What is Connected TV (CTV)?
Connected TV refers to a television used to stream online video content usually through platform-specific applications. Smart TVs, connected devices like Apple TV, and gaming consoles can all qualify as CTV devices.
How is CTV different from OTT?
While CTV refers to a device that can be used to stream online content, Over The Top (OTT) is the distribution model through which content is placed in front of a user regardless of the type of device used. A user could be watching OTT content on a CTV or on another device such as a laptop or tablet. Netflix, Hulu, and Amazon Prime are examples of OTT streaming services.
Following the COVID-19 pandemic, CTV and OTT skyrocketed, with more people at home and billions of eyeballs binge-watching video content around the world. Consumers switched to online streaming services and cut the cord on traditional linear TV, causing major cable and satellite TV providers in the US to lose 10M+ viewers in 2020.
OTT providers have innovated and adopted a range of business models for OTT content, which can include advertising on a CTV device. Popular OTT models include Advertising Video on Demand (AVOD), Subscription Video on Demand (SVOD), Transactional Video on Demand (TVOD), and hybrid distribution models that combine these approaches. The most interesting model to emerge in recent years is Free Ad-Supported Streaming TV (FAST) which allows viewers to enjoy video entertainment in a traditional linear format.
The Most Popular CTV Devices
Any electronic device that enables OTT video streaming by allowing a television set to connect to the Internet can be described as a CTV device. This includes three big categories of CTV devices:
- Dedicated CTV devices that connect to the television’s HDMI port,
- Smart TVs with integrated Internet connectivity, and
- Internet-connected video gaming consoles.
Dedicated CTV devices are still the most popular way for U.S. audiences to stream OTT video on a television set. This segment is dominated by Roku’s line of Streaming Player devices and Amazon’s FireTV devices, while other big players like Apple (Apple TV 4K) and Google (Chromecast) are searching for a foothold in the space.
Smart TVs are also popular, with 27% of U.S. households using them daily to stream OTT content. Today’s top Smart TV manufacturers – Samsung, LG, and Vizio – all offer a built-in FAST service as part of their core value proposition.
Modern video gaming consoles (e.g. PlayStation 5, Xbox Series X/S) can also be used as CTV devices, but are less popular than Smart TV and dedicated CTV devices when it comes to enabling OTT video streaming on television.
Benefits of CTV Advertising
CTV advertising is one of the fastest growing channels in advertising, now an estimated $19 billion industry in the US for marketers to reach households and individuals directly, and to target the right audiences throughout their marketing funnels.
Benefits of CTV advertising include expanded reach, precision targeting, and real-time measurement and optimization. The connected TV penetration rate in the US rose to an all time high in 2022, with 87 percent of American households owning at least one CTV device. CTV enables companies to cater their ads directly to viewers they want to attract. Because CTV advertising is hosted by a digital platform, marketers can then see results in real time and make adjustments as needed.
Challenges of CTV Advertising
As the CTV advertising space is quickly evolving, it can be difficult for companies that are new to OTT to make strategic decisions. Choosing the right OTT models and platforms is a substantial challenge for both content owners and advertisers, and the sheer number of options means there is high potential for audience overlap. Plus, analyzing metrics and attributing conversions across multiple OTT channels can be daunting.
How Can I Measure CTV advertising?
CTV offers advertisers the ability to measure their TV advertising campaigns like any direct response channel. In theory, CTV enables companies to combine the brand-building power of traditional linear TV with precision targeting, calls to action, and conversion tracking of direct response marketing. In the future, brands and CTV providers may create ways to make purchases within the user interface or send links to users’ smartphones.
CTV to mobile measurement
Connected TV to mobile measurement allows cross-device insight. Advertisers can target viewers who have visited their website on their CTV devices, and also retarget them by serving them related ads across their other devices. This insight can drive growth and inform marketing strategy by offering a comprehensive view of the user conversion journey.
What types of CTV advertising are there?
CTV and OTT ads generally appear before, during, or after video content. Advertisers can target audiences in a number of ways depending on the platform used and the data they are able to access. Three types of CTV ads that you should know are:
In-stream video ads
Ads that are usually integrated at the start or middle of video content and that cannot be skipped or removed by the viewer. These ads usually last up to 30 seconds.
Interactive pre-roll ads
Clickable ads that prompt the viewer with a call to action. Viewers can click on the ad and be directed to the company’s landing page.
Home-screen placement ads
Located on the home screen of a CTV device, these are often a static image, animated image, or short video that encourages the viewer to learn more.
CTV advertising will continue to be a new frontier, providing more meaningful ways for companies to engage with their target audience at the right time. Organizations that can accurately predict content performance and customer engagement are gaining a significant advantage, as those factors help inform advertising, content acquisition, and distribution strategies.
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