Why Connected TV Advertising Stands to Transform the TV Industry | PRO Insight

Compared with other standard pre-roll ads, CTV advertising generates a sixfold increase in engagement

The COVID-19 pandemic is accelerating the shift to connected TV consumption. In fact, streaming video adoption has surged an estimated 60% as the world self-isolates, and we navigate a new reality.

But even before the coronavirus crisis, the industry was already witnessing an explosion in connected TV (CTV) viewership. Fans have cut the cord on expensive cable subscriptions and now watch their favorite shows on mobile devices or smart TVs, wherever and whenever they want. For marketers, CTV offers an attractive opportunity because of the data that enables precise targeting across digital channels alongside premium network-quality programming.

Last year, CTV ad spend approached $7 billion, a 38% increase, while U.S. viewership is expected to crack 200 million in 2021. While everyone is talking about COVID-19’s impact on CTV spend, the numbers were always poised to climb. Here’s why:

More inventory

CTV inventory is opening up. And while many of these services are subscription-based video-on-demand (SVOD), ad-based video-on-demand (AVOD) platforms also are exploding. New services, like NBCUniversal’s Peacock, for example, are expected to follow the ad-supported model, and for good reason. Forbes estimates that Hulu earns $7 per month per ad-supported user. Amid COVID-19, we’re also seeing providers like Vudu offer more content for free, but with commercials.

Broadcasters with CTV options are capturing the audience as it shifts to streaming, delivering impressive results for advertisers. For instance, Innovid found that 63% of broadcasters’ digital ad impressions were in CTV environments. What’s more, compared with other standard pre-roll ads, CTV advertising held the audience’s attention longer and generated a sixfold increase in engagement.

More buying options

As CTV inventory scales amid the coronavirus crisis, we can expect more of these opportunities to be sold programmatically. By 2021, nearly 60% of CTV ads will be sold that way, up from 51% in 2019.

As is the case with any channel in the beginning, for pricing reasons, broadcasters and publishers are somewhat wary of shifting high-value inventory to programmatic marketplaces. Yet broadcasters that sell more inventory programmatically will benefit because the demand is there. Pre-coronavirus, the Interactive Advertising Bureau (IAB) found that 94% of companies were planning to increase or maintain their CTV spend this year, with 50% looking to grow their commitment. As that occurs, buyers who enjoy the seamless nature of programmatic transactions for web and mobile inventory will be seeking the same from CTV. 

In the current environment, marketers also are looking for additional flexibility in how they spend. They want to adjust programmatic investments accordingly as they grapple with COVID-19’s impact. As a result, CTV inventory should be available alongside other forms of programmatic supply. Buyers want to partner with omnichannel players who can help them adapt their strategies across various platforms, including CTV, mobile, video and audio.

Consumers also are tightening their belts and may begin to reduce the number of streaming services they have. If so, it becomes harder for advertisers to buy on an IO (Insertion Order) basis while programmatic buying affords greater opportunity and flexibility.

Better measurement

The CTV ecosystem is responding to the surge in demand by evolving just as other emerging channels, like mobile, have done in the past. Vendors are stepping up to provide third-party verification, giving advertisers confidence in their investment and delivering accurate measurement of return on ad spend. This assuages concerns about an “adtech tax,” because marketers will know what money is going in and what results they’re getting from their placements. In today’s climate, this is critical.

The adoption of common industry standards also will increase confidence across the CTV landscape. Accurate measurement, pricing, brand safety and ad fraud are understandable concerns in any emerging channel. The IAB Tech Lab is meeting the unique challenges in CTV with its own recommendations, which will go a long way in aligning all stakeholders. In recent years, accuracy has been difficult because of the wide range of devices and software in play. Recommending common app-store IDs, along with the app-ads.txt standard, allows users to compare apples to apples and to reduce fraud in this burgeoning market.

More data activation

As more broadcasters and demand-side platforms (DSPs) adopt VAST (Video Ad Serving Template) 4.x, video ads can be delivered more seamlessly without breaks in the complicated chain. Connecting these dots to use data is a challenge, but solutions using automated content recognition (ACR) data help advertisers reach specific audiences on CTV.

ACR is a data stream unique to smart TVs that flows from viewers to the manufacturer. In an anonymized way, the specific shows and commercials that an individual watches can be tracked second-by-second and tied to an IP address. And new technologies now offer a way to use ACR data to target ads on digital channels across mobile and desktop platforms. This bridge between TV and digital makes omnichannel targeting much easier and more efficient for advertisers. And, in today’s “new normal,” especially as CTV attracts greater spend, simplicity and efficiency are table stakes.

Not surprisingly, precise targeting (58%) and accurate measurement (39%) are the top reasons why advertisers are drawn to CTV in the first place. As the space evolves and sees even greater interest at a time of self-isolation, these changes will ensure that CTV is growing in the right direction, meeting the rising demand to deliver top-performing ads around popular TV shows over the web at scale.

Iván Markman

Iván Markman

Iván Markman is the Chief Business Officer at Verizon Media. Previously, he was Senior Advisor at Abundant Venture Partners and a Special Advisor to the CEO and Board of Directors of comScore, Inc. Markman also served as General Manager of Marketing Services at Neustar, a real-time provider of cloud-based information services, following its acquisition of MarketShare where Markman served as Chief Operating Officer. Before joining MarketShare he was Global Head of Corporate Strategy at Yahoo!, where he also served as Vice President of Operations Finance.


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