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The Growing Power of Shoppable CTV Advertising
As streaming becomes the norm for TV viewing, new ad formats have advertisers and consumers buying in
Streaming is poised to become the dominant way Americans watch television. Here are some numbers that offer a snapshot of streaming's increasing power in the advertising ecosystem:
- $1 billion. The amount Amazon paid for the rights to stream the NFL's Thursday Night Football
- 110 million. The number of millennials and gen Zers watching connected TV (CTV)
- 74 percent. The growth of Netflix's ad-tier membership between January and May 2024
As the number of people watching CTV continues to grow, so do the advertising dollars chasing those eyeballs. By 2027, Emarketer projects that CTV advertising spending will increase to more than $40 billion.
Several reasons account for this anticipated growth in CTV ad budgets. First, as the stats shared above indicate, the number of people who stream TV is increasing. Second, CTV's digital nature allows brands to measure the reach, frequency, and performance of their advertising campaigns in a way not possible with linear TV. Third is a reason that often flies under the radar: CTV advertising offers the ability to use dynamic creative optimization and interactive formats — like shoppable ads.
Point and Click
Shoppable ads in particular present a remarkable opportunity for CTV advertisers — especially with the approaching make-or-break holiday shopping season. Shoppable ads are just what they sound like: TV spots that allow consumers to research or buy products directly through the ad.
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Roundel, Target's retail media network, recently surveyed 2,876 Target guests and found that consumers have embraced streaming. The report, produced with Innovid, also shows that Target guests are willing to engage with interactive shoppable ads.
One key finding from the Roundel/Innovid report is that 91 percent of respondents subscribe to streaming services, which underscores the proliferation of streaming across the population. And not only does a significant majority of Target guests stream TV but they are doing it more often: The time respondents spent streaming increased by 40 percent versus a year ago.
And when Target guests are streaming TV, they are not ignoring the ads. According to the Roundel/Innovid report, three in five respondents say they research products after seeing video ads, which is good news for brands and advertising agencies. Further evidence that Target guests are willing to engage with advertising: 33 percent of respondents say they will scan a QR code on their TV if they know it will take them to a trusted site.
Target guests say they feel comfortable spending in the neighborhood of $30 when making purchases through ads they see on TV. For advertisers, consumers' willingness to engage with shoppable ads is a chance to compress the funnel. By reaching consumers on the biggest screen in the house, brands can use shoppable ads to not only build awareness but also to drive consideration and even purchases.
And the numbers from a separate Innovid report published last year show that these kinds of ads deliver strong performance. Interactive ads — with features like QR codes, product galleries, and store locators — provide high engagement, the study shows. Interactive CTV ads generate 92 additional seconds of engagement compared with standard pre-roll video and have an average engagement rate 10 times that of standard video.
Living the Stream
Target's retail media network is experiencing the benefits of shoppable ads firsthand. Roundel says that shoppable CTV ad formats in 2024 produced an increase in average sales three times as large as 2023.
More specifically, Roundel advertisers such as Energizer are seeing strong results. Energizer's most recent holiday campaign on Roundel enjoyed a sales lift 12 times higher than the previous year, in part because of shoppable ad formats. Using a QR code, Energizer posted 18 percent higher return on ad spend (ROAS) than with the standard CTV format.
Similarly, Enfamil generated an ROAS three times higher than Roundel benchmarks with a shoppable ad campaign featuring a "Scan to Shop" call to action. Additionally, Enfamil's campaign generated 31 percent higher ROAS when reaching Target guests who had recently purchased baby products, indicating success with reaching broader audiences, including those open to switching brands or trying new products.
Shoppable ad success stories like these will only continue to proliferate on CTV as more consumers embrace streaming and leave linear TV behind. Advertisers, too, will increasingly opt for CTV because of its measurement capabilities — but also because of the strong performance of shoppable ads and other advanced creative formats available only on CTV.
Innovid is a partner in the ANA Thought Leadership Program.
