For digital marketers, the past several years ushered in a new era of firsts. We watched as consumers replaced the family TV with a variety of connected devices, streaming favorite shows over computers, smart phones, and even gaming consoles like PlayStation and Xbox. Families, single professionals, and retirees eagerly cut cable cords, tired of paying for services that didn’t fit their lifestyles. Yes, Connected TV (CTV) changed viewing habits forever, as the digitally savvy among us demanded the freedom to watch what they want, when they want.
The rise in CTV changed the way consumers interact with media. Streamed content can be viewed on-demand, and often costs less than traditional cable or satellite TV. But it’s also — and some would argue, more importantly — changing how businesses engage with consumers. For advertisers, CTV creates exciting opportunities to zero in on specific, highly targeted audiences, while spending less on advertising overall.
According to eMarketer, CTV ad spending in the US is projected to more than double by 2025, soaring past $30 billion. Bottom line? Smart advertisers recognize the potential and are allocating more of their budget to these platforms.
So, what exactly is CTV advertising and how does it differ from OTT advertising? What are some of the benefits and how do you integrate it into a healthy marketing strategy? What does it cost to run a typical campaign and how do you measure results? Let’s explore these questions and more as we unravel the mysteries of connected TV advertising.
Over-the-Top (OTT), Connected TV (CTV) and Cable TV — Know the Difference
OTT and CTV are sometimes used interchangeably. Not entirely wrong, but there are some distinctions that need to be understood if your goal is a robust omnichannel marketing plan. While they both describe how viewers access streaming TV and video content, knowing how they differ will help ensure your ad dollars are put to best use.
OTT versus CTV. OTT stands for Over-the-Top and refers to streaming services that deliver content over the internet. Hulu, Netflix, and Disney Plus are great examples of OTT services. The name comes from the fact that services are delivered ‘over the top’ of another platform — in this case, the internet service provider. OTT can be subscription based, meaning you pay a premium for ad-free content. Or free, with ads shown either before or alongside content.
By contrast, CTV is a smart device used to stream live television and the internet. It’s a type of OTT that displays content on any connected device that’s capable of streaming video. This includes devices with a built-in internet connection, like a smart TV and those that connect to the internet using a traditional television equipped with a streaming device. Apple TV, Roku, Fire TV and internet enabled gaming consoles like Nintendo Switch, Xbox and PlayStation or are all examples of CTV.
Why the interest in CTV? Americans are ‘cutting the cable cord’ by the millions. Cable and satellite TV usage dropped significantly as streaming services became more accessible. A 2021 Ipsos poll on television viewing habits found that over half of Americans use streaming services to watch TV, while a third use Cable TV. Even more interesting, the poll found only 1 in 5 Millennials (19%) and a quarter of Gen Z (25%) use Cable TV.
The number of ‘cord cutters’, or those who cancel Cable TV in favor of streaming services is increasing rapidly too.
In 2017, nearly 20 million US adults canceled their Cable services. Fast forward to 2022, and the number of cord-cutting households is projected to ring in at a whopping 55.1 million! More than a passing trend, Connected TV is a way of life. On-demand viewing schedules, mobility and ‘binge watching’ align perfectly with growing expectations of today’s on-the-go consumer.
Connected TV Advertising — Tap into an Engaged Audience, at an Affordable Cost
As millions of viewers ditch linear TV, savvy advertisers are pouncing on the opportunity to reach this new audience. Particularly if traditional TV advertising has been out of reach financially, CTV is an affordable alternative. And here’s the kicker: the audience is completely engaged — even motivated to watch ad supported content. Why? Because content with ads can be streamed for free. The same programming without ads costs money, and few are willing to pay. Result? CTV viewers are happy to sit through your ads!
What are the benefits of CTV advertising? Connected TV advertising reaches an engaged audience, is cost effective, and offers enhanced targeting options with real time metrics to help you optimize your campaign. Let’s look at a few of the benefits.
Reach a huge (and growing) audience. Data doesn’t lie. CTV provides the ultimate in visibility for your ads. Streaming services are simply killing linear TV, now and across all projections for the future.
Affordable Options. With a low barrier to entry and different pricing structures, CTV makes it easy to get your ad up on the big screen while staying under budget. This helps you experiment so you can fluidly move between digital channels and position your ads tactically for the best ROI.
Precise targeting. The data-driven nature of CTV makes it easy to get to know your audience so you can tailor content that’s meaningful to them. With control over where your ads play and who sees them, you can target specific groups with pinpoint accuracy. Send hyper-personalized messages that resonate to the right person at the right time, spend more effectively and boost conversion rates.
Real time reporting, deeper insights, and the ability to track against goals and metrics. Forget about measuring in the moment with linear TV– nothing is certain until the campaign is done. CTV offers real time metrics so you can see what works and what doesn’t, when it matters. Optimize your campaign by tracking to specific goals, and tweak messaging in real time as new data about your audience comes in.
A Deeper Dive: CTV Ad Types, Cost, and Best Practices
The good news about CTV advertising is that it’s easy to build a solid campaign that can integrate seamlessly into your existing digital marketing channels. And, with flexible ad options, you can reach your customers exactly where they are in the journey — before they stream or in the middle of viewing content and on different devices as part of a cross channel video campaign.
Types of CTV ads.
- Home screen ads. These are ads — video or images– that appear on the main screen of a CTV device, before content plays. Less intrusive, the benefit of home screen ads is simple: the first thing anyone sees before any content plays is your brand.
- In-stream video ads. These are short video ads that appear within the content. In stream-video ads can’t be skipped and run for around 15-30 seconds uninterrupted. A smart tactic for maximizing brand awareness, in stream video ads are perfect for capturing viewers’ attention.
- Interactive pre-roll ads. Pre-roll ads are great because they encourage the user to act. These ads appear within the middle of streaming content, with the option to click through to a landing page. By making it easy to interact with your ads, you encourage viewers to take the next step in the buyers journey, whether it’s visiting your webpage or filling out a form.
What does a typical campaign cost? CTV advertising is a smart way to get your message out to a targeted, and growing audience. But is it affordable? The short answer is yes — if you’re strategic. Many variables shape cost, including ad format, targeting and even bidding. The key is to understand which audience you’re targeting, continually assess ad performance and adjust to ensure you’re getting a high return on your investment.
Like with all video ads, the cost to run ads on CTV is mostly determined by views, using cost per view (CPV) and cost per thousand (CPM). Basically, you pay a set price for every 1,000 impressions of your ad.
The average CPM for Connected TV varies quite a bit, but usually falls within the $10-$50 range. YouTube averages $30 CPM, with the average cost to reach 100,000 views somewhere around $2,000. Netflix is slightly higher, with an average COST as high as $65 CPM.
While you can set a maximum daily spend, there’s a high minimum cost for CTV ad placement, which is often 3-5X higher than standard video placement. However, because in-stream video ads can’t be skipped, cost per completed view (CPCV) is almost always less expensive with Connected TV, when compared to traditional video advertising.
All said, it’s possible to integrate CTV advertising into a holistic digital marketing campaign without breaking the budget.
Best Practices with CTV ads. It goes without saying that the best ads are top quality and targeted with high impact messaging. But beyond that, CTV provides unique opportunities for maximizing ROI. Here are a few good strategies to consider.
Maximize brand awareness. CTV ads are displayed on a variety of devices, from a mobile phone to an Xbox. Because of this, they work particularly well for awareness campaigns. Video Completion Rate (VCR) and Cost per Completed View (CPCV) are great for tracking performance and can help you understand quickly how your campaign is performing.
Embrace interconnectedness. The buyers journey isn’t linear. And that’s good because CTV makes it easy to move. Be sure to link your channels together when you can. Embed a QR code into an ad and encourage your viewers to scan with their phone and visit your landing page, where they convert, and you track their visit.
Automate ad buying. With tons of available data (demographics, device, browsing history, etc.) programmatic advertising and CTV were made for one another. Advanced algorithms work in milliseconds to present the most relevant ads to the most relevant consumers, giving you absolute precision targeting.
Build a strong Call to Action (CTA). Viewers can interact with CTV ads far easier than other channels, giving you the perfect opportunity to hit them with a compelling reason to convert. Be sure to build CTAs that offer a clear next step.