Connected TV Ads: Golden Age of Television Reloaded [+ Infographic]

From television worshippers to cord-cutters — that's a century-long path we're still marching along. Instead of dying out as unnecessary with the arrival of the advanced streaming services, TV devices keep changing, gradually adapting to a newer reality. And aside from offering a new way of watching your favorite shows, CTV opened up a huge window of opportunity for advertising.

Before we discovered the superpowers of digital ads, it was television that was in charge. Not big boards, not radio, not advertorials in local newspapers, but a little box with wires was the #1 influencer of consumer's purchase intents during the last 70 years. Surprisingly enough, continues to be one for most groups of the population.

In 2000, 102 out of 104 households in the US had a TV set. That's an impressive 98%. And even though now TV popularity is declining, Nilsen estimates that this number only dropped to 96%. Thus, TV reaches 70% of the population in a day, 90% in a week, and almost everyone in a month. Even with some Americans actively cutting cords, connected TV advertising steps in to replace traditional TV commercials and maintains the TV's honorary title as the most effective advertising medium.

While all the world's eyes were on COVID-19 during the first half of 2020, the cohort of advertising industry leaders paid specific attention to connected TV ads as the brand's savior during the lockdown. OTT and CTV combined ad spend rose by 40%, initiating a transformation process in the TV industry. So if you still haven't rebalanced your ad spend toward connected TV advertising, the time to rethink your strategy is now.

What is Connected TV? CTV Definition

Connected TV (or smart TV) is a TV set that can be connected to the internet. Apart from traditional television programs broadcasted over cable, satellite, or terrestrial, these TV sets can display any internet content, including YouTube, over-the-top content, and media available across the websites scattered over the web.

Some people who ask questions like "what does CTV mean ?" may mistakenly assume that this is the same as internet TV. However, internet TV can be broadcasted on any device, not necessarily a TV set, and feature the same channels provided by cable or satellite. This is more of a connection between the viewer and the broadcaster, while connected TV is a standalone device that can be used to watch any kind of content.

Connected television is the closest to smartphones by its nature. In the past, we had "brick" mobile phones that could only dial and ring. Same story with TV sets, which could only receive signals from some source and turn them into live videos. Thus, CTV sets are often called smart TVs, so while we speak of connected TV advertising, we can also call it smart TV ads. Examples of smart TV framework platforms utilized by most vendors are Apple TV, Android TV, Google TV, Roku TV, Fire TV, etc.

CTV vs. OTT: The Difference

What is connected TV? It's a device above all. In digital advertising, now it's often accompanied by an array of other terms, some of which may seem interchangeable. For example, OTT ads are often perceived as the same as CTV ads. They're not.

OTT (short for over-the-top) is a form of content provided by online streaming services over the top of conventional TV content. The viewer hasn't to subscribe to cable or satellite services, which are usually more expensive. OTT is the major driver of the cord-cutting trend and is frequently used together with connected TV. However, OTT content can be watched on any device connected to the internet, whether it is a smartphone, PC, or gaming console.

How Connected TV Advertising Works?

Frequent OTT + CTV pairing led to a revolution in terms of TV advertising. Those who don't watch TV via cable anymore can't access commercials run on TV channels. Therefore, advertisers managed to figure out another method to deliver their ads to them.

Connected TV advertising isn't much different from any other online video advertising, the only significant distinction is that advertisers here buy specifically smart TV ad inventory instead of more popular desktop and mobile. This can be done directly when you negotiate the price of ad serving with the publisher on your own and use an ad server to deliver the creative.

Or, you can use a demand-side platform to serve what is called programmatic TV ads. You use automated algorithms to match your targeting preferences with a relevant inventory on the connected TV platforms and streaming services.

You can serve ads on both linear TV (aka traditional television airing) and non-linear TV (on-demand viewing). Linear CTV ads will be served likely manually, as traditional television doesn't imply the internet connection. Automatic targeting and ad placement are impossible in this case. The audience is determined by assessing Gross Rating Point (GRP) to see how many people from the specific group watch a particular program. Then, the ad will be shown during this program within a selected timeframe.

Some non-linear OTT services are entirely built on AVOD (advertising video on demand) monetization model. Here most media buyers purchase programmatic inventory instead of direct sales and can serve the right ads to the right users via probabilistic and deterministic (cross-device) matching. The latest one is supported by Epom DSP and is 100% accurate, while probabilistic accuracy reaches only 96%.

Most widespread connected TV ad formats are pre-roll & mid-roll videos and rich media advertisements like in-line videos, carousel ads, and TV-to-mobile.

Why Are CTV Ads So Relevant in 2020? [CTV Infographic]

Connected TV advertising has already been named as a major trend in programmatic for the last several years. But none of the events that happened in the ad tech could serve as a trigger for connected TV to evolve. The time has come in 2020: the worldwide lockdown during the COVID-19 pandemic led to a significant surge in OTT and CTV popularity. Notably, CTV viewing has risen from 2.7B hours during the pre-pandemic week of March 2 to 3.9B hours during the weeks of March 23, March 30, and April 6. This comprises 81% of the year-on-year increase.

As restrictions ease, linear TV viewing has dropped, while CTV remained on the same level. Programmatic TV transactions grew by 40% in April and May, indicating advertisers rebalancing their ad spending towards the promising channel. Such acceleration of CTV adoption means the new era in digital advertising, where Connected TV and OTT ads figure prominently in your media mix.

Benefits of Connected TV Advertising for Brands and Agencies

Besides the acceleration in CTV adoption among the world population, which naturally means more eyeballs on your ads, there are more fundamental benefits of smart TV ads for your brand. Among them:

Higher Ad Viewability

The drawback of web video ads and especially display is their low viewability. Most viewers have developed banner blindness and don't see a banner at all, while annoyingly ignoring pre-rolls that often disrupt the user experience. Outstream video ads, which are played within the content, tend to be more engaging, but still, the audience may not feel that's relevant for them to watch videos while reading the article.

Connected TV advertising is more like traditional linear TV commercials. Sometimes they annoy us, but we still don't skip them being in anticipation of the next episode of our favorite show. Besides, we can't really skip them outright while watching AVOD or Youtube. And lastly, even if we could, you need much more willpower to reach for remote control and press the right button than just tap on your phone screen.

CTV video ad viewability reaches an amazing 98%, regardless of the type of content you watch: Youtube, OTT, or regular videos on the website. That's comparable to Youtube Ads, but they're still skipped much more on mobile and desktop because as I said above, it's easier to do. By contrast, the regular video has a low viewability rate of 68%.

Higher Engagement Levels

For similar reasons, the audience tends to watch ads longer on CTV than on any other device. 97% of users remain engaged for more than 15 seconds, while only 83% do the same on mobile. According to Innovid, ad campaigns that are run exclusively on Connected TV demonstrate a 335% higher engagement rate than those run on mobile or desktop.

Reduced Cost Per Impression

For top-tier countries, average video ad CPMs start from $5 and end somewhere near $30. Average CPMs for connected TV video ads reach $20, though. I should admit that web video comes in different formats, are tailored to different placements, and can be of varying quality. Connected TV ads usually have no other option but to be of premium quality, as they're going to be surrounded by premium content. 55% of survey respondents confirmed that.

But here, unlike regular web videos, each ad usually receives more than just one impression. People typically have one TV per household, and prefer watching it in a company of two or three. This means that you 2x or even 3x the number of impressions you pay for. Thus, CPM of $20 may turn into $10 or even $7, which is quite affordable, taking into account that your ad gets a premium video placement and usually can't be skipped.

Effective Cross-Device Advertising

Who said you should limit yourself to the connected TV only? It's much more effective to retarget your users on other platforms, where they're more likely to click on the ad. CTV ads don't imply people clicking on them and buying your product outright, which some advertisers perceive as a drawback.

Not quite. As I said before, TV commercials are the ones the population trusts and engages with the most. CTV advertising has the same psychological effect and is far more memorable than web-based banners and videos. Thus, if you run the first campaign on CTV to raise awareness of your brand, and then retarget the same audience utilizing their user IDs on mobile, this can have a tremendous effect on your overall conversion rate.

Real-Time Analytics

Programmatic TV, as well as any programmatic media buying, implies real-time performance tracking and round-the-clock access to analytical tools. Linear TV advertising never had such automated measurement, as you paid not for the number of impressions, but depending on how popular the channel and the show are. And you could never say how many people buy from your brand because of your advertising.

With connected TV, advertisers can precisely measure their ad performance, assess the effectiveness of each traffic source, and test different audiences without spending a fortune. You can use an ad server for direct deals and DSP for programmatic sales, and thus always be able to fine-tune your campaigns or optimize them with automated bidding algorithms right away.

How to Buy Connected TV Ad Inventory with an Ad Server

You can either secure a CTV or OTT advertising spot directly, just by contacting TV platforms, providers, and AVOD streaming services OR use an RTB platform to buy CTV traffic programmatically. Let's start with how you manage your direct CTV deals via an ad server.

First, create a video banner if you're going to run a standard in-video ad campaign (pre-roll, mid-roll, or post-roll placements), or use a non-standard ad format. In the first case, you need to add a new advertiser, create a new campaign, and place a banner like this:

In the second instance, you do the same thing but choose a non-standard placement. On this screen, you see the ad ready for placement. Aside from basic information, you can see targeting options, pricing, limits, rules, and everything else you need to optimize your CTV advertising campaign. You can read in more detail about each adjustment in the Epom Help Center.

Then, request VAST tags from your publishers to receive info about their placements. An ad server will then automatically match this creative to the suitable placements provided by your supply partners based on your targeting options, priorities, and banner rules.

Later on, you'll be able to see your ad performance in the analytics tab and fine-tune your campaign accordingly. An ad server offers detailed reporting, where you can see all the information about your audience, including impression log report, where you see all metrics regarding each impression happening as part of your ad campaign.

If you want to use extra analytics solutions, you can seamlessly integrate this tool with an ad server using a 3rd-party reporting API service and enjoy extended analytics.

Connected TV Advertising Brief FAQ

• What is CTV advertising?
  CTV advertising is a form of digital advertising which implies serving ads specifically on Connected TV devices.
• What's the difference between CTV and OTT?
  CTV is a TV set with access to the internet, while OTT is content served over the top of traditional television.
• What is programmatic TV?
  Programmatic TV is a form of programmatic advertising, where you buy media on connected TV platforms.
• What is linear and non-linear TV?
  Linear TV is traditional television broadcasted over cable, satellite, or terrestrial, where each program is aired according to the schedule. Non-linear TV is on-demand television, when you can pick any program and watch it anytime.
• How did COVID-19 influence CTV ads?
  Connected TV ad spend increased by 40%, while CTV viewing has risen from 2.7B hours during the pre-pandemic week of March 2 to 3.9B hours during the weeks of March 23, March 30, and April 6. Brands rebalance their spend toward CTV, the channel's popularity is gaining traction.
• What are the major benefits of smart TV advertising?
  Major benefits are higher ad viewability, lower prices than for conventional TV commercials, higher view competition rate, opportunity for cross-device retargeting, and ability to fine-tune a campaign while needed.
• Are smart TV inventory slots more expensive than average video?
  Yes, they are. But those are usually premium placements that also give 2-3 real impressions instead of just one nominal, as people used to watch TV in a company of several people.
• Can I run CTV ads in a DSP or ad server?
  Surely you can. All you have to do is to find a direct supply partner with CTV inventory or connect to an SSP with CTV traffic available. Then, you can run CTV ads just like any other digital banners.