CTV Advertising: Targeting, Engagement, and Measurable Results

The Purr in Performance Marketing

In the digital marketing jungle, Connected TV (CTV) has emerged as a powerful and effective channel for advertisers. Ironically, I remember the first pitch I heard (many years ago) from my local cable system. Digital TV, as it was being called, would allow advertisers to target their television commercials to customers by household zip codes, personas, and shopping behavior. That promise was a little ahead of its time. As more consumers cut the cord and shift to streaming services, CTV makes good on much of that promise, leveraging unique advantages that set it apart from traditional performance marketing channels like social media, search, and display advertising. It may be that CTV deserves a prominent place in your marketing strategy.

• Brands that should be considering CTV:
  • Need household-level targeting
  • Want to deliver through premium networks
  • Care about transaction-level attribution

Understanding CTV Advertising

Connected TV (CTV) refers to devices that connect to the internet and allow viewers to stream video content. These devices include smart TVs, streaming devices (like AppleTV, Roku, Amazon Fire TV, and Google Chromecast), and gaming consoles (like Xbox and PlayStation). CTV advertising involves delivering ads within the streaming content viewed on these devices.

The Rise of CTV

The adoption of CTV has been meteoric. In the United States alone, 88% of households owned at least one connected TV device in 2023, which is projected to continue growing. The connected TV market is expected to be valued at an estimated $9.28 billion in 2024, with projections indicating it will reach $17.25 billion by 2029. This rapid growth is driven by the increasing popularity of streaming services and the decline of traditional cable TV. As a result, CTV has become an essential channel for reaching a large, engaged audience.

Benefits of CTV Advertising

1. Massive Reach and Engagement

CTV advertising offers a vast reach, with nearly 88% of U.S. households owning a CTV device. People spend more time streaming content on their TVs than ever before, making it an ideal platform for building brand awareness and reaching a broad audience. The average American watches nearly two hours of video daily on CTV devices, providing ample opportunities for advertisers to connect with viewers.

2. Precision Targeting

One key benefit of CTV advertising is its ability to target specific audiences with precision. Unlike traditional TV, which relies on broad demographic segments, CTV leverages digital targeting capabilities. Advertisers can use data such as demographics, location, viewing history, and even first-party data to deliver highly targeted ads to their desired audience. This level of targeting ensures that ads are shown to the right people at the right time, increasing the likelihood of engagement and conversion.

3. High Completion Rates

CTV ads are typically non-skippable, meaning viewers must watch the entire ad. This results in high completion rates, often exceeding 90%. The lean-back viewing experience of CTV, where viewers are relaxed and engaged with the content, further enhances ad completion and effectiveness.

4. Measurable Results and Attribution

CTV advertising offers robust measurement and attribution capabilities. Unlike traditional TV, which relies on panels and estimates, CTV provides real-time data on ad performance. Advertisers can track metrics such as impressions, viewability, completion rates, and conversions. CTV attribution models, such as view-through attribution, allow advertisers to connect the dots between ad exposure and consumer actions, providing a clear picture of campaign effectiveness.

5. Cost-Efficiency

CTV advertising can be more cost-effective than traditional TV advertising. With CTV, advertisers can pay per-user, ensuring that they only pay for actual ad views. This is in contrast to traditional TV, where advertisers pay for estimated impressions that may not always be accurate. Additionally, CTV allows for smaller budget tests, making it accessible to brands of all sizes.

Comparing CTV to Other Performance Marketing Channels

1. CTV vs. Social Media Advertising

Social media advertising has been a staple of digital marketing for years, offering extensive reach and targeting capabilities. However, CTV provides several advantages over social media:

• Engagement: CTV ads are delivered on large screens in a distraction-free environment, leading to higher engagement rates compared to social media ads, which are often viewed on smaller screens amidst a clutter of content.
• Completion Rates: CTV ads are non-skippable, ensuring that viewers watch the entire ad. In contrast, social media ads can be easily skipped or ignored.
• Brand Safety: CTV ads are delivered in a premium, brand-safe environment, reducing the risk of ad placements next to inappropriate content.

2. CTV vs. Search Advertising

Search advertising is highly effective for capturing intent-driven traffic, but CTV offers unique benefits:

• Awareness and Engagement: CTV is ideal for building brand awareness and engaging viewers with compelling video content. Search ads, while effective for driving clicks, may not provide the same level of engagement.
• Visual Impact: CTV ads leverage the power of video on large screens, creating a more immersive and memorable experience compared to text-based search ads.
• Cross-Device Targeting: CTV allows for seamless cross-device targeting, enabling advertisers to reach viewers across multiple devices and track their journey from ad exposure to conversion.

3. CTV vs. Display Advertising

Display advertising is widely used for retargeting and driving website traffic, but CTV offers distinct advantages:

• Viewability: CTV ads are delivered on large screens with high viewability rates, ensuring that ads are seen by the target audience. Display ads, on the other hand, can suffer from low viewability and ad fraud.
• Engagement: CTV ads provide a more engaging and immersive experience compared to static display ads, leading to higher completion rates and better brand recall.
• Attribution: CTV offers advanced attribution models that allow advertisers to track the impact of their ads on consumer behavior, providing a clearer picture of campaign performance.

Efficiency Rates Comparison: CTV, Paid Social, and Search Advertising

When comparing the efficiency rates of CTV, paid social, and search advertising, several key metrics stand out:

• Conversion Rates: CTV advertising has been shown to drive higher conversion rates compared to traditional TV. For example, Digiday reports that 23% of CTV viewers made a purchase after seeing an ad, while linear TV only achieved a 12% conversion rate. Additionally, CTV creates a halo effect for other channels, boosting conversion rates for paid social and paid search by 8.5% and 22.3%, respectively, 90 days after adding CTV to the ad mix.
• Engagement Rates: CTV ads boast higher engagement rates due to their delivery on large screens and the immersive viewing experience. This is in contrast to social media ads, which are often viewed on smaller screens amidst a clutter of content.
• Completion Rates: CTV ads typically have high completion rates, often exceeding 90%, as they are non-skippable and delivered in a distraction-free environment. Social media and search ads, on the other hand, can be easily skipped or ignored.

Real-Life Examples of Effective CTV Advertising Campaigns

Understanding successful CTV advertising campaigns can provide valuable insights and inspiration for your campaigns. Here are some notable examples:

A Case Study

Houston Hyundai Auto Group, consisting of three car dealerships, needed to generate new business and drive quality traffic to their websites. Digital Strategist John Watts used MNTN Performance TV to launch prospecting campaigns. By creating geotargeted groups and leveraging data from LiveRamp, the auto group targeted in-market consumers, predicted Hyundai buyers, and Hyundai enthusiasts. The results were impressive, with an 81% month-over-month improvement in cost per acquisition (CPA), a 15% improvement in cost per visit (CPV), a 24% increase in average raw conversions, and an 11% increase in average site visits.

Overcoming Challenges in CTV Advertising

While CTV offers numerous benefits, it also comes with challenges that advertisers need to address:

1. Fragmentation of Platforms and Devices

CTV advertising spans multiple platforms, devices, and apps, each with its own data silo and measurement methodology. This fragmentation can make obtaining a unified view of campaign performance difficult. Advertisers must work with experienced partners and leverage advanced measurement tools to overcome this challenge.

2. Lack of Universal Measurement Standards

There is no universally accepted standard for measuring CTV ad delivery and viewership. Different platforms and publishers use their own proprietary methods, making it challenging to compare metrics across platforms. Industry-wide collaboration and the development of standardized measurement solutions are essential to address this issue.

3. Privacy Concerns

CTV advertising relies on data such as IP addresses and device IDs for targeting and measurement. Privacy regulations like GDPR and CCPA consider IP addresses as personally identifiable information (PII), adding complexity to data collection and usage. Advertisers must navigate these regulations carefully to ensure compliance and maintain consumer trust.

What’s Ahead

Connected TV (CTV) advertising offers a unique blend of the reach and engagement of traditional TV with the precision targeting and measurability of digital advertising. Its benefits, including massive reach, high engagement, precision targeting, measurable results, and cost-efficiency, make it a powerful performance marketing channel. While CTV presents challenges such as platform fragmentation, lack of universal measurement standards, and privacy concerns, these can be addressed with the right strategies and tools.

As the digital landscape continues to evolve, CTV is poised to become an essential part of any brand’s media mix. By leveraging CTV advertising's advantages, brands can connect with their target audiences in a meaningful and impactful way, driving better results and maximizing their return on investment.