Connected TV Advertising: Opportunities and Challenges

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Classic linear TV was in the groove in the middle of the 20th/beginning of the 21st century. Currently, its place is slowly and steadily being overtaken by Connected TV, a new trend in the TV sphere. Let’s go deeper into the subject and see how CTV and the associated advertising have changed the industry of television.

The notion of CTV

As this article is centered around CTV, let’s clarify this notion in order not to get confused as the narration goes on further below. According to IAB, Connected TV is a regular television set that is connected to the Internet using set-top boxes, game consoles, HDMI sticks and other devices, and is able to provide the user with web-based content. Smart TV also fits in the CTV definition though it comes with Internet functionality already integrated in it.

CTV Schematic

CTV has become so popular due to the viewing options it provides. The number of Connected TV users will rise from 182.6 mln. in 2018 to 204.1 mln. in 2022, according to the statistics provided by eMarketer. And it is no surprise as Internet-based content allows people to choose what to watch and when.

That said, marketers might consider CTV a honey pie. But hold on! Connected TV has its own merits but it also poses challenges! We’ve tried to outline some of those below just to be on the safe side.

An Opportunity — Large audience getting yet larger

As mentioned earlier, the CTV audience is likely to grow in the coming years. Now let’s examine how matters stand at present.

First of all, the rising amount of Connected TV viewers opens up great opportunities for programmatic advertising. According to Beachfront — a video SSP — the number of ad requests for all CTV devices in November 2018 has risen by 1,640%. Yes, that’s 1,640% — from 1.8 to almost 30 billion requests. Quite some audience, isn’t it?

The rise itself is not surprising. The traditional TV industry needed some kind of transformation and Internet based content (provided by OTT communications) appeared to be the perfect candidate. And as more and more people want to get rid of cords and prefer to choose the show to watch by themselves, the number of “connected TV devices” is going to be on the rise for at least a couple more years.

An Opportunity — Targeted advertising

Another technology associated with CTV is addressability. It allows particular content to be shown to particular viewers from the perspective of what they find interesting. CTV provides inter alia Programmatic TV advertising solutions including Addressable TV. Let’s focus on those briefly.

Programmatic TV is the method that allows advertisers to buy inventory algorithmically, possibly including TV spot placement in any television ad inventory. Addressable TV stands for the ability to provide viewers with targeted ads. In theory, people in different households watching the same content can receive different ad spots thanks to dynamic ad insertion.

Targeted advertising is one of the most attractive features of CTV for publishers and advertisers alike. It allows them to perform the most precise targeting and reach their future clients with a slim chance to miss.

An Opportunity — Measurement

Internet integration gives Connected Television greater opportunities to estimate the efficiency of ad campaigns as compared to linear TV. Currently, advertisers can gather video completion rate statistics and see how successful their advertising campaign is, not to mention the tracking metrics provided by SSP. This is the level of measurability that linear TV isn’t able to rival.

So, CTV is more efficient in terms of advertising campaign tracking. For example, you can gather metrics similar to what digital advertising provides, such as viewability, impression numbers, view rate, etc. However, the sheer amount of existing platforms doesn’t contribute to it, so it is no small task to gather metrics from all the devices.

A Challenge — Platform fragmentation

Connected TV is a honey pie not only for advertisers, but also for broadcasters. For this reason there are not just one, two, or even three platforms but rather a number of them, e.g. Roku, Apple TV, Google Chromecast, Amazon Fire TV, Nexus Player, NVIDIA Shield, etc. The difficulty is that the media inventory is also spread among all these OTT devices.

The variety makes publishers create apps for each and every platform impelled by their intention to reach a larger audience. As a result, the diversity of apps only makes the process more complicated.

A Challenge — Ads tracking on different platforms

Most websites and platforms use various tracking tools such as cookies and IP recognition to identify their users. This approach is especially efficient in advertising campaigns as it avoids presenting the same ads to the same user.

Unfortunately, it doesn’t work so well for Connected TV. The above-mentioned platform fragmentation contributes a lot to it. The matter is, the amount of existing platforms makes it very difficult to identify the same user viewing content on different devices. As a result they may receive the same ads over and over on all the platforms despite the fact they have already seen it. That can be a disservice rather than a benefit.

There is no exclusive ads tracking method applicable to every service. Gathering statistics requires that different data providers be addressed, and their feedback, related to the target platforms. The challenge only grows more complicated as a new measurement option appears.

A Challenge — Ecosystem complexity and media sales

The ecosystems the clients use are quite complex and comprise various platforms and apps such as Smart TV, game consoles, set-top boxes, etc. The huge number of parties involved makes media purchasing segmented and resource-intensive. It turns out that every app sends an ad request and then receives a bid response as two unrelated chunks of data. It complicates the entire system and increases the cost due to extra app integration.

One will need an entirely automated and efficient solution to address the issue. This is where Adoppler steps in with its Exchange that offers such a solution. It ensures integration between the apps and ad exchange via a custom proxy that coerces the publisher-specific request to a common format. In other words, the solution customizes a particular publisher product to the needs of the entire ecosystem.

Forecasts for CTV

CTV audience is growing rapidly and that’s a proven fact. According to eMarketer, the US-alone share of CTV users is going to be more than 60% before 2022 as compared to 55.5% in 2018. People choose CTV over linear TV and it would be wise to follow the trends and make money off it.

E.g. in the UK the value of CTV advertising rose from €110 mln. to €220 mln., according to the IAB report. In Germany and France the situation is even more representative with a rise from €50 mln. to €125 mln., and from €35 mln. to €240 mln., respectively.

There is still progress to be made, and of course linear TV won’t lose ground all that easily. But sooner or later it will have to transform itself into CTV. Being among the pioneers is definitely going to pay off.