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What Is Connected TV (CTV) Advertising: Basic Explanation 2024

Connected TV (CTV) advertising revolutionizes how brands reach and engage audiences.

Programmatic DOOH
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Perion Marketing

Published on

29th Oct 2024

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With the rise of smart TVs and streaming devices, CTV advertising has become a vital component of digital marketing strategies, offering targeted, measurable, and interactive ad experiences. 

 

Still, this new technology may be confusing to understand. Connected TV advertising refers to delivering ads through internet-connected television sets. Unlike traditional TV, CTV ads can be dynamic and interactive, reaching viewers via smart TVs and streaming devices, on OTT (Over-the-Top) services like Netflix or Hulu

 

In this blog, we’ll explain what makes this new advertising format so innovative, and how to make the most of it. 

 

Key Highlights

  • Connected TV (CTV) advertising delivers targeted ads via internet-connected TVs, smart TVs, streaming devices, and OTT services. 
  • Utilizing programmatic technology, CTV ads are delivered in real-time, with DSPs ensuring precise audience targeting and optimal ad placement. 
  • Advertisers can buy CTV ads through streaming services, programmatic platforms, or CTV device-makers. Each of them has its advantages and downsides. 
  • CTV stands out with its internet-based targeting and immediate analytics, versus CTV/OTT, Addressable TV, and Linear TV. 

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How CTV Advertising Works

CTV advertising leverages programmatic technology to deliver ads in real-time. Key technologies include DSPs for buying ad space and ad exchanges that facilitate transactions. This automated process ensures ads reach the right audience at the right time. 

 

Connected TV ads are shown on streaming devices. They can be interactive, in-stream, or appear within the video content. 

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Formats for Placing a CTV Media Buy

The ways advertisers can buy Connected TV media will depend on the media format. Streaming services and apps can be categorized according to their payment model, be it subscription, ad-funded, or broadcasted. Categories include SVOD (subscription video-on-demand), AVOD (ad-funded VOD), BVOD (broadcaster VOD), or FAST (free, ad-supported television). However, many streaming services nowadays fall into more than one category. 

 

Since the acronyms can be confusing, here is a brief explanation: 

 

  • SVOD (Subscription video-on-demand)- is a distribution model for video content where users pay a monthly or annual subscription fee to access on-demand videos. 
  • AVOD (Ad-funded video-on-demand) – in this distribution model, access to content is free and the platform generates income by showing ads. 
  • BVOD ( Broadcast video-on-demand)- content from TV broadcasters that is made available for online streaming. 
  • FAST (Free advertising-supported streaming television)- users access curated content on a linear schedule similar to traditional TV. This model is usually free and supported by advertisements. 
  • SOCIAL – social media platforms that stream content. They can be free or under a subscription model. 
  • LINEAR TV – content that is scheduled to appear on a schedule, usually via satellite or cable. 
  • HbbTV (Hybrid broadcast broadband TV)-this distribution model shows digital television from broadcast and Internet sources.  

 

logos avod bvod svod

 

Devices Used for Connected TV Advertising

Connected TV (CTV) advertising uses smart devices to stream video content over the Internet. Advertisers leverage these dynamic platforms to reach audiences. Devices range from smart TVs and streaming sticks to gaming consoles, allowing for targeted and interactive ad experiences, and transforming the way brands connect with viewers.

 

Connected devices include: 

 

  • Tablets, phones, desktops
  • Smart TVs
  • Stand-alone OTT and CTV devices 

 

Connected TV Devices

 

Types of CTV Advertising

Connected TV (CTV) advertising includes several ad formats that aim to engage viewers. These ads try to capture the viewer’s attention with visuals and narratives.  

 

”The variety of formats allows advertisers to tailor their strategies to audience behaviors and preferences, making CTV advertising a versatile tool for engaging consumers. 

 

  • Video ads: The most common type. They include pre-roll, mid-roll, and post-roll ads that play before, during, or after streaming content. 
  • Interactive ads: These ads offer clickable elements that lead to more information, quizzes, or purchasing options directly from the ad.
  • Display ads: Display ads appear on the interface of CTV platforms. Such as home screens or navigation menus and are not intrusive.

 

How to Buy CTV Ads?

There are three main methods to buy CTV ads. Via streaming services, programmatic platforms, or CTV device-makers. 

 

  • Streaming Services

Advertisers can buy ads directly at streaming services such as Disney+, Netflix, Max. It has the advantage of giving exclusive inventory, and some degree of transparency on ad spending. However, it offers limited scalability. 

 

  • Programmatic Platforms

These platforms allow advertisers to bid across multiple services and applications’ inventories. While it offers a larger reach, it also brings limited control over where ads are served. These platforms can be managed or unmanaged. 

 

  • CTV Device-Makers

Makers of Smart TVs, Roku, and Fire TV sticks, also deal with ad space. The advantage of this method is that ads can go within many apps and devices, although it results in less transparency and control for advertisers. 

 

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CTV Advertising Campaigns Metrics to Track and Measure

Advertisers track Key Performance Metrics (KPIs), used to evaluate the success of CTV campaigns. Marketers choose which KPIs to track based on the goals of the campaign. 

 

The most common metrics include: 

  • Reach: The number of viewers that see an ad.
  • Impressions: How many times has the ad been viewed? 
  • Viewability: How many of these impressions have been seen by the viewer for at least 50% of the ad’s duration? 
  • Engagement: Two metrics are used to understand how viewers interact with the ad, click-through rate (CTR), and video completion rate (VCR). 
  • Conversions: How many viewers performed an expected action on the ad. For instance, visiting the website or making a purchase. 

 

Benefits of Connected TV Advertising

The advantages of Connected TV result in growing CTV ad spending, projected to reach $40.90 billion by 2027 in the USA. 

 

us connected tc

Source: eMarketer

 

There are several advantages of Connected TV (CTV) for advertisers and marketers: 

 

  • Highly targeted reach

Advertisers can deliver ads to specific demographics, interests, and viewing behaviors, and reach the most relevant audiences. 

 

  • Increased engagement

CTV’s interactive ad formats and immersive nature result in higher viewer engagement and interaction rates. 

 

  • Enhanced measurement

CTV’s advanced analytics provide detailed insights into ad performance, viewer behavior, and ROI, allowing for data-driving optimization. 

 

  • Cross-device integration

CTV ads can be part of a broader digital strategy, seamlessly integrating with campaigns across mobile, desktop, and other connected devices. 

 

  • Premium content 

CTV ads are often placed alongside high-quality, on-demand content, associating brands with premium entertainment experiences. 

 

  •  Ad Flexibility

 CTV allows for a variety of ad formats, including video, interactive, and display ads, providing flexibility to meet different campaign goals. 

 

The advantages of Connected TV result in a growing CTV ad spending, which is projected to reach $40.90 billion by 2027 in the USA only. 

 

How is CTV Advertising Different from Other Ad Formats

Connected TV (CTV) advertising stands out from other formats due to its innovative characteristics. Other advertising formats are often confused with CTV ads. Here’s a brief comparison with Over-the-Top (OTT) services, Addressable TV, and Linear TV advertising. 

 

CTV vs. OTT

While both CTV and OTT involve streaming content over the Internet, their focus differs. OTT is an umbrella term for delivering ads on streaming content, be it on streaming services like Netflix or any connected device. 

 

In contrast, CTV specifically refers to streaming on a television connected to the Internet, such as smart TVs or devices like Roku and Apple TV. This allows CTV to leverage larger screens for impactful advertising experiences.

 

CTV Advertising vs. Addressable TV Advertising

Both methods deliver targeted advertising but they are executed differently. Addressable TV can deliver different ads to different households watching the same program via traditional cable or satellite systems. On the other hand, CTV employs internet-based technology to provide pinpoint targeting and immediate performance analytics.

 

CTV Advertising vs. Linear TV Advertising

 

The main difference between CTV and Linear TV advertising is the measurement and engagement capabilities. Linear TV uses a scheduled broadcast model, which leaves little room for targeting and delayed performance metrics. 

Connected TV Advertising Examples

Connected advertising allows companies to expand their brand reach via out-of-the-box solutions. For instance, Perion live CTV integration offers full-screen branded content during live music and sports events. 

 

 

Another innovative example of connected ads is Pause Ads. These ad units display whenever the user pauses the content they’re watching. Pause Ads don’t disrupt the user experience while attracting attention. Without being intrusive, these unique ad placements run across Live, VOD, and DVR content. 

 

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Leverage the Power of CTV Advertising with Perion

Harnessing the capabilities of Connected TV (CTV) advertising with Perion presents a transformative opportunity for brands to engage audiences. Perion’s CTV solutions offer dynamic ad customization based on user context. This technology enables brands to broaden their audience reach by leveraging highly targeted, high-impact advertising that captures attention and drives interaction. 

 

Among the various ad formats that deepen user interaction and provide detailed performance insights, Perion offers interactive video ads that engage users directly and Pause Ads that run whenever the viewer pauses the CTV content. Live CTV integrations and “L”- shaped banners increase brand visibility while full-screen branded content during live broadcasts ensures the brand engages the audience at just the right moment.
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FAQ

Where are connected TV ads shown?

There are several platforms where CTV ads are run. For instance, streaming services, smart TV apps, and on-demand video platforms. Examples include streaming services such as Disney +, or applications like YouTube or Prime Video. 

 

How are CTV advertising audiences targeted?

CTV advertising enables marketers to fine-tune targeting. This technology uses demographics, interests, and viewing behavior. By doing this, it increases the ad’s relevance. Some targeting strategies used by marketers include contextual and behavioral targeting. 

 

Are connected TV ads clickable?

Unlike OTT advertising, CTV ads currently aren’t clickable. Some marketers can find a workaround by using QR code marketing. 

 

Where do CTV ads reach their audience?

Connected TV ads are shown on devices such as smart TVs, and mobile phones, so they can reach their target audiences. The ads are shown in streaming services, smart TV applications, or on-demand video platforms. 

 

What is the future of connected TV advertising?

 CTV advertising is evolving with new opportunities, such as cross-screen advertising, improved measurements and interactive ads. Advertisers who adopt these trends will have the advantage of tapping an expanding advertising medium. 

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