Connected TV advertising, or CTV advertising, is an undiscovered marketing tool for many brands. While traditional ads are shown on cable TV, CTV ads are shown exclusively through streaming and online platforms with a connection to the internet. CTV ads can appear as the same advertisement shown on linear television, but they include added benefits, such as analytics tracking that show the ad’s reach and user engagement.
The Future of CTV Advertising
As connected TVs and streaming platforms continue to rise in popularity, CTV advertising will grow alongside this evolving technology. Internet-connected devices and smart TVs are becoming commonplace in households, and many TV advertisers are already phasing out non-internet-connected TV ads. This will lead to a natural rise in the prevalence of CTV ads as advertisers move their content to streaming platforms.
Advertisers wanting to use CTV ads should know the current and upcoming CTV trends that will help them to create successful CTV ad campaigns.
- Ad-Supported Streaming
Today’s selection of streaming platforms is diverse and expansive. However, these streaming platforms are slowly becoming more expensive and less accessible to the general population. As streaming services such as Netflix increase their prices, many people, especially younger generations, are quick to cancel their streaming subscriptions if prices jump too high.
To keep users from leaving their platforms, many streaming services are moving to ad-supported content rather than continuing to require all users to pay a subscription fee to access their content. This allows users to gain access to their favorite content by watching ads instead of paying a fee. Popular ad-supported streaming services include Hulu, Peacock, Sling, Paramount+, HBO Max, and Pluto TV. According to Mountain’s “Ad-Avoidance or Ad-Seeking,” two-thirds of viewers would rather watch ads than pay for a subscription, but only if the ads are relevant and interesting.
According to Ad Week, by 2025, the number of free streamers will outnumber paid streamers. Users who subscribe to these ad-supported streaming accounts will ultimately see the CTV ads that advertisers create for these spaces.
- Interactive CTV Ads
With the rise in CTV ads, another type of ad has started to gain favor among viewers and advertisers: interactive CTV ads. For the advertisers, interactive CTV ads often generate a longer engagement time than what they purchased. While an advertiser may purchase a thirty-second spot for their ad, users can interact with the ad beyond the purchased time. According to Innovid, 30-second ads, on average, achieve an additional 71 seconds of ad time, increasing by 237%, while 15-second ads achieve an additional 67 seconds, which equates to a 447% increase.
In the case of the user viewing the ad, they’re allowed to interact and engage with the ad in a unique way. This helps them learn more information than they would from traditional, non-interactive advertisements. These interactive advertisements are becoming more commonplace as advertisers realize the benefits CTV ads can provide for them and their target audience. These interactive ads can help brands stand out and differentiate themselves from the competition. Since these ads are still relatively new, not many brands are using them, so those that do are seen as innovative and forward-thinking.
- Enhanced User Experience
Today, streaming and video content consumers can become frustrated when advertisements interrupt their favorite TV show or movie. Streaming users will be more critical and less forgiving of ads they see, making it harder for a brand to earn conversions. This means the last thing any brand wants to do is to create an ad that is bland or uninteresting, as this will only turn a user away from the product.
To capture the interest of the user and convert their views into a purchase, brands must prioritize user experience with ads that are interesting, relevant, and to the point. If a user doesn’t see an ad as being worth their time, they won’t engage with it or the product it’s trying to sell.
- From Alternate Advertising Platforms to CTV
More and more advertisers are allocating their digital budgets from social media advertising to CTV advertising. Among many advertisers, the budget allocation for CTV comes second only to linear TV advertising. Recently, digital advertising has struggled due to a lack of cookies and increased regulations on advertisers. For this reason, advertisers are turning their attention away from social media advertising and are expected to continue to invest a growing number of dollars into streaming and online platforms.
Like social media platforms, many advertisers have started to turn away from linear advertising on traditional television. While this shift is not as rapid or dramatic as the shift from social media to CTV, only 57% of US video ad spending will go to linear TV in 2022, a decrease from 62% in 2021 and 71% in 2020, according to Insider Intelligence. While CTV ad spending currently sits at only 18%, it has increased from 11% since 2020 and is expected to continue rising. In time, the budget allocation for CTV advertising is expected to overtake linear advertising.
- Importance of Analytics
One of the greatest benefits of CTV advertising is the ability to target a specific demographic of users and track analytics like reach and user engagement. Unlike linear advertising, where brands need to purchase an entire channel with shows that may not be relevant to their product, the online nature of CTV advertising means advertisers can target specific user demographics and shows that these demographics watch. There’s no end to the specificity that CTV advertising can achieve.
CTV ads also offer detailed analytics to help advertisers know how well their ads performed. This also allows advertisers to retarget the users who already viewed their CTV ads with additional advertising through other platforms, which increases the chances of a successful conversion.
As streaming platforms continue to grow, it’s becoming clear that CTV advertising is reshaping the advertising landscape. While cable TV is unlikely to completely disappear, fewer people over time will purchase packages, opting instead for subscriptions to streaming platforms. Streaming may one day overtake linear television in popularity. Where consumers go, advertisers will follow, and it seems now that the consumers are flocking to online subscriptions. Brands that don’t want to be left behind must adapt their advertising to these platforms or risk becoming irrelevant.