How Connected TV Is Changing the Game for Advertising
An increasing number of consumers are ditching their cable subscriptions in favor of more flexible and personalized viewing experiences. As of the most recent statistics, an incredible 88 percent of U.S. households own at least one internet-connected TV device, while the number of CTV users amounted to more than 110 million among gen Z and millennials.
The Evolution of Television
Television has come a long way since its inception. From bulky TVs to sleek, high-definition flat screens, the hardware has transformed significantly.
The shift began with the rise of on-demand streaming platforms like Netflix, Amazon Prime Video, and Hulu, allowing viewers to watch their favorite shows and movies whenever and wherever they please, making the concept of "appointment viewing" obsolete.
What Is Connected TV?
Connected TV, often referred to as CTV, is a broad term that encompasses any television that can be connected to the internet and access content beyond traditional cable or satellite TV. This includes smart TVs, gaming consoles, streaming media players (like Roku or Apple TV), and even smartphones and tablets.
The defining feature of CTV is its ability to stream content over the internet, giving viewers access to a vast array of content, from streaming services to social media platforms and more. This freedom of choice has driven a significant shift in consumer behavior.
The Cord-Cutting Phenomenon
Cord-cutting is the act of canceling a traditional cable or satellite TV subscription in favor of more cost-effective and personalized alternatives. This trend has gained tremendous momentum in recent years, and there are several key reasons behind it.
1. Cost Savings
One of the primary motivators for cord-cutting is cost savings. Traditional cable subscriptions can be expensive, often coming with a bundle of channels that many viewers never watch. With CTV, consumers can pick and choose the services they want, leading to substantial savings.
2. On-Demand Content
CTV allows viewers to watch content on their own terms. No more waiting for a specific broadcast time or enduring commercials. With streaming services, viewers have the power to pause, rewind, fast forward, or binge-watch entire seasons at their own pace.
3. Personalization
Connected TV platforms use algorithms to recommend content tailored to individual preferences. This personalization ensures that viewers are exposed to content they are more likely to enjoy, enhancing the overall viewing experience.
4. Accessibility
CTV is incredibly accessible. Viewers can watch their favorite content on various devices, including smart TVs, smartphones, tablets, and laptops, making it convenient for users on the go.
How CTV Is Changing the Advertising Landscape
Connected TV (CTV) is not only transforming how viewers consume content but also how advertisers reach their target audiences. The advertising landscape has undergone a significant shift with the rise of CTV, and it's changing the game.
In 2023, CTV ad spend in the U.S. was expected to surpass 25 billion U.S. dollars, marking an increase of 21.2 percent from the previous year. In fact, nearly four out of 10 marketers who said they were increasing their CTV ad spend for 2023 said they were doing so by reallocating budgets from digital TV, according to Statista. Audience targeting capabilities constituted the main reason for shifting media budgets from linear TV to CTV and OTT.
Consumers also prefer to watch advertising on connected devices compared to traditional television. Nearly six out of 10 connected TV users in the U.S. found CTV ads to be more relevant than ads on linear television. Additionally, more than 60 percent of CTV viewers said they preferred to watch ads if that meant they would pay less.
Highly Targeted Advertising
CTV platforms collect a wealth of data on viewers' preferences and behaviors. Advertisers can leverage this data to create highly targeted and personalized ads. This level of precision ensures that ads are shown to the most relevant audiences, increasing the chances of engagement and conversion.
Programmatic Advertising
Programmatic advertising, which involves using algorithms and real-time bidding to automate the buying of ads, is on the rise in CTV. This allows advertisers to reach their target demographics efficiently and cost-effectively.
Advertisers can set specific criteria, such as age, gender, location, and viewing habits, and programmatic algorithms will place their ads accordingly.
Interactive and Engaging Ads
CTV offers a more interactive and engaging advertising experience compared to traditional television. Advertisers can create clickable ads, interactive overlays, and shoppable content that allow viewers to directly engage with the brand or product. This interactivity leads to a higher level of viewer engagement and can drive conversions.
Cross-Device Tracking
CTV advertising can be integrated with other digital advertising channels, allowing for cross-device tracking.
Advertisers can reach viewers on their smart TVs and then retarget them on their smartphones or tablets, creating a more cohesive and effective advertising strategy.
Measurable Results
Unlike traditional TV advertising, which can be challenging to measure accurately, CTV provides detailed analytics. Advertisers can track metrics such as viewability, click-through rates, and conversions in real time.
This data allows advertisers to assess the effectiveness of their campaigns and adjust as needed to optimize their ROI.
Reduced Ad Waste
With CTV's precision targeting, advertisers can avoid wasting ad spend on audiences that are unlikely to be interested in their products or services. This reduces ad waste and ensures that every advertising dollar is used more efficiently.
Dynamic Ad Insertion
CTV enables dynamic ad insertion, which means that different ads can be inserted into the same piece of content for different viewers. This personalization ensures that viewers see ads that are relevant to their interests and demographics, increasing the chances of engagement.
Geotargeting
Advertisers can target specific geographic regions or even individual households with CTV advertising.
This level of geotargeting precision is not possible with traditional TV advertising, making CTV a valuable tool for local businesses and regional campaigns.
Flexible Ad Lengths
CTV platforms often offer more flexibility in ad lengths, allowing advertisers to create short, snappy ads or longer, more informative ones, depending on their goals and the content they are sponsoring.
Conclusion
Connected TV has ushered in a new era for advertising, revolutionizing how brands engage with their target audiences. As consumers increasingly shift away from traditional television in favor of CTV, advertisers who adapt to this changing landscape stand to benefit from the ability to deliver more relevant and engaging content to their audiences.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Larisa Bedgood is VP of marketing from Porch Group Media.