Resources > The Fundamentals of CTV Advertising
The Fundamentals of
Connected TV Advertising
Everything you need to know to confidently incorporate CTV advertising into your omnichannel mix.
What’s the difference between OTT and CTV advertising?
Connected TV advertising has grown exponentially and is expected to top $27 billion by 20251. With CTV advertising top of mind for marketers, it’s crucial to master the basics — starting with the lingo. While it’s common to hear OTT and CTV used interchangeably, they actually refer to completely different things. Keep these distinctions in mind when devising your omni-channel advertising strategy:
- Over The Top (OTT): OTT refers to the delivery mechanism for video content, where content is delivered “over the top” instead of through a cable or satellite connection. OTT content can be viewed on a mobile, desktop, or connected device.
- Connected TV (CTV): CTV is actually a subset of OTT, and it refers to the device on which you’re accessing that video content. It combines the delivery mechanism with the viewing experience — on the biggest screen in the home. If you watch Hulu on your mobile device, then you’re streaming OTT content. If, however, you watch Hulu through a Roku Stick that’s plugged into your television, then you’re streaming OTT content over CTV.
1eMarketer, U.S. Connected TV Ad Spending
Understanding the connected TV landscape
With various devices, streaming services, buying methods, and ad tech platforms to consider, the current CTV advertising landscape can be quite intimidating. Let’s break it down layer by layer, starting with the basics.
- CTV Devices: A connected TV (CTV) is a device that connects to — or is embedded in — a television to support video content streaming. CTVs include PlayStation, Xbox, Roku, Amazon Fire TV, Apple TV, smart TVs, and more.
- Streaming Services: A streaming service is an online provider of entertainment (music, movies, etc.) that delivers content via an Internet connection to a subscriber’s TV, computer, or mobile device. Popular streaming services include Netflix, Hulu, Amazon Prime Video, Peacock, Disney+, Apple TV+, and Roku Channel.
- AVOD vs. SVOD: AVOD stands for Advertising-Based Video on Demand (e.g., Hulu, Peacock); these services are ad-supported and are available at a lower cost for consumers. SVOD stands for Subscription Video on Demand (e.g., Netflix); these services charge a monthly subscription fee.
How are CTV ads bought and sold today?
In general, CTV ads can be sold directly, which involves manual negotiations between people, or programmatically, which involves using software that automates the buying and selling process.
Advertisers may choose to use either (or both) for a number of reasons, but here are the main benefits of each:
- Benefits of Direct Buying and Selling: Going the direct route enables advertisers to pre-negotiate fixed prices for ads. What’s more, advertisers can take a focused content approach and specify where they would like their ads to run, which also ensures brand safety.
- Benefits of Programmatic Buying and Selling: Programmatic technologies provide the ability to buy and sell inventory in real time, which gives more flexibility and control to both advertisers and publishers. It also enables real-time measurement, which allows advertisers to better track campaigns and make in-flight optimizations, ensuring each campaign is running at peak efficiency. Finally, programmatic technologies enable greater targeting capabilities and increased scale, allowing advertisers to be more specific about who they reach while reaching more people at the same time.
Who’s involved in the programmatic CTV advertising market?
There can be many ad tech partners involved in the programmatic buying and selling of CTV ads, including demand-side, supply-side, data management, and measurement partners. With so many in play, it’s important to consider the following when vetting ad tech partners:
- Do they have media ties? It’s important to work with partners who do not have a bias towards any individual media owner. Work with independent partners who make decisions strictly based on what’s best for your campaign goals.
- Do they value transparency and brand safety? In a privacy-first world, transparency and trust is crucial. Do you have visibility into what you’re buying, where your ads are being shown, and how much you are paying for them? Given that ad fraud is a concern, can they ensure media quality through integrations with leading measurement providers?
- Can they confidently navigate the technical complexities of connected TV advertising? With dozens of devices, shifting specs, and new platforms launching every month, you need experts you can trust to help navigate creative, activate campaigns, and calculate impact. It’s crucial to work with partners who are focused on TV and video.
- Do they offer omni-channel advertising capabilities? Find partners who enable you to seamlessly manage advertising experiences across all channels, platforms, and devices — even walled gardens — so you can do more with less.
What’s the deal with walled gardens?
The term ‘walled gardens’ has recently entered the CTV advertising conversation, but what does it mean? A walled garden is a closed ecosystem in which all operations are controlled by the ecosystem operator (think Google and Facebook).
Similar to what took place in the digital landscape, publishers are trying to differentiate their offerings not only through content but also through audience and measurement solutions. As the walls around their inventory and data continue to rise, advertisers are forced to buy, execute, and measure campaigns across multiple publishers.
The emergence of walled gardens has made the CTV landscape more fragmented than it already was and has made it nearly impossible for marketers to get a holistic view of their CTV efforts. It’s more important than ever that marketers work with independent, media-agnostic partners who can serve as a source of truth and enable marketers to accurately measure the success of their CTV advertising campaigns.
The promise of connected TV advertising
CTV embodies the best of linear TV and the best of digital; it brings the sight, sound, and motion that engages audiences but also the targetability, interactivity, and measurability that allow advertisers to capture the ROI of their campaigns.
Targetability
Personalization is now possible on the biggest screen in the home. With CTV, advertisers have access to enhanced first- and third-party audience targeting that allows them to reach a much more relevant audience than they could reach on linear TV.
Interactivity
From interactive video elements like photo and video galleries to dynamic overlays that make personalization at scale achievable, advanced creative in CTV ads enables advertisers to push past standard impression metrics to capture engagement, time earned, and other metrics that matter.
Measurability
Though still evolving, CTV measurement capabilities already far exceed those of linear TV. Advertisers no longer have to rely on just gross rating points (GRPs); the data and technology now exist for advertisers to execute sophisticated planning and in-flight reach, frequency, and media-efficiency optimizations.
Unlocking CTV’s full potential
Despite CTV advertising’s exponential growth, there’s still so much untapped potential. As marketers become increasingly confident and allocate more media dollars to the channel, they’ll be able to maximize reach, leverage advanced creative features to their fullest, and unlock the true potential of the biggest screen in the home.
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