3 CTV Advertising Trends for 2024
CTV advertising is booming. The category is expected to grow from $12.9 billion in 2020 to $42.5 billion by 2028. But other than a potential uptick in revenue, what does that mean for media companies?
These three trends will be key in helping media companies stand out and capitalize on CTV growth in 2024: the use of AI for dynamic creative optimization (DCO), the rise of contextual advertising, and higher standards for CTV ads.
AI-Fueled Dynamic Creative
Historically, DCO in digital has entailed choosing the best possible ad for a given audience based on a few predetermined parameters. For example, the ad might include different copy, images, and color schemes. Based on audience signals, algorithms would determine which combination of these components would be most likely to drive attention and conversions, and the viewer would see that combination.
AI is pushing DCO to new frontiers by allowing advertisers to process a much greater amount of information and make more complex decisions in real time. So, advertisers will increasingly expect the ability to optimize ads based on not only those predetermined parameters but also the content against which the ad appears, geo-contextual signals, and advertiser-selected KPIs.
CTV has a lot of room for improvement in this regard. While CTV's promise as an advertising channel is often lauded as the targeting of digital with the storytelling power of the big screen, in practice, CTV ads often feel like linear ads. AI will have a role to play in realizing CTV's promise so that CTV ads are not just the same old beer and car spots aimed at a broad linear audience.
Contextual Advertising
The past 15 years of digital advertising have been dominated by the pursuit of audience-based ad buying via open auctions. Programmatic promised the ability to find the same audiences who came with premium prices when targeted via CBS or CNN in cheaper environments. While this state of affairs fueled efficient reach, it also often came at the expense of brand safety, creative, and the connection between advertising and the content against which it appeared.
The paradigm is now shifting. With third-party cookies finally going away on the leading browser, Chrome, advertisers are reevaluating their modus operandi across channels and reconsidering the importance of the context in which their ads show up, not just the audiences they're reaching. In other words, they want their ads to capitalize on the premium content against which they're delivered.
Contextual advertising — customizing ads based on the content surrounding them — is the answer to this problem. And it will be a big focus in 2024 across advertising channels, including CTV. An MSNBC viewer has different tastes than a Fox News viewer, who has different tastes from someone watching children's programming on PBS, scripted shows on USA, or reality series on Bravo. Going forward, CTV advertisers will expect the ability to tailor ad placement and creative accordingly, ensuring that the content and style of their ads adhere to the criteria most likely to captivate and convert audiences of a given TV program.
This doesn't just mean matching the ad to the program. As technology improves, advertisers will be able to bring elements of the programming audiences are watching into their ads, transforming media owners' IP into a strategic advantage. For now, this may be a question of color schemes and scripts. But in the future, it could take the form of an ad placed directly within a show or the characters within a show making the case for the product in an ad.
Contextual advertising could also mean optimizing ads based on location. A winter attire or tropical travel ad will resonate differently on a Saturday afternoon in January in Chicago than on a summer Tuesday. Contextual advertising takes all these factors into account, delivering the ad most likely to generate an impact.
Expectations of CTV Ads
As technologies like AI and methodologies like contextual targeting improve, so will expectations of CTV ads. Specifically, advertisers will expect CTV to live up to the hype of bringing digital's strengths to TV — by combining AI-driven DCO, audience targeting, native, and contextual advertising capabilities to deliver more powerful ads and more effective outcomes.
For example, brands will look to use CTV not just for top-of-funnel brand awareness campaigns but for lower-funnel activations such as website visits and purchases. One way to do this is QR codes. Another is retargeting audiences exposed to CTV ads on mobile. Yet another is driving audiences to local stores.
Lower-funnel performance will deliver on another advertiser goal, which is increased measurement. Reach is one thing, but proving that CTV ads drive website visits, store visits, and ultimately purchases is another. Better measurement will kick off a virtuous cycle, encouraging more CTV spend, which leads to better outcomes, which reinforces the need to invest.
Frequency capping is another area where everyone in the CTV ecosystem from advertisers to consumers is expecting improvement. It's not uncommon to see the same ad dozens of times while binging a series. The failure to cap ad frequency risks alienating consumers from streaming services and generating negative associations with the advertiser. Fixing the problem requires clean data and collaboration among publishers, agencies, and platform and technology companies.
Finally, as CTV demand increases, so does the need for more affordable pricing models. Netflix, Disney, and Amazon all released new pricing tiers in 2023, which included ad-supported streaming models, and independent free and ad-supported channels are becoming more popular. Media owners will need to monitor this dynamic and strike a balance between getting what their inventory is worth and competing in an environment with greater supply.
Ultimately, the rise in CTV standards will hinge on the growing ability to optimize ads for a broader range of permutations — based on audience, content environments, and context — to deliver against advertiser objectives and deliver a better audience experience. Ads will be able to iterate much faster by learning what works, and advertisers, publishers, and consumers will benefit.
Alistair Goodman is CEO of Emodo.
The views and opinions expressed in Industry Insights are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.