Elizabeth Thorp

 

The secret is out. The largest purchasing demographic on earth is cutting the cord on linear TV and turning toward streaming services. Connected TV penetration is up 32% this year, with over 74% of American homes owning at least one Internet-connected TV device. 

As the trend shifts to more flexible means of advertising, connected TV advertising meets the needs of publishers and buyers alike with a direct, high quality, and efficient TV ad experience. 

Connected TV is changing the way people watch TV

Advertisers are familiar with programmatic. They use it with their online display and native ads, as well as their audio ads. But as people lean toward diverse capability and customization, the media narrative is shifting toward programmatic video technology. 

Programmatic advertising isn’t invariant to remnant TV inventory anymore. In the past year alone, the CTV environment has molded itself into a superior advertising space. Publishers and buyers gravitate toward quality and scalable tech partners and continue to cut ties with those who don’t meet the standard.

What do advertisers need to know about connected TV?

The benefits of CTV advertising are exponential. Rich video ads, paired with a deeply targeted programmatic environment, create a better user experience and generate faster reports. 

Trends continue to move away from traditional satellite and cable, making it highly probable that CTV will become a front runner for long-form, full-screen in the near future. 

Navigating the new terminology and verbiage can be confusing, but advertisers shouldn’t feel intimidated. Here’s a quick rundown:

  • OTT is the content you view “over the top” of infrastructure providers, both live and on-demand. (Netflix, Hulu, etc.)
  • Connected TV (CTV) is a device you use to watch OTT content. (Smart TV’s, Roku, Apple TV, Amazon Fire, etc.)

CTV advertising is booming

In a nutshell, CTV is just another avenue of watching OTT television – on an actual TV set. Depending on the platform, that’s around 80% or 90% of all viewing. 

So it’s not surprising that OTT networks are more than happy to see that connected TV advertising is growing at a pace that is nearly unheard of. 

Beachfront, an independent publisher (supply-side platform), reveals in a recent report that connected TV advertising requests have reached a staggering 1,640% year over year. 

No, that wasn’t a slip of my keyboard. That’s the real percentage of growth from November 2017 with 1.7 billion CTV ad requests, to November 2019 with 29.9 billion.

The introduction of top-tier streaming services

OTT marketers are anticipating the launch of new OTT channels. Disney+ launches in the U.S. on November 12, while Warner Media will enter the market in spring, 2020. 

The announcement of top-tier providers joining the CTV advertising space bodes positively for OTT marketers. Not only do premium channels bring awareness to connected TV, but they will also gain new consumers who may have not yet adopted CTV media in their households. High-quality OTT channels mean advertisers will want to spend money on those services. 

We can expect the addition of new ad-supported services to have a domino effect on all aspects of advertising while catalyzing a shift in linear TV to digital and connected TV platforms. 

The pressure of SVOD services

The pressure of SVOD services will increase. As consumers look for the platforms that offer their favorite channels and shows, they subscribe to services in a puzzle-piece model. However, most consumers hit their financial limit at around 3 or 4 subscription services. 

As the competition for high-quality, relevant content increases and costs are driven lower, OTT channels may find it challenging to cover operational costs with income from monthly fees. To fill in the gap, ad-supported video streaming models will assist OTT providers in gaining enough traction to remain profitable long-term, which means that advertising will pay a crucial role in the future of connected TV advertising and streaming. 

The market looks good, so why the hesitation?

More than 50% of marketing professionals say that programmatic TV is “top of mind.” Then why do only 15-17% of advertisers have connected TV advertising in their marketing plan?

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You’ve probably heard that connected TV is the next best thing in advertising right now, but you’re not even sure how to get started. Some don’t feel like they know enough about it to jump in headfirst. Others may feel like their other current campaigns are getting results. 

It’s a misconception that connected TV advertising has to replace your current marketing efforts. In fact, addressable TV advertising, and even direct mail efforts, can pair surprisingly well with your OTT marketing campaign. 

One thing is abundantly clear – as more people experience the benefits of CTV, more households are choosing to add connected TV’s to their homes.

It takes time, but the gap is rapidly closing. More advertisers are choosing to purchase TV ad space programmatically, especially when they experience firsthand success. As more prominent players join the OTT network, programmatic is making its way and gaining traction in publisher strategies, agency agreements, and long-term holding companies. 

The future of CTV advertising is here

Overall, the fact that connected TV advertising is reasonably untapped is a good development for advertisers looking to add a new media stream to their marketing playbook. 

The numbers don’t lie, and the market will likely become denser with the introduction of top-tier channels like Disney and Warner Media this next year. If you want to get ahead of the game, the time to get involved in OTT marketing is now. 

Connected TV is the primary source of delivery to OTT content. Broadcasters are focusing their efforts on reaching consumers with alternatives to mid to long-form that are “TV”-derived.

CTV revenue and perspective insights

  • The number of connected TV users in the U.S. reached 222.7 million in 2017. By 2021, this number will exceed 223.3 million. (EMarketer)
  • 87% of consumers are active on their smartphones and tablets while they stream content on a CTV. (YuMe)
  • Advertisers that have already implemented and leveraged CTV ads in their marketing strategy have been known to increase their investments in it. Up to 80% say they are planning to buy CTV inventory within the next year.
  • Connected TV advertising revenues will rise past $129 billion in 2023. In the U.S., outcomes are expected to almost double, reaching $48 in 2023. 
  • 90% of CTV viewers say connected TV advertising is more relevant or better than ads found on traditional TV.

Why advertisers should consider OTT marketing

For most consumers, the “TV” entertainment experience is a blend of traditional programming and streaming devices. Consumers are no stranger to juggling multiple remotes and subscriptions daily. Even the list of ways they access OTT content is ever-increasing. 

The CTV ad market is ripe

The rate at which ad buyers have access to a large-screen video with targeting and interactivity is quickly growing. On the other hand, familiarity, understanding, and experimenting with advanced CTV tactics is still new to some advertisers. An OTT marketing agency can help businesses tackle challenges surrounding fragmentation and data. 

One of the most significant benefits of CTV advertising and the reason brands are looking to OTT channels as an advertising strategy is due to the personalization it offers. Because connected TV advertising connects to the Internet through OTT content, advertisers can tailor messages to consumers in a way that traditional television cannot. 

As programmatic tactics increase, consumers have come to expect personalized content. Connected TV advertising allows you to continue a customized experience through their TV set. When users see ads that were served based on their interests, habits, and behavior, more trust and positivity is surrounding your brand and message. 

Accessible data sets allow OTT marketers to streamline a range of variables. Things like recent ad exposure, demographics, and psychographics can contribute to sequential messages. This messaging pairs with other connected devices such as a user’s phone or laptop. The result . . . a 360-degree advertising experience that spans multiple formats and media. 

CTV advertising is in high-demand

Although CTV/OTT audiences continue to rise at an exponential rate, inventory is competitive and often sold out. Other than popularity, advertiser demands for OTT inventory can be attributed to the data that connected TV advertising offers. Publishers can pair their quality first-party data with powerful and insightful third-party data to benefit the buyer.

Using a supply-side platform, publishers will package their audiences and sell them to OTT marketers at a premium, valuing inventory on each screen. Post campaign connected TV advertising is considered substantially more actionable than what gross rating points (GPR) can deliver. CTV, on the other hand, combines cross-device attribution to tie first-party insights with shopping card data and purchase behavior, nearly closing the full attribution loop. 

CTV ads are interactive

The platform that drives connected TV devices is designed to do so much more than linear video. With the combination of advanced graphic chips and gaming capabilities, CTV devices and OTT platforms are ripe for interactive formations. This goes beyond the static overlays and “red” button. 

Interactive formats are already starting to merge on the market. Companies are pushing the boundaries of what advertisers can expect on a larger screen. Right now, these include everything from interactive carousel images that dive into product detail and user experience, to engaging features that let the audience explore and play with their advertisement. 

The creation of interactive units and formats are only expected to evolve at this point. Not only will they have a more significant impact on the user, they will catalyze interactive commerce as a mainstream feature on CTV devices. The added benefit brands get is that they may drive consumers to other devices for purchasing that they can also track. 

Final thoughts

The number of OTT-enabled devices is growing (Roku, Apple TV, pay TV, smart TV PlayStation, Xbox, etc.), and CTV use is booming. Worldwide, there are over 1 billion connected TV devices. The rapid growth of CTV and OTT makes the market worth looking into for marketing and advertising leaders. 

Due to its extensible and open nature, Connected TV is the fastest way forward in the new Over-the-Top ecosystem. The benefit it offers to brands is the ultimate combination of premium content adjacency, one-on-one messaging, and immersive broad screen experience. Brands and audiences are both joining the masses of people migrating to CTV. 

It’s essential to be mindful that creative formats are still in the experimental stage. Working with the right OTT marketing agency is the key to a successful CTV advertising campaign and achieving results. 

Do you want to learn more about the potential of connected TV advertising in your brand? We’d love to hear more about your goals and needs. Call Moblyft today to speak with our experts, receive a free media kit, and read our case studies