Effective Targeting at a Lower Cost
CTV advertising allows for advanced targeting at a lower cost, as brands can select their target audience from an existing list. This ensures that advertising budgets are not wasted and that the target audience is reached with engaging ads.
- Consumers Respond to CTV Ads More
Thirdly, consumers are more receptive to CTV ads, with 86% of customers willing to view ads that are interesting or relevant to them. This is likely because they are viewing content they enjoy at a lower cost than traditional cable television.
- Easy Progress Tracking
Fourthly, CTV advertising is easy to track, with video completion rate (VCR) and automatic content recognition (ACR) allowing brands t track their success.
5. Better Completion Rates
Finally, CTV advertising has improved completion rates, with 95% of video ad impressions viewed on connected TV devices being completed in North America in 2020, compared to an average completion rate of 80%. This is likely due to the inclusion of non-skippable ads within the streaming content, ensuring that the brand’s message is seen by the audience.
Conclusion
In the modern era of digital advertising, it’s essential for brands and advertisers to connect with consumers in the places they spend most of their time. However, if ads are not contextually relevant, they may be perceived as intrusive, irrelevant, and annoying, causing a negative impact on consumers’ perceptions of the brand and its product offerings. Therefore, it’s crucial to ensure that ads are targeted to the right audience and displayed in the appropriate context to enhance the overall advertising experience and drive positive results.