Connected TVs: The Future of Advertising
The next goldmine
Advertising budgets are expected to change dramatically over the next several years, as both consumers and marketers shift their attention to Connected TVs.
Many brands are allocating as much campaign investment for CTV as linear TV. Case in point: Since 2021, upfront linear TV spending has remained relatively stagnant (up 0.15 percent), whereas CTV spend has risen 195 percent, according to eMarketer.
It’s a whole new ecosystem
Why? Streaming platforms have proliferated in recent years. We now have premium Connected TV inventory at scale thanks to Netflix, Paramount+, Disney+, Espn+, Peacock, and other platforms, which is transforming the way media is being bought and sold. This is a significant opportunity for brands and content providers, even as their perceptions about how to transact within this surging CTV marketplace are still playing catch-up. But who’s to blame them?
Modern marketers now have to make up-to-the-minute campaign decisions based on shifting economic conditions and consumer trends. Brands, which are well versed by now in the power of digital media, are seeking a more dynamic, flexible, and data-driven media-buying environment.
All major media companies are moving to meet those changed expectations!
Why brands love CTVS
1. Advertisers want to optimize their campaigns via programmatic deals
78% of marketers say measuring their entire campaign performance is the top benefit of buying CTV programmatically.
64% say other key benefits include campaign optimization and a strong return on ad spend.
57% brands say that buying CTV inventory programmatically is more compatible with 57% the way they buy video ads.
2. Consumers are moving away from linear TV, and advertisers are following
In 2022, the TV industry reached a tipping point. Accelerated by a global pandemic and a mass consumer shift to streaming TV.
“U.S. pay TV penetration is dropping below 50 percent in 2023, ” Insider Intelligence.
This shrinking linear TV efficacy is forcing many marketers to seek audiences elsewhere.
Advertisers want more value from their Ad spend
Cost is the top factor holding brands from spending more on CTV advertising. This makes sense — historically, ad-supported TV was limited and pricing for streaming ads was high compared to linear and cable TV, causing some brands to balk. But these high costs are coming down, thanks to the changing economics of the CTV marketplace. Recently, inventory has swelled, as streaming services have opened ad-supported tiers and many consumers take advantage of the more affordable option.
The launch of cheaper, ad-supported tiers is expanding the reach and ad inventory offered by AVOD [ad-supported video on demand]. At the same time, linear TV’s prices have remained high, and in many cases have surged despite declining viewership.
As linear audiences shrink, the cost to reach them typically increases, leading to an inflection point where the medium has become cost-prohibitive to some.
Live sports are the final CTV frontier
You can’t really discuss sports viewing without discussing streaming
As ever, sports are drawing heavy interest from marketers: 70% of all surveyed advertisers plan to activate against CTV live sports in 2023!
The №1 KPI for CTV sports campaigns is return on ad spend. Legacy broadcasters and streamers are now battling for lucrative sports rights. Amazon moved into live-streamed sports, paying about $1 billion a year for exclusive rights to the NFL’s Thursday Night Football. Meanwhile, Apple has made a foray into live sports, adding partnerships with Major League Baseball and Major League Soccer. And at the end of 2022, Google snagged the rights to the NFL’s Sunday Ticket.
Conclusion: A forward-looking view of TV
Marketers across the board are seeking greater accountability and transparency from all media — including television. As CTV becomes more central to marketers’ strategies, CMOs are looking to move beyond negotiations and toward a highly dynamic TV marketplace built around targeting and measurement.
