It’s expected that there will be 113 million connected televisions (CTVs) in the U.S. by 2024, and every one of them represents an emerging opportunity for advertisers to place more customized messages before viewers – although there are challenges ahead.
About Connected TV
Connected TV, known in the industry as CTV, is a blanket term used to describe what is known as OTT (over-the-top), which is when content is watched via the internet rather than cable or satellite.
OTT is subdivided into ad-supported (AVOD), such as Roku, which is where users can see content on demand. Then there is FAST (free ad-supported streaming television), which resembles live linear TV as well as platforms doing subscriber-supported (SVOD) such as Netflix and Disney+. In addition, Vizio is spearheading Project OAR (open addressable ready), a consortium trying to bring programmers, agencies, and adtech companies together for standardized addressable TV. They also want to develop a solution for owners of TV ad inventory.
The CTV Opportunity
CTV is booming! No surprise here as we all knew cord-cutting was coming and is now happening at full tilt. Pew Research reports that the percentage of Americans who say they watch TV via cable or satellite has plummeted from 76% in 2015 to 56% in 2021. Cable service hit its peak about 10 years ago. Impatient younger generations have turned to streaming services, both paid and unpaid, some of which are supported by ads.
The Leichtman Research Group finds that 80% of U.S. households have at least one Internet-connected television device, whether it’s a smart TV, a streaming device such as Roku, or a video-game system. Does this mean the transition is already mostly complete? We’ll have to see as new research comes out and the cable companies continue to acquire steaming platforms or work with CTV companies to maintain their foothold.
CTV Ad Dollars
eMarketer predicts that CTV ad spending will hit nearly $35 billion by 2025, jumping from about $14 billion this year. Three main reasons for this include:
- People spending more time on CTVs;
- Device companies like Roku and Vizio emphasizing their ad business;
- The growth of ad-supported video platforms.
In addition, Amazon is intensifying its CTV focus.
Still, there are some challenges to CTV advertising. For example, different households may share one streaming channel account, which can make it difficult to get a true picture of the consumer. Further, if there is more than one person using a streaming platform with the same login, or even two people at the same time, there is a lack of consistent ID across streaming apps. That means there is no centralized frequency management. This makes it harder to target people effectively and also do attribution.
So, while all the kinks still need to be worked out, it is clear that CTV is emerging as critical to the media spending mix. There is some good coming from this, however, as GRP targeting has evolved more than a bit with the rise of CTV. As opportunities emerge to shift advertising dollars to CTV, there are several things to consider:
- Targeting. Fragmentation is a big challenge when measuring CTV advertising performance. There are more options on the market, such as original equipment manufacturers (OEMs), which have their own IDs, to ad-based video on demand. Since each device creates its own identifiers, it can be challenging to analyze data that effectively targets audiences. Some solutions include using first-party data, looking at the consumer’s past purchasing decisions and demographics. Yahoo predicts that in two years, more than 75% of ad impressions will have no advertising ID. In response, Yahoo recently unveiled Next-Gen Solutions, a zero-ID product. Users who log in can be tracked on web properties owned by the company, such as Yahoo Fantasy Sports and TechCrunch. Platforms like Amazon can look at screens being viewed or interactions with Alexa.
Automatic content recognition (ACR) data, which is collected using the tech built into smart TVs, can help measure the reach and audience quality of an ad campaign. The ACR data can also provide gateway platforms (app stores, device/UI, operating systems) with household ad exposure data. This gives advertisers a chance to hit households with CTV ads that they may not have viewed on broadcast TV. While there are some limitations – such as scaling being a challenge because each ACR company only covers a fraction of U.S. households – it still offers advantages such as being able to see linear and OTT viewing.
Video data platform Iris.TV plans to work with The Entertainment Identifier Register Association (EIDR). The aim: to better identify and monetize content by joining Iris.TV video level data with EIDR’s metadata. This will enable Iris.TV to give media buyers better data for contextual targeting and help advertisers to see the content where the ads appeared.
- Formats. Streaming ads often appear when a viewer pauses a program. Or, when a viewer is binge-watching a certain show, then more targeted ads will appear. Advertisers want their streaming ads to have a scale and reach similar to that of linear primetime television ads. In response, NBC Universal unveiled Spotlight Ads that lets advertisers select a certain time slot so the viewer will see that ad first. Another key ingredient to attracting audiences is offering a variety of lengths of ad pods, which are several ads sequenced together and played one after the other within a single ad break. Offering different lengths provides a chance to have longer-form ads, target lengths to specific viewers, or provide greater value to advertisers by using desired ad lengths.
- Live television. Amazon is getting into live sports with “Thursday Night Football.” This 11-year-deal with the NFL – worth more than $1 billion – helps attract viewers and advertisers. Amazon says that Prime Video and Twitch audiences (the targeted viewership) “could add +13% incremental reach over linear NFL audiences and +8% incremental reach over all linear live sports.” Amazon is offering sponsorships to advertisers at various points before, during, and after the games and says it will be able to offer more insights on ad performance and impact. Streaming platforms like Hulu, Sling TV, and Paramount offer live TV options and NBC’s streaming service, Peacock, offers live “Sunday Night Football.” A Magnite survey finds that 44% of cable users say they would cancel cable if they could get access to live-streamed sports and events.
- Measurements. As streaming audiences grow, more large brands want a consolidated look at their ads on conventional TV, CTV, and digital. For example, Innovid, a CTV ad delivery and measurement provider, recently announced plans to buy media-attribution company TV Squared for $160 million. TV Squared says it tracks more than 100 million households around the world and has more than 75 connected TV platforms. NBC Universal is working with iSpot.tv.a company that helps advertisers verify the reach and impact of their TV and streaming ads. It also tries to quantify how consumers are viewing ads across various mediums. Recency attribution curves can be used to look at website traffic that’s directly related to recent TV ad impressions, usually in a 15-minute window. But when looking at data linked to CTV ads, it has been shown that viewer action is increased on another screen for several days, with three days capturing 70% of the conversions. To capture this, some companies are linking app installs to CTV exposure to offer further measurements.
- Return on investment. Marketing tech company DeepIntent says that its research shows that CTV is 53% less expensive than advertising on cable television. It’s also better at reaching targeted audiences than linear TV, display ads, or online video. DeepIntent’s work for most pharmaceutical companies uses its automated content recognition technology. They report that CTV delivers more ad impressions of relevant viewers, better audience quality, and better targeting of desired audiences when compared to display ads and online video ads.
All in all, the TV landscape is changing. No surprise there, but as TV ad dollars shift to CTV ad dollars, companies who are positioned well and have the technology and teams to support the shift to the newer medium will win. It’s all about being smart at scale with every channel. Marketers need to leverage best-in-breed targeting methodologies, measure their return on ad spend (ROAS), and use analytics to understand the results and optimize accordingly.
Stay competitive with Aerospike
Here are some ways that the Aerospike Real-time Data Platform can help your adtech business as the CTV market takes off:
- Bigger data stores. As mentioned earlier, data is coming from many different sources when it comes to targeting ads. Millions of households exhibiting different purchasing decisions, viewing habits, and various demographics will require the ability to store more data. Aerospike is a great place to have your profile store in order to leverage many identifiers and data signals.
- Greater ROI. Aerospike’s 99% of reads/writes in under one millisecond, predictable low latency, and high throughput offer reliability. In addition, businesses will be able to scale more easily at a lower cost. Customers typically reduce server footprint by 80% even as business and data grow.
- Speed. Aerospike enables fast look-ups to enrich ad requests with information about the consumer. Aerospike also provides consistent data across geographically-dispersed data centers so that you can act in real-time.
As this ecosystem evolves, there are many opportunities to better target advertising and develop a stronger understanding of each consumer. Still, it’s important to remember that in order to be competitive, it will require a real-time data platform like Aerospike to deliver more data at faster speeds, so that there is a better return on investment when it comes to CTV advertising.
Learn more regarding how Aerospike is helping Ad Tech drive new business.