Over the course of 2021, Connected (CTV) advertising gathered significant momentum as a result of increased activity in the ad-supported streaming TV space. Between 2020 and 2021, CTV ad spend in the U.S grew 59.9% to reach $14.4 billion. In 2022, this growth is predicted to continue with $19.10 billion in ad spend being forecasted.
These numbers can be backed up by a survey conducted by Digital and MNTN where 123 brands and agencies were asked about their use of CTV within their advertising strategies in 2021. 60% of respondents stated that CTV was “very important” in their omnichannel marketing strategy in 2021, with 58% stating that they had re-allocated marketing budget away from Linear TV and into CTV.
This highlights the fact that CTV is now seen by advertisers as an extremely attractive channel. But why has CTV experienced such a surge in popularity? The following sections discuss some of the answers to this question and will help to paint a better picture of the current CTV advertising landscape.
In recent years, the streaming TV landscape has become increasingly congested and fragmented, with a myriad of video on-demand platforms now for audiences to choose from—the majority of which operate on a subscription-based (SVOD) model.
According to Deloitte, those U.S consumers who do subscribe to at least one SVOD service will in fact have an average of four different subscriptions running. For many, this is leading to frustration at the high costs being accumulated by multiple subscriptions.
With this in mind, it comes as no surprise that ad-supported video streaming platforms (AVOD) that offer free or cheaper subscriptions are proving successful amongst consumers.
Hulu, the pioneer and leader of the SVOD/AVOD hybrid model, has for example amassed 110 million ad-supported viewers. Following Hulu’s success, other big players such as NBCUniversal’s Peacock and HBO Max have launched their own AVOD offerings.
For advertisers, the growing AVOD environment is opening up greater amounts of CTV advertising inventory—helping to fuel growth.
The growing popularity of ad-supported streaming is obviously a huge plus for advertisers wanting to reach these audiences. But what are the major draw cards for advertisers who decide to allocate more spend towards CTV?
The key benefit of CTV is the fact that it essentially combines the advantages of both digital and TV advertising. Traditional, Linear TV for example has always been a go-to method for building brand awareness due to the “lean-back” viewing environment it creates. CTV maintains this strong brand-building ability, but it also has with it the benefits of being a digital format:
These core digital advertising characteristics have helped to make CTV a more efficient and effective successor to Linear TV.
That being said, up until recently CTV was predominantly used for top-of-funnel brand awareness objectives. However, this is beginning to shift with new formats and functionality being rolled out to help CTV advertisers run effective performance campaigns.
If we compare CTV to other digital channels such as social or display in terms of its ability to drive lower-funnel results, there is one striking disadvantage. CTVs, even though they are connected to the internet, are quite limited in terms of the actions that audiences can take after the completion of an ad. After coming across an ad on social for instance, audiences can easily swipe or click directly through to a landing page where they can take action.
This led early CTV campaigns to focus solely on top-of-funnel objectives. However, there is a lot of innovation currently taking place amongst CTV ad platforms in order to overcome this obstacle and to open up conversion opportunities for advertisers.
In October 2021, YouTube for example announced that CTV inventory would be available for video action campaigns enabling advertisers to include a CTA button on their CTV ads that will send the link directly to the audience's mobile device.
Hulu on the other hand offers a format called GatewayGo, that utilizes “action-oriented” prompts in the form of QR codes or push notifications that help advertisers to direct audiences to take action on a second screen.
Although these methods may not (yet) offer a truly seamless experience, they are able to be effective nonetheless by leveraging the fact that the vast majority of TV-watchers have a second device with them whilst watching TV.
These new and improved formats that are beginning to appear are only the beginning of what will be a lot of innovation in this space as the enablement of performance-focused campaigns will be a big focus for CTV platforms going forward.
As more and more audiences move away from traditional TV, preferring to stream their video content, it is safe to say that the future of TV advertising will lie in CTV. Advertisers wishing to stay ahead of the curve need to look at how CTV can be utilized within their advertising strategies going forward.