Connected TV (CTV) has all but dominated the advertising industry over the past few years, as consumers have shifted away from linear TV toward streaming platforms at increasing rates.
In fact, Nielsen recently reported that streaming viewership exceeded cable usage for the first time. And as a result, advertisers are allocating more dollars to the channel than ever before because it allows them to engage with their specific target audiences in powerful, premium TV environments.
CTV is still relatively young, and the industry is working to address some of the associated challenges, including privacy-centric identity solutions as well as an industry-accepted measurement solution. Still, CTV has become an increasingly compelling proposition for advertisers who are looking to reach their audiences wherever they are engaging with and viewing content.
With more work being done to address supply fragmentation and to take advantage of higher viewership coupled with major national and global events taking place this year, in addition to the onset of new AVOD (advertising video on demand) streaming options, all eyes are on CTV.
Tech platforms build more direct routes to supply
The nature of “fragmentation” in the U.S. CTV marketplace is different from other parts of the world due to its comparative maturity. Currently, there is an overwhelming number of places to buy CTV inventory, and a lot of ways to buy it, meaning buyers are facing complexity.
To reach an audience through CTV advertising, a buyer must first navigate the content owner or broadcaster, multichannel video programming distributor (MVPD) and device manufacturer carriage agreements. Buyers must also contend with a multitude of different supply paths to each publisher, some of which are more efficient than others. Ultimately, navigating the fragmented CTV supply landscape requires time, resources, and expertise.
Due to this complex environment, there have been some programmatic tech platforms developing solutions to help ease the buying and selling process of CTV advertising. One solution that is being adopted widely is curation technology.
Buyers can leverage a self-service tool to access thousands of pre-negotiated video and CTV deals across hundreds of premium supply partners. They can then layer in targeting and data to create customized buys in an always-on environment. This is an easy-to-use solution that gives buyers direct access to all available CTV inventory, helping ensure there are no missed opportunities to reach their target audience.
Viewers shift toward CTV and advertisers follow
For years, the TV ad ecosystem remained stable, but as consumers turned their attention to more video formats, seeking out content on demand on any screen, linear TV has seen viewership decline. While CTV ad spend remains behind linear TV, the gap is getting smaller. eMarketer forecasts that there will be 109.3 million households with a CTV by the end of this year, which equates to 83.6% of the U.S. households.
In 2022, new digital video and CTV viewing options, which offer addressability and fewer geographical boundaries than linear TV ad inventory, have led marketers to reconsider their ad budgets to effectively reach their target audiences.
Additionally, events that were traditionally reserved for linear TV broadcasting are switching up their approach. Specifically, marketers can expect an even larger jump in Q4 CTV viewership as major sporting events, like the FIFA 2022 World Cup, shift to streaming platforms. This premium inventory is selling fast, with NBCUniversal selling approximately 90% of its 2022 FIFA World Cup advertising inventory months ahead of the tournament.
This represents a massive evolution as typically live events have been a primary reason that consumers keep their cable subscriptions. With more of these events moving to streaming, more consumers are expected to cut the cord, and fully rely on streaming services. Advertisers should watch this trend and follow suit.
More streaming platforms get in the game
According to Kantar, the average household now has an average of 4.7 different streaming service subscriptions. With looming economic uncertainties across the globe, many households that currently pay for multiple subscription TV services may choose to streamline their paid content providers. In this scenario, free-to-view AVOD services are well-positioned to pick up new viewers.
As content gets further fragmented among new platforms and subscription prices rise, the shift to AVOD is likely because consumers will look for lower-tiered options to access their favorite shows and movies.
There is an opportunity for the industry to better test and address the current ad experience on CTV to ensure they are seamless. Working to improve the user experience will make for better advertising environments and drive further brand favorability.
Success through collaboration
Admittedly, CTV is still in its toddler years, and the industry still has some things to figure out when it comes to providing buyers and consumers with the most frictionless experience possible.
For the industry to further innovate and evolve, and to accelerate the shift in media dollars, there needs to be increased collaboration among all players in the CTV space, with a particular focus on measurement and reporting. For the time being, all eyes are on CTV.
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Anthony Susi is a director of marketplace development for Xandr’s supply-side offering. He is a 14-plus year advertising sales executive within the digital/programmatic, OTT/CTV, enterprise sales ad tech, data/advanced TV, linear, social and mobile space.
