If television and the internet had a baby, it would look like this. Attractive and impactful, connected TV (CTV) is the best of both – the effectiveness of full-screen, lean-back TV, plus the choice, targetability and measurement capabilities of digital.
Despite declining linear consumption, television is going through another “golden age”, thanks to a burgeoning range of internet-connected viewing devices and new TV services.
Viewers of over-the-top (OTT) TV services – jargon for the apps accessed over CTV devices – are forecast to reach 2.9 billion by 2025, up from 1.8 billion in 2017.
And, while subscription video-on-demand (SVOD) services have led the charge, a looming peak SVOD moment plus an emerging plethora of ad-supported rivals also means the OTT opportunity is wide open to advertisers.
Best of both
Those opportunities are several fold. CTV promises all the benefits of modern digital advertising:
- Precision ad targeting based on a variety of data signals.
- Frequency-capping to avoid excess and off-putting ad exposures.
- Using on-device measurement rather than panels, combined with multi-device consumer profiles, attribution from ad exposure to viewer outcomes like website or retail store visitation.
- Using software rather than manual processes, the agility and data to make faster, insight-driven optimised buying decisions, rather than the old world of insertion orders.
But all this is on offer, for the first time, on television, still the most impactful screen in the house:
- Viewer attention is on by default. In a world of distraction, CTV viewers are engaged and attentive – after all, they actively choose what to watch on-demand, while ads tend to be unskippable, meaning CTV boasts completion rates of more than 90%.
- Digital advertisers have salivated over TV capabilities for years – full-screen, high-quality creative, in formats familiar to digital video buyers, but packaged against the world’s most engaging television content.
Brands that have used CTV successfully include the bank BBVA in Argentina, for which Xaxis achieved a 90% video completion rate (VCR) using large-format OTT connected TV platforms – far in excess of the 50% target set, and far ahead of many web and mobile video publishers.
A growing trend
No wonder, then, that ad buyers are taking such a keen interest. In the US, where TV is a $72 billion advertising medium, eMarketer forecasts connected TV spending will reach $10.81 billion by 2021 – that is up by 56% from 2020 and represents 15% of the TV total.
Research carried out by Xandr and the IAB Europe, among advertisers, agencies and trading desks, shows that nearly nine in 10 (86%) are due to increase investment in CTV within the next 18 to 24 months. Of those planning to invest more, nearly half (47%) are aiming to increase budgets by more than 30%.
Meanwhile, connected TV is opening up the viability of TV advertising to a range of smaller brands that, previously, were locked out of the opportunity, whether by absence of return-on-investment proof or by their inability to find a specific audience in linear.
It’s clear, then – those involved in planning and buying digital television campaigns now need to look at how they can deploy data-driven, precision targeting strategies.
And that means navigating CTV’s friction as well as its freedom.
Xandr’s research with IAB Europe revealed that buyers’ biggest barrier to entry is lack of inventory supply.
That is a conundrum. The proliferation of new TV and video services has led to a plethora of new viewing surfaces, many with advertising opportunities. But they are largely fragmented across device types, standards, suppliers and services. The traditional hegemonies and trusted partnerships of global TV ad sales have been disrupted; now the ecosystem is a free-for-all, and knowing where to place your spending is critical.
When you identify that place, you may find the lack of identification a problem. That is to say, unlike the web, which typically users cookie files to determine who an ad viewer is, connected TV devices generally lack such persistent identifiers. Several initiatives and technologies are vying to tackle that, using methods like identity “graphs” – but the industry broadly lacks a consistent identification technology that both works across multiple platforms and protects user privacy. This makes it difficult to plan cross-channel campaigns, as well as apply frequency capping limits.
For a medium that is powerful but nascent, that presents a challenge. Lack of understanding is a key bottleneck cited by buyers. It is important, however, to understand how the nuances of this platform – for instance, whilst VAST 4.0 video tags support cross-platform viewability rating, alternative VPAID tags do not – can radically alter outcomes.
On top of this fragmented picture, add global divergence. Connected TV is maturing differently in regions across the world. Whilst the UK is dominated by broadcasters’ own popular on-demand platforms, in the US a proliferation of rivals is snapping at the heels. Whilst, in Latin America, linear remains relatively more popular and broadcasters have been content to place content on YouTube, in France ISPs dominate the medium with their own broadband “IPTV” services, limiting the OTT opportunity, even as the pan-European HbbTV standard aims to define a hybridised path for digital terrestrial and internet-delivered broadcasting.
A new dawn
Navigating these dynamics will be complex, but rewarding. Every newborn platform has its teething troubles, every new parent must learn the ropes.
All companies in the sector have a role to play in educating customers and prospects so they can feel more comfortable in progressing the promise of CTV to actively invest budget.
And things are getting easier. Around the world, industry groups, even rivals, are coming together to meet the challenge – to fight back against Google and Facebook’s advertising might, they must work together.
Initiatives like OpenAP, Project OAR and Ampersand in the US are now providing fewer, easier on-ramps to the connected TV opportunity.
Australia’s main broadcasters have come together with GroupM’s Finecast advanced TV-buying unit to create a single viewer identifier that leverages authenticated user data from their respected, rival BVOD services.
In the UK, ITV’s ITV Hub, Channel’s All4 and Sky’s AdSmart are rising up as the main ways agencies can buy ads programmatically across some of the country’s main broadcaster VOD services, consumed by tens of millions.
Two worlds collide
All of which may cause one to ask an existential worthy of a 21st Century Shakespeare: “TV, or not TV?”
That is the question many are asking of connected TV, whose “best of both” appeal holds within it both the high impact of an increasingly inefficient medium and its hopes and dreams for digital reinvention.
While engineers continue tackling technology challenges, some of those dreams are going unimplemented – at least, by some suppliers and buying platforms.
There is a tendency, then, for many to fall back on the same capability set offered by linear TV for so long – high impact, mass scale.
It is true. Connected TV needs to be far easier to access, to measure and to report. Until then, it is easy to give buyers what they want, buying currencies and KPIs that are not yet the digital replacement for those in the “old” media – CTV that looks and functions a lot like, well, TV.
But it is the responsibility of people in the industry to show that we can do more.
So many campaigns are active in the wild today using tactics like geo-targeting, household profiling, targeting against viewers’ place in the buying cycle, time of day and post-exposure attribution. As we move into a new normal, it is more important than ever for brands to maximise the efficiency of their spending, even if that spending is focused on the top of the funnel rather than correlating end outcomes.
As these two worlds collide, it is important that everyone in the industry acts to make the most of transformation for the most important people – the viewers and advertisers.
They can be best served by positioning themselves right in the middle. Early adopters will best place themselves for success by acting early, experimenting, buying and seeing the tangible benefits that connected TV can provide – before rivals gain traction in this new space.