The advertising industry has shifted to a digital focus over the years and more traditional media like television ads have followed suit. Enter Connected TV (CTV).
CTV is any television that connects to the internet either directly through a smart TV or through Over-the-Top (OTT) devices that connect to a TV and enable internet use. Examples of these are Roku, Chromecast, PlayStation, etc. Through CTV, users can stream content from sources like Hulu, Netflix, and YouTube. But CTV’s streaming abilities go beyond just movies and TV shows—users can also stream music and access social media.
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Why is CTV important to advertisers?
According to an eMarketer study, 168.1 million users owned a CTV in 2017, and this is expected to rise to 194.4 million users by 2021.
As more and more people are cutting the cord with their cable providers—and many never signing up to start with—advertisers need a way to reach this highly engaged audience. CTV offers a bridge between traditional TV and digital capabilities that allows advertisers to more precisely target their audience with more personalized messaging than ever before. Through using first and third-party data, advertisers can be more effective with their targeting by using retargeting, lookalike modeling, and cross-device targeting. These strategies, combined with high-quality and interactive videos, makes their messages more likely to resonate with their audiences and lead them to action.
Another benefit CTV offers advertisers is the ability to see real-time performance metrics and on-the-fly campaign optimizations. Using machine learning, advertisers can make in-the-moment changes to campaigns to ensure they’re targeting the most relevant audiences with the right messages at the right time. This capability makes advertising dollars more efficient for the brand and messaging more relevant to its audience.
CTV offers advertisers the ability to see real-time performance metrics and on-the-fly campaign optimizations.
In its aforementioned report, eMarketer states, “Increasing comfort with OTT and CTV will drive greater access to inventory from major content creators, but signs also point to a potential shift in the monetization model for at least some of the services that today rely entirely on subscriptions.”
As more and more people switch to subscription-based services such as Netflix and Hulu, there may be a point when viewers are no longer willing to pay for additional subscription services, which would likely lead to a shift to more ad-supported models for content. If this happens, advertisers will play an essential role in the next wave of TV by helping to fund content creation and streaming.
Although there is still a lot to be learned from the effectiveness of ads on CTV, advertisers should already be testing this medium to capture audiences lost by not utilizing traditional TV—this is especially true since the cost barrier of entry is much lower for CTV than we see for traditional TV. CTVs lower cost and the ever-growing audience makes it an ideal place for brands to test more interactive and creative video ads on different audiences.