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    Research Digest

    Comparing the Effectiveness of Connected TV Advertising to Linear TV

    Abstract

    • Connected TV’s accelerated adoption rate by advertisers and viewers is influencing how brands approach their advertising strategy
    • 91% of advertisers now think that Connected TV advertising is just as effective or more effective than linear TV at driving a return on ad spend
    • CTV is where advertisers can find a younger audience, a more engaged audience, and drive both brand awareness and customer conversions
    • While the gap between CTV and linear TV is closing, linear is still an effective advertising channel thanks to its large audience and a lower likelihood of repeated ads

    How the Modern Method of TV Advertising Stacks Up Against its Traditional Forebearer

    Fig. 1

    For the last several years, brands and viewers have been re-evaluating their relationship with smart TV advertising as more consumers cut the cord and embrace streaming services. Thanks to countless new services, original programming, and new habits formed during the COVID-19 pandemic, CTV’s adoption rates have surpassed expert predictions and influenced advertising spend.

    These developments have impacted how advertisers think about advertising, television, and their marketing budgets. In 2021, 60% of advertisers polled reported shifting ad dollars away from linear TV and towards CTV advertising, and a combined 91% of advertisers think that CTV is either as effective or more effective than linear TV at driving return on ad spending (Fig. 1).

    But how does the effectiveness of CTV compare to the more traditional success stories found on linear TV? eMarketer’s recent US Connected TV Advertising Report examined the data, strategies, and comparisons between CTV and linear to explore the advertising effectiveness of both platforms and how marketers should react. 

    Why CTV is an Effective Ad Channel

    The rise of CTV as a premier advertising solution can be directly attributed to its effectiveness. By being able to target key audiences down the most granular demographic, as well as provide real-time feedback on ad performance, CTV occupies a space between both linear television and digital marketing that wasn’t previously possible for marketers. With CTV advertising, brands have easier creative management, including the ability to upload a video file themselves. Similarly, Connected TV improves audience targeting by streamlining the process and allowing advertisers to pick their specific audience segments—from the broad to the niche. 

    Connected TV occupies a space between both linear television and digital marketing that wasn’t previously possible for marketers.

    After an ad is served, advertisers can see how the ad is performing – allowing them to adjust creative if necessary—then track the customer to see if they engage with the brand or make a purchase after seeing an ad. If they don’t, follow-up ads can be retargeted and creative can easily be refreshed as needed. 

    The result of these capabilities is a channel that provides a reliable and precise way to serve relevant ads to consumers—which in turn has led to viewers being more receptive to advertising in general:

    • 92% of users watch at least one ad-supported streaming channel 
    • 60% of viewers say they enjoyed shows with ads customized for them
    • 56% of viewers enjoy ads based on their search history
    • 87% of viewers watch CTV with a second device (e.g., phone, tablet, laptop) on hand
    • 65% of viewers look up content on their phones while watching CTV and navigate to the advertiser’s website
    • 33% of adults purchased a product after seeing a CTV ad
    • Ad-supported video-on-demand channels cumulatively attract more viewers on CTV than paid subscriptions (Fig. 2) 
    Fig. 2

    CTV’s effectiveness lies in both its technological capabilities—and an audience that is not only receptive to watching relevant ads but actively enjoys them even when they understand they’re targeted. That effectiveness is leading directly to customer conversions – conversions that can be directly tracked thanks to CTV’s household-based solution that targets IP addresses. This particular method of audience tracking gives perspective on the full customer lifeycle, informing brands when an ad viewer takes the next step to engage or convert—regardless of what household device they do it on. The effectiveness of these capabilities is pushing more brands to expand their CTV marketing budget, with ad spend increasing faster than experts predicted. 

    Why Linear TV Is Still the Dominant TV Platform 

    Despite the growth explosion and advertising gains made by CTV, linear TV still maintains dominance in the television advertising arena. When studying viewing habits for the month of June 2021, Comscore found that the amount of time people spent watching live TV was around 2.5 times greater than the amount of time watching OTT (fig. 3).

    Fig. 3

    This significant—but steadily shrinking—gap means that many advertisers simply can’t abandon linear TV completely yet, especially for larger brands that have the budget to support tentpole events like championship games or awards shows. For this reason, linear TV’s effectiveness relies on its broad approach—while the ads might not be delivered to a target audience most likely to convert, larger brands (for instance, ones operating in the CPG vertical that appeal to many different demographics) can still find success thanks to the sizable viewership. And while advertisers are shifting ad dollars away from linear and towards CTV, linear TV still remains an important part of the equation for larger ad campaigns. 

    Another argument for linear TV’s effectiveness over CTV is thanks to a lower frequency of repeat ads. While CTV’s targeting methods ensure that ads are effectively served to the right customer, this can lead to repeated ads being shown in a short amount of time—especially if the CTV platform being used doesn’t offer frequency controls or capping. A poll by Conviva found that most consumers think there are simply too many repeated ads on CTV. Even for brands that advertise predominantly on CTV, this data should be a wake-up call to incorporate frequency capping or refresh creative. 

    Conclusion

    Connected TV has forever changed the advertising landscape by not only providing tools that are proven to be effective but also altering how consumers think about advertising. By making ads more relevant and less of a nuisance, audiences are more likely to watch CTV ads and convert. Despite this, linear TV still holds key advantages for brands that will likely continue to support the channel for the immediate future. 

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