US ad spend for connected television (CTV)—television programming that’s streamed through an internet-connected device—will grow 37.6 percent this year to reach $6.94 billion. Coupled with CTV ad spend’s current strong performance and the prediction that it will surpass $10 billion by 2021, it’s clear that online interactive media is critical to marketing strategies.
CTV usage in the US will grow 5.3 percent to reach 195.1 million viewers of all ages by the end of this year, and surpass 200 million in 2020. Marketers are therefore leveraging CTV marketing to reach audiences that don’t watch live television. Especially for direct-to-consumer (DTC) brands, CTV provides an opportunity to increase reach and brand awareness among younger audiences.
CTV includes Roku devices, smart TVs, gaming consoles as well as video content streamed on a tablet, iPhone or desktop. The CTV umbrella also includes over-the-top (OTT) content, which refers to network provider extensions like Netflix, HBO GO, Hulu, YouTube TV and DirecTV Now. eMarketer reported that in terms of ad revenues, leaders in the CTV market are YouTube, Hulu and Roku.
Users of the aforementioned CTV platforms are usually cord-cutters—a group that cancels or dramatically reduces their subscriptions to multichannel television subscription services for cable or satellite. Some TV ad buyers are willing to pay a premium to reach these users, who are otherwise difficult to reach via traditional TV ads. In fact, a study found that marketers have a better chance of getting their ads seen by CTV users because ads on CTV were considered “less annoying” than those on traditional TV. Half of the study’s respondents who view content on apps like Hulu are willing to sit through video ads to continue to watch shows. This gives CTV a huge leg up over traditional TV viewers.
CTV audiences’ acceptance of unskippable ads is driving a shift to longer ad lengths. In a recent study, half of the respondents agreed that watching ads is a fair value exchange for low-cost content. 30-second ads displaced 15-second spots as the most common ad length in Q4 2018. The trend has continued as 30-second ads accounted for 69 percent of all ads in Q1 2019, a 20 percent increase over the prior quarter.
CTV ad impressions are hard to ignore, too, as they currently make up about half of the total impressions, or nearly double those of mobile. Because CTV ads are unskippable, they have an unprecedented 97 percent completion rate.
Another characteristic of CTV that makes it so appealing to advertisers is that CTV ads will be seen by several people at once when viewed on a smart TV. When users watch an ad on a personal device, only the user will see the content. Smart TV owners tend to watch in the company of friends and family, which results in a reduced cost per impression for marketers. Knowing that millennials are a full 67 percent more likely to be in a CTV-only house, CTV platforms are also ramping up targeting, programmatic and attribution capabilities in order to attract buyers from the digital world.
Calling on digital signals to track users’ activity after ad exposure, CTV advertising also allows marketers to utilize cross-device mapping and see if a user who viewed a CTV ad later visited a brand’s site via another device tied to the same IP address. An individual’s ad exposure can then be tracked to a user’s activity and optimized to return on investment (ROI) actions.
In addition to the benefit of direct attribution, CTV helps marketers prevent wasting marketing budget on audiences they’re not trying to reach. CTV comprises precise audiences, allowing for granular targeting to reach high-value users. Research from Telaria found that shoppers are twice as likely to buy a product after seeing it in a CTV ad versus seeing it in the same ad on linear TV.
Despite the opportunities to advertise on CTV platforms, linear TV marketers are skeptical of how much to make CTV part of their strategy because there’s no real way to measure ad performance on CTV. Unlike traditional TV, CTV has no single, commonly accepted measurement across platforms. Adding to the caveat is the fact that CTV targeting, attribution and programmatic capabilities are significantly behind those of other leading digital ad platforms.