Connected TV (CTV) is one of the hottest markets in the ad industry. eMarketer predicts CTV’s annual growth rate will (once again) outpace total digital ad spending in 2023.
CTV ad spending continues to expand as more players adopt ads, streaming services increase their ad loads, and people continue to spend more time cord-cutting. CTV will account for more than one-fourth of total time spent with digital media this year.
CTV is the future. So it’s important for digital advertisers to understand this hot market. That’s why we sat down with Lotame’s Head of CTV, Hunter Terry, to dive into some of the biggest Connected TV trends to watch in the world of digital advertising.
OTT, CTV, FAST — what do they all mean and why do marketers care?
There is no shortage of acronyms in the space so let’s start at the top, so to speak. Over-the-top or OTT is the method of streaming content over the Internet. If you are seeing something via OTT then you are most likely viewing it on your Smart TV, phone, tablet, or computer. Connected TV (CTV) refers to one of the specific screens that you use to watch OTT content — a TV, specifically internet-accessible TVs, which could be via a SmartTV directly or as a result of a connected device to the TV such as a set-top box, streaming stick, or gaming console. It sounds more complicated than it is, to be honest.
Now on to the other acronyms. We can’t talk about FAST (free ad-supported TV) without discussing AVOD (advertising video on demand) as they are almost synonymous with each other. FAST refers to the content that is viewable in a live environment. When you go to a FAST channel (like Tubi), a program is already running similar to what you’d see on a traditional TV channel, which you can choose to watch or not. AVOD (like Amazon Freevee), on the other hand, is ‘on demand’ such that you as the consumer can choose which program to watch and when, starting and stopping at your leisure. Then there’s SVOD (like Netflix), which operates like AVOD but is subscription based. Finally, there are also services that act as a hybrid subscription-based and ad-supported (like Hulu) which don’t actually have a term yet (can we just call it VOD – video on demand?)!
As you can see, there are many models (and many more we didn’t discuss) to help satisfy the cord-cutters tastes. This is a direct result of the rise of streaming culture with media and tech companies trying to determine how best to take advantage of such a huge momentum shift away from traditional broadcast, cable, and satellite television.
From your perspective, what are the missed, or yet to be realized, opportunities in CTV from both a marketer and media owner perspective?
From a media perspective, CTV today looks very similar to how mobile did seven years ago or the web did 15 years ago. For marketers, CTV targeting is often barebones. It can be difficult to find appropriate scale, and identity is an afterthought. Addressable data can be hard to come by either due to the hoarding from major OEMs and streaming services that have the CTV traffic and native data, or from traditional data providers not being able to transfer their existing web/mobile data into the world of CTV. Identity, a concept that folks are still trying to wrap their heads around on the web for cookieless solutions, is left on the wayside by most marketers in CTV, neglecting to think about how to best plan for campaign efficacy in such a fragmented landscape.
For media owners, they haven’t yet realized that CTV can represent a brand new channel on which to monetize all of their existing content. Web/mobile-first media owners have a greenfield opportunity to help supply additional inventory for the ad dollars marketers are trying to cram into an ad-diminished ecosystem.
Big brand dollars have been flowing into CTV from CPG, retail, auto, insurance, etc. Is this an indication of linear’s last legs or do you believe something else is at play?
Big brand dollars go where the eyeballs are, plain and simple. The early adopters in the CTV space like CPG brands tested the space while cord cutting was still in its infancy because of the opportunities CTV represented over linear TV advertising. But we are past early adopters now. We are into the late majority now as most brands have started shifting their ad budgets from traditional to connected TV simply because that’s where the viewers are increasingly found. If a brand wants to reach households on a large format TV they increasingly HAVE to run ads via CTV to be able to get the scale they used to find purely from running on linear.
Early adopters really helped pave the way for brands to follow. Views may have been the initial draw but optimization is now taking center stage and everyone stands to benefit.
CTV and retail media networks (RMNs) are trending to take a significant chunk of budgets this year. Do you see any connections between the channels that would explain this?
I see a great deal of crossover and potential in these two high-growth areas. For example, Kroger and Disney announced plans to share first-party behavioral data for targeting streaming audiences. Pooled data may become a popular commodity in the industry in the near future if more brands lean into the idea. It makes sense if you think of how marketers spend across the funnel. They’ll use CTV for upper funnel and RMNS or other emerging channels for lower funnel conversion.
Netflix introduced an ad-supported tier this year and has been cracking down on shared logins to boost revenue. Apparently the ads users are “more valuable” to Netflix. How do we wrap our heads around this?
Netflix’s move has validated that CTV isn’t a fad anymore. I think it’s actually a crucial next step for streaming since so many viewers are flip-flopping between services every month based on the latest blockbuster shows to come out. For services that are offering extremely low (or no-cost) ad tiers it dramatically decreases the likelihood that their subscribers do the streamer hop.
What are your go-to CTV apps, binge watches, etc.?
I’ve been a Disney fan all my life. Now that I have 2 young kids it’s become a savior on so many occasions knowing that I can leave them with Mickey or some other Disney Junior character. My wife and I are partial to services like Netflix for the extensive library of movies and the new series they introduce so frequently. We will see how the writer’s strike affects this though!
Ready to jump into the world of CTV advertising, but not sure where to start? Learn more about Lotame’s CTV solutions and how we can help you find the scaled audiences needed to maximize CTV advertising’s impact.