The proliferation of smart devices over the last decade has transformed the way people consume media. With the rise of streaming services, the traditional television model has evolved into a more connected and interactive experience. This shift in viewing habits has created new opportunities for advertisers to reach their target audience through Connected TV (CTV) platforms.
What are Connected TV Platforms?
Connected TV is a term used to describe any television set that is connected to the internet, allowing users to access online content and streaming services. This includes devices such as smart TVs, gaming consoles, streaming boxes, and sticks. Unlike traditional TV advertising, advertising through a connected TV platform offers more personalized and targeted advertising options.
CTV platforms display content over-the-top (OTT), which simply means they deliver it over the internet rather than through traditional cable or satellite providers. These services, ranging from video-on-demand platforms like Netflix to live streaming services like Hulu Live, offer an abundance of content at the consumer’s fingertips. As a result, advertisers can tap into these platforms’ data capabilities for targeted advertising, thereby increasing the potential for user engagement and conversion.
Components of the CTV ecosystem (and how they affect advertisers)
For connected TV to work the way it’s supposed to, there are a lot of moving parts that have to come together.
- Broadcasters are the streaming services that host exclusive content on their platforms. Hulu, Netflix, and Amazon Prime Video are a few examples of popular streaming services.
- Streaming devices enable connected TV on smart TVs. Roku, Amazon Fire Stick, and Apple TV are a few examples of streaming devices that connect to traditional TVs.
- Smart TVs are today’s standard TVs that come preloaded with streaming apps and internet connectivity. Certain smart TV models are built to work particularly well with certain streaming devices or have their software built in.
- Networks and publishers sell ad inventory from the above categories and smart TV product manufacturers.
- Advertisers target specific demographics, interests, and viewing habits when they purchase ad inventory from networks and publishers.
- Data partners collect information about viewers’ preferences and viewing habits that can be used to target advertisements more effectively.
- Mobile measurement partners (MMPs) measure the effectiveness of ad campaigns running on CTV platforms.
- Supply-side platforms (SSPs) are technology platforms that instantaneously facilitate the ad exchange (purchase) from the publisher’s side.
- Demand-side platforms (DSPs) provide automated tools for advertisers to purchase and manage ads across multiple CTV platforms.
Every source of inventory gathers data in a unique manner, leading to a variety of insights. Some providers might use pixels for improved accuracy in measurement and engagement.
Frequently, these inventory sources function within confined ecosystems, compelling advertisers to interact directly with them. This situation leads to handling diverse and restricted data sets, and also stops user-level data from exiting their particular platforms.
What’s the consequence? A highly competitive and disjointed market — this poses a growing challenge for advertisers in correctly gauging their campaigns across multiple devices and platforms.
Connected TV monetization models
There are a few different ways CTV platforms use advertising to generate revenue:
- Subscription-based — Platforms like Netflix and HBO Max rely solely on user subscription fees for revenue, opting not to include any advertisements.
- Ad-supported VOD (AVOD) — AVOD services like Hulu offer free content in exchange for playing commercials during a show’s designated ad breaks.
- Transactional — Platforms like iTunes and Google Play offer users the option to buy or rent individual movies or episodes.
- Hybrid — Some platforms, like CBS All Access, use a combination of subscription and ad-supported models for revenue generation.
Advantages of advertising on connected TV platforms
Compared to regular TV advertising, there are countless benefits to advertising on connected TV platforms:
- Targeted advertising. Connected TV platforms offer advanced targeting options based on factors such as demographics, interests, and viewing habits. This allows for more personalized and relevant ads to be delivered to the viewer.
- Interactive capabilities. OTT advertising offers interactive features such as clickable ads, which can lead to increased engagement and conversions. Many of these haven’t yet been translated to CTV, but certain interactive elements (such as polls) are widely used by advertisers.
- Measurable results. CTV platforms offer detailed metrics and data on ad campaigns, allowing advertisers to track the success of their ad placements and make data-driven decisions for future campaigns.
- Budget control. Advertisers can target specific audiences without wasting funds on reaching a broader, less targeted audience. Since CTV advertising is success-based, advertisers will only pay for ads that are seen by actual viewers.
- Increased reach. With the rise of cord-cutting and streaming services, more people are shifting away from traditional TV viewing. Advertising on connected TV platforms allows advertisers to reach a larger audience, especially with younger demographics who prefer OTT content.
- Real-time analytics – Advertisers can access real-time data on the performance of their ads, allowing for adjustments to be made quickly for optimal results.
- No ad skipping – Unlike traditional TV where viewers can fast forward through commercials, connected TV platforms do not allow for ad skipping, ensuring that ads are seen by the viewer.
Tips for advertisers looking to tap into the CTV market
When you advertise through connected TV, you’ll have a wealth of data at your fingertips. This includes viewer demographics, interests, and viewing habits. This information allows you to tailor your advertising campaigns to their audience’s specific needs and preferences (sometimes, automatically).
It’s no longer about broad-reach advertising; instead, it’s about reaching the right audience at the right time with the right message. To make the most out of it, keep these tips in mind:
- Use the data provided by CTV platforms to understand your target audience better and create ads that will resonate with them.
- Take advantage of the interactive capabilities offered by CTV platforms, such as clickable ads or polls, to engage viewers and drive conversions.
- Continuously monitor and analyze the performance of your ads to make data-driven decisions for future campaigns.
- Don’t just rely on CTV platforms for your advertising efforts. Use a mix of different advertising channels to reach your target audience effectively.
- Keep up with the latest developments and trends in the CTV world to stay ahead of the competition and make the most out of this growing market.
Final thoughts on CTV advertising
As technology continues to advance, it’s clear that connected TV platforms offer a unique and highly effective advertising opportunity for businesses. With their targeted capabilities, interactive features, and measurable results, it’s no surprise that the CTV market is growing rapidly.
