Over the past few years, the world of advertising has undergone a significant transformation. One of the main reasons behind it is the migration of viewers from traditional TV to streaming services.
According to research, over one-third of American households now rely on streaming for their television entertainment. A huge number, isn’t it?
Additionally, 90.3% of broadcast and cable networks measured between the years 2016 and 2021 saw a decline in the number of audiences.
When the majority of the TV-watching audiences are on CTV, why would the advertisers be anywhere else?
In the past few years, Connected TV (CTV) advertising has become increasingly popular, with many brands and marketers opting for this form of advertising over traditional TV advertising.
Connected TV (CTV) advertising offers the same advantages as traditional TV advertising, but with greater control over ad targeting and frequency. With CTV contextual advertising, it's possible to serve video ads at the optimal time to a specific audience, and limit the number of times they are shown.
But what is CTV advertising, and why is it taking over traditional TV advertising? In this blog post, we'll explore all the benefits of CTV advertising and why you should be choosing it. Keep reading.
What Should You Know About Connected TV?
If you're unfamiliar with Connected TV (CTV) and want to know if you're being exposed to CTV advertising at home or if you're interested in how CTV ads can benefit your business, let's start with some basic definitions.
What is Connected TV (CTV)?
A CTV refers to a television that is linked to the internet, allowing it to stream content. This can be achieved through either a built-in operating system found in smart TVs such as Android TVs or Roku TVs, or by connecting external devices like Xbox, PlayStation, Roku, Amazon Fire TV, Apple TV, Chromecast, or others via HDMI or Displayport.
What is Over-the-Top (OTT)?
OTT content refers to content that resembles television programming and is distributed to users through the internet, either through free or paid subscription services that are supported by advertisements. Users who access OTT content do not need to have a traditional cable or satellite subscription to watch the content, although they may have one. This type of content can be streamed or provided on demand in formats such as video on demand (VOD) on a CTV or through apps on other devices like tablets and smartphones with internet access. Some of the most preferred OTT services include Hulu, Pluto TV, and Sling. As well as direct access apps for channels like ESPN or Fox Sports Go.
What is Linear TV?
Linear TV is a conventional method of watching TV programs, where the viewer tunes in to a scheduled program at its original time and channel. The program can also be recorded using a DVR and watched later. During linear TV broadcasting, all viewers watching the same program on the same network are shown the same advertisements. Although linear TV still dominates the market, its reach is becoming fragmented due to the growing competition in the advanced TV landscape.
The Advantages of Connected TV Advertising over Traditional TV Advertising
- Targeted Advertising
One of the key advantages of CTV advertising over traditional TV advertising is its ability to target specific audiences. With Contextual advertising, CTV advertisers are able to reach the relevant audience at the right time and place. Traditional TV advertising is often limited to broad demographic categories, while CTV advertising allows for more precise targeting based on a viewer's interests, location, and other data points. This targeted approach can increase the effectiveness of advertising campaigns by ensuring that ads reach the most relevant audience.
CTV advertising is often more cost effective than traditional TV advertising. Traditional TV advertising can be very expensive, with high production costs and high fees for ad placements during popular shows or events. In contrast, CTV advertising allows for more flexible budgeting and a greater variety of ad placement options. Additionally, the programmatic technology used in CTV advertising can optimize ad placements for maximum return on investment.
- Measurable and Trackable
Another advantage of CTV advertising is its measurability and trackability. Traditional TV advertising often lacks the ability to track the effectiveness of ads, making it difficult to determine the return on investment. CTV advertising, on the other hand, can provide real-time data on ad performance, such as the number of impressions, clicks, and conversions. This information can be used to optimize campaigns and improve targeting.
- Growing Viewership
The number of viewers switching to CTV has increased rapidly over the past few years. According to eMarketer, the number of US households that subscribe to at least one streaming service is expected to reach 82% by 2022. Moreover, Insider Intelligence predicts that the Connected TV advertising market will grow significantly, with advertisers expected to spend $30 billion on it by 2025. This shift in viewing habits has led to an increase in the number of advertising opportunities on CTV platforms.
In conclusion, CTV advertising is taking over traditional TV advertising due to its ability to target specific audiences, cost-effectiveness, measurability and trackability, and growing viewership. Brands and marketers can benefit from the flexibility and precision of CTV advertising to create effective campaigns that reach the right audiences at the right time. As more and more viewers turn to CTV platforms for their entertainment needs, we can expect this trend to continue in the years to come.