The Comprehensive Guide to CTV Advertising

What is CTV Advertising?

Today’s modern audience engages with TV and advertisers in different ways than they used to. While linear TV was once king, nearly 75% of buyers are now shifting ad budgets to Connected TV. The COVID-19 pandemic resulted in audiences rediscovering their love for TV, and CTV consumption increased drastically worldwide.

Even as people venture out of their homes more now, connected viewership is still going strong. This fast-growing channel, combining the reach of linear with non-skippable content and digital addressability, makes it a winning opportunity—with the potential to drive ROAS up to 10 times higher than with linear TV.

Despite these powerful statistics, in recent years investment in CTV advertising was much slower. Marketers associated connected TV as a measurement-challenged space. However, the ability to track performance across CTV campaigns solidified in recent years.

In this guide, we’ll explore how TV advertising has changed, what it looks like with the shift to CTV, and how marketers can, and should, adjust their strategies as the connected — and measurable — digital age reshapes how marketing approaches television as an advertising channel.

A recent Digiday report, WTF is TV Advertising in the Connected Age, examines the rise of CTV, how advertisers are using it as a performance marketing channel, and outlines steps for brands interesting in utilizing the platform. 

What Connected TV Is—and Isn’t

CTV essentially encompasses TV screens connected to the internet — i.e., smart TVs or regular TVs connected to an Amazon or Roku streaming stick. Over-the-top (OTT) video is not the same as CTV. OTT refers to content rather than a specific device. The term OTT was originally coined to describe content being distributed via the internet that was, at the time, consumed mostly on desktop computers and mobile devices.

 It could be argued that, with the rise of CTV, the use for the term OTT has since passed — streaming has replaced OTT. That said, these terms are often used interchangeably. Some of the confusion between the two likely stems from some using the term to refer to devices other than mobile and desktop, which is not how it was originally intended.

Advertising on CTV: The Basics and Benefits

When it comes to advertising on CTV, marketers use first- and third-party data to target specific audiences, as they do with any digital advertising campaign, to customize creatives, personalizing for whoever they want to reach. Linear TV, on the other hand, would broadcast one commercial to an entire audience, often resulting in content that felt impersonal and potentially unimportant to many viewers.

Advertisers leveraging CTV are now accessing a new performance channel with a significant impact on audiences. CTV advertising can reach viewers that traditional TV ads do not and in ways that are highly targetable and measurable.

One way advertisers can think of approaching CTV is as a digital programmatic advertising channel with the commercials as an ad unit instead of banner ads.

“90% of Samsung TV Plus users do not have another connected device plugged into their TV, so these are users that are not watching traditional cable,” said Stephanie Zuroff, director of business development and content partnerships at Samsung TV Plus in a recent Digiday report. “They’re users that advertisers can’t reach if they’re not buying CTV inventory.”

When it comes to ad spend, CTV is one of the most rapidly growing markets. CTV impressions soared even during the pandemic, with more growth tapped for 2021 and beyond. Nielsen reported an 81% year-over-year increase in CTV viewing, while the numbers for linear TV have continued to decline.

So What Does All This Mean for Advertisers?

CTV has not only changed the way consumers and advertisers think about video advertising, but it has also allowed TV to become a whole-funnel marketing channel for brands in every space—from multinational and local, to B2C and B2B. One way advertisers can think of approaching CTV is as digital programmatic advertising with the commercials as an ad unit instead of banner ads. Some networks are now prioritizing content for streaming rather than linear TV, to account for the new normal of user behavior.

Furthermore, CTV offers insight into accurate measurement of TV ad campaigns, which is an advantage that wasn’t previously available. This offers valuable data to advertisers that can be shared between traditional and digital teams to fine-tune messaging and inform where the advertiser should focus their efforts—effectively collapsing silos between the two teams.

For example, if a CTV campaign shows that the advertiser’s audience is watching certain types of networks, such as home and garden or sports, the traditional TV team can then provide better insight into where their audience may be watching TV. This change can then improve linear efforts by allowing them to leverage insights to drive better performance outcomes, test ideas, and validate placements and messaging.

“This solves a classic problem, where traditional TV ad teams needed to rely on archaic measurement methodology to determine the value of an ad placement,” said Ali Haeri, vice president of marketing at MNTN. “Unfortunately, the data available to them is pretty limited. They didn’t really ever know the true impact of their campaigns. With CTV, marketing organizations can now measure their ad’s impact with specific audiences, letting them know whether a message is resonating or not.”

With CTV, marketing organizations can now measure their ad’s impact with specific audiences, letting them know whether a message is resonating or not.”

Ali Haeri, Vice President of Marketing at MNTN

If advertisers drill further into the data and have the right technology in place to do so, they can even see which CTV networks are driving better performance for their campaigns. They can then make much more informed decisions by applying those insights to linear TV. “Performance marketers get uneasy when they think of traditional TV advertising because it feels so immeasurable,” said Haeri, “but now that CTV allows TV advertising to behave in a way that’s familiar to them, they’re certainly excited about it.”

The increase in advertiser presence on CTV can also be connected to the ability to measure performance. CTV offers digital targeting in ways that marketers already use across other channels. Gone are the days when linear TV measurement was much less definitive and advertising largely centered around brand awareness.

To Repurpose or Not Repurpose?

In a recent Digiday Future of TV briefing, one digital video publisher saw this shift to digital TV as an opportunity to sell TV advertisers on the videos they post to social channels, such as YouTube: “If an advertiser is comfortable with a publisher’s YouTube video when played on a TV screen, why wouldn’t they be interested in it when viewed on any screen?”

That’s a message with which Haeri at MNTN does not exactly agree. To his eye, CTV ads are best served on the biggest screen in the house. “CTV is a standalone, unique channel that provides a lot more accountability than what brand advertisers are used to,” said Haeri. “With the old way of TV advertising, there wasn’t a whole lot of information to go off of to really understand the effectiveness of a TV campaign. Now, with CTV, every platform can deliver way more information with way more precision than was ever available before. And when it’s delivered on a TV screen, it has the full impact of TV advertising but with digital delivery and measurement.”

“Connected TV is a standalone, unique channel that provides a lot more accountability than what brand advertisers are used to.”

Ali Haeri, Vice President of Marketing at MNTN

Why Measurement and Performance Are Central to CTV

Performance is now the name of the CTV game. Advertisers have discovered that they can measure store visits and offer claims via CTV, a compelling argument for investing marketing budgets in the channel. “The shoppability that can be built into CTV campaigns with QR and SMS codes has a direct impact,” said Allergan’s senior marketing manager, Myles Dacio, in a recent Digiday article. “That was a game-changer for us, seeing that we aren’t only driving awareness, but lower funnel tactics as well.”

With CTV, it’s also possible to see exactly how many people viewed an ad and see their completion rates. Marketers can measure the actual impact of CTV ads on a one-to-one basis, whether that’s ad exposure, site traffic to sales Measurement and performance are central to CTV in 2021 or ROAS. So, marketers can measure ad results and ROI much in the same way they do for search and social and without cookies, IDFA, and the like.

This can be done without the need for QR or SMS codes, by relying on cross-device measurement technology instead that ties household devices together. If a viewer sees a streaming TV ad, then visits or makes a purchase on another device within the household, the marketer will know.

Additionally, brands and agencies can leverage partnerships to further analyze data, monitoring web activity to see if a consumer converts as a result of their CTV ad. They can see how a CTV ad resulted in increased traffic on the advertiser’s site and identify other devices from the same household that also viewed the ad, resulting in site visits driven by that ad impression. Advertisers equipped with the right partnership, a CTV ad platform integrated with Google Analytics, for example, can gain crucial insights into their ad’s impact.

“It’s been really satisfying to see brand marketers realize they can track how many people are visiting the website after we run this branding campaign,” said Haeri. “They can precisely know how many people purchased something on the website after seeing the ad campaign. It unlocked something entirely new for them and it really does introduce a new sensibility for the brand marketer where they now have an expectation of really trying to understand the impact of their campaign much more so than they ever did before.”

How Marketing Teams Get Started With CTV

Programmatic buying is now becoming more popular in the CTV space, with nearly half of advertising spend being purchased programmatically. Streaming continues to soar, with CTV accounting for 73% of streaming watch time worldwide, as of earlier this year. In order for brands and advertisers to obtain broad reach and frequency, they really need to utilize programmatic CTV inventory.

Several different types of automation tools are available in the marketplace today. Dedicated CTV advertising platforms, which handle elements like creative management, campaign optimization, and measurement are a go-to for many advertisers because they streamline a lot of manual steps.

By leveraging a CTV platform’s automation, especially for optimization and bidding, advertisers can remove a lot of the time-consuming tasks. This is especially useful for campaigns that rely on quick optimization to ensure strong ROI.

Demand-side platforms allow advertisers to purchase ad space at a low cost and at scale. These platforms operate by having advertisers upload their creatives, set a budget, and select their desired targets before searching through publisher networks to find apps and websites that fit the profile of requirements the advertiser created. This happens all automatically, so an advertiser’s creative is placed within milliseconds.

Supply-side platforms are similar to DSPs, but are essentially the publisher equivalent, allowing them to maximize the prices that their impressions sell, with similar tech powering both DSPs and SSPs. Data management platforms are another resource for advertisers in the CTV space.

These are essentially data warehouses, where software ingests, sorts, and holds information, then spits it out in a format useful for marketers, publishers, and other businesses. Because these platforms primarily house data, they are most often connected to a DSP, for example, as they are not built for buying ads themselves.

AI and machine learning technologies can also greatly improve the way that brands and advertisers handle their CTV campaigns. These features often find themselves worked into CTV advertising platforms to help augment campaign performance

CTV Advertising Metrics in Focus

Agencies, TV networks, and teams that buy and sell ads are often siloed and many companies that own ad space aren’t eager to share their data with buyers. Because of this, advertisers must come up with metrics specific to their campaigns rather than relying on any common ground across linear and CTV. Knowing that someone saw a specific ad and visited that brand’s website after is vital. 

Advertisers can also track conversion rates with CTV to help them understand the overall effectiveness of a campaign in generating a conversion or a sale. This is what unlocks CTV as a performance channel that’s similar to paid search or social.

Other key metrics are determined by the advertiser’s goal. Are they looking for reach and awareness or are they looking for ROAS? With CTV, they have the option to generate strong returns for any of these metrics. CTV’s flexibility allows advertisers to do more with the channel, whereas traditional TV advertisers are generally limited to reach and awareness with the lack of reliable measurement.

Does Advertiser Size Matter in the CTV Space?

CTV looks the same when it comes to core functionality for both small and large companies. “Any differences are determined by how those companies use it and which outcomes they want to generate,” said Haeri at MNTN. “That said, it is important to note that it’s far more budget-friendly than linear TV advertising because it’s purchased programmatically, so advertisers can pay as they go. This is good news for smaller advertisers who don’t want to be saddled with upfront costs, so it is rather similar to paying for a social campaign.”

Challenges in Play, and Where CTV Advertising Goes Next

In some ways, measurement is still a work in progress. In a recent Digiday survey, 39% of respondents indicated shifting to CTV advertising increased their ROAS, while 32% of respondents weren’t sure how this new channel was impacting their revenue. Part of this discrepancy can be attributed to the lack of standard ad measurements between CTV platforms.

This can be a challenge, and perhaps a barrier to obtaining organizational buy-in. Even though not every platform has the same kind of metrics, there are platforms and software working to make this less of a challenge for advertisers.

“We have to establish a new lexicon and we need to create measurements and goals that make sense within a business model, because ultimately what matters is ROI,” said Dick Wechsler, CEO of Lockard and Wechsler Direct, in a Digiday report. He also highlighted that many clients are still relying on traditional metrics, which have become irrelevant with the linear TV audience collapsing, such as cost per point. “Agencies and sellers need to shift the conversation and invest time in helping clients understand CTV to build their willingness to test and learn.”

“Agencies and sellers need to shift the conversation and invest time in helping clients understand CTV to build their willingness to test and learn.”

Dick Wechsler, CEO of Lockard and Wechsler Direct

Partnering for CTV Advertising Success

While there are plenty of options for advertisers who are looking for an efficient way to approach CTV advertising, important elements to consider when choosing a platform include the ability to easily upload and customize ad creatives, reach tens of thousands of new third-party audiences, leverage both first- and third-party data, and accurately measure campaign performance down to the last conversion. Any platform that delivers on all of the above and functions similar to other performance channels, like Facebook or Google’s paid search, is really all they need.

“For smaller brands starting to explore the CTV space,” said Haeri, “it’s important to find a solution that’s self-serve, nimble, and avoids a managed service requiring egregious minimums. They should be looking for something that lets them spin up as many campaigns as they want. Essentially, they’re looking for all the aspects that introduce efficiency, but in a self-serve platform.”

Framing the Audience-First Future of CTV Advertising

CTV is at its best when treated as a performance channel, and Haeri at MNTN said that any tool to help optimize for campaign performance that’s currently available on other channels will find its way into the CTV space. “We can expect things like A/B testing to determine the most effective piece of creative or integrations into third-party measurement platforms like Google Analytics so advertisers can track results alongside the rest of their ad channels. Look at what’s available on other performance channels now, and that’s what we’ll see becoming more commonplace on CTV in the near future.” It is likely that performance measurement will continue to evolve on CTV to further distance itself from linear TV measurement.

“The current way TV advertising is transacted and measured is unsustainable,” said Haeri, “There’s no need for abstract measurement like what’s found on linear on CTV. On the transaction side, massive upfront costs or spending large budgets tied to specific programs will likely be seen as archaic means of building a campaign, outside of certain use cases.”

With that being said, specific ad buys still do have a place in TV advertising, such as an advertiser wanting to run ads during events like the World Series. “But, to really take advantage of what CTV has to offer,” Haeri said, “advertisers should be prioritizing measurable outcomes and strong performance. That means taking an audience-first approach and reaching them regardless of what they’re watching.