Web ecosystem has been a perfect medium for delivering and consumption of myriads ad formats and now CTV advertising actively changes experience on TV. Unlike traditional television, the Internet as a platform is universal in the ability to make content available from any spot on the world. As linear TV for advertising loses its former relevance, Internet-connected one is massively paving the road for flexible and selective advertising.

What is connected TV and how does it work?

Connected television can be supported by any device that is designed to support multimedia and connect streaming from the Internet (internet-capable TV set, video game consoles such as Xbox, PlayStation, Blu-ray Disk Player, or Smart TV). Thus, connected TV is far broader than the Smart TV definition (Internet-connected TV sets).

Without going deep into technical subtleties, it’s worth pointing out that connected TV (CTV) is the integration of the internet and web 2.0 features into new-generation TV sets. To ease the understanding of connected TV definition, you might regard the CTV as a hybrid TV or a merging of computer technology and television. The user interface resembles that on the smartphone. For this reason, connected TV is sometimes called smart TV.

Using smart devices (connected TV devices), the viewers can access video streaming services (Netflix, Hulu, YouTube, Pandora) and search for movies, photos, and other digital content on the web. Compared to traditional TV, which is primarily focused on media broadcasting, these new-generation devices are all about online interactive media, Internet TV, over-the-top content, and on-demand streaming media. These can be accessed through software applications or web widgets.

Evolution of TV

This scheme depicts the evolution of television over time. Judging by the picture you can understand how TV advertising works now. When it comes to advertising, it can be delivered on every medium featured above, including linear/broadcast TV, the differences will be in technical nuances. Since traditional television doesn’t support the Internet connection, it can’t transmit digital advertisements like internet-capable Smart television. Let’s take a bit closer look at the channels for digital advertising distribution: OTT, CTV, and PTV.

The difference between OTT, CTV, and PTV

Connected TV is purely a technology that supports addressable TV advertising capabilities. As was mentioned above, connected TV examples include streaming content via gaming consoles, from PlayStation to Xbox, online TV streaming services, and cable providers. This way, CTV represents the tech core for programmatic TV (PTV) support.

The TV connected with OTT (over-the-top) is the same internet-TV content consumption, but it doesn’t require an active subscription like cable or TV streaming services. However, users still need to have a broadband connection. It helps to reach the connected TV market using top OTT apps typically found in mobile stores. Since both addressable TV and CTV connect to the Internet source, they’re able to deliver the digital ads on television programmatically.

Programmatic TV buying, aka PTV, is a method used for broadcasting connected TV ads to the target audience using advantages of algorithmic ad purchasing. The algorithmic purchasing is enabled by programmatic software. Such software is specially adapted for the brands and exists in the form of programmatic advertising platforms. It can be either a connected TV ad network or a connected TV platform for advertisers (DSP). Advertisers organize ad placements on programmatic platforms tuning the dashboards according to their marketing objectives almost like they do for the web.

Programmatic TV is essential for advertising individualization. Using PTV, the brand can deliver a specific commercial to a particular household. Instead of running the same ad for all viewers of a TV show, the brands can show different ads to different people. While watching the same show, the users will be shown different ads that better correspond to their interests, age, level of income, etc.

difference between OTT, CTV, and PTV

What is CTV advertising in terms of programmatic auctions?

If we speak about the mechanism of how programmatic connected TV ads are served, we need to remember the specifics of the environment. Programmatic functions according to second and first-price auctions. Apart from this, different programmatic deals have different terms and conditions regarding inventory access priority and necessary purchasing volumes.

Connected TV ads are getting purchased and sold in private marketplaces (PMP) which perches one level above the open marketplace. Private marketplaces are invitation-only, which means fewer participants and higher win rates. In such addressable TV programmatic auctions, advertisers can reach unique premium inventory that isn’t available in real-time bidding auctions (plus specific sections, sub-sections on narrow-niche websites).

(Smart TV) Connected TV performance measuring

The number of clicks is not very indicative when we talk about Connected TV ad campaign performance. Why? Because clicks will only measure interaction on mobile devices where the content is streamed. That’s why cost-per-completed-view (CPCV), video completion rate (VCR), and CPM: Cost per mille (cost per 1000 views) performance metrics will be more descriptive.

Best connected TV CPMs

Best internet-connected TV ad formats are usually full screens. They are far from the cheapest static ad formats in terms of CPM. They usually cost 3-5 times higher than average display ad formats including web video ads. Yet, while CPM of average video ads in normal circumstances reaches $10-$15, the CPM of Connected TV ads pay off at $65. So, if advertising on CTV definitely isn’t the cheapest option, it is the most effective way to raise your CPM and decrease cost-per-completed-view.

How big is connected TV?

More than 164 million U.S. internet users access video content via connected TV devices, and this number is predicted to grow by up to 204.1 million viewers in 2022. The trend doesn’t only encompass North America. The penetration of connected TV devices in the United Kingdom, Japan, Germany, and France will significantly grow according to the Interactive Advertising Bureau.

How big is connected TV

Market potential for connected TV ads According to Adexchanger, the connected TV market will grow exponentially along with OTT and CTV penetration. By the end of the year 2020, we’ll see a 31% growth which translates into a $5 billion opportunity for advertisers and marketers.

Connected TV advertising is becoming a powerful open platform that caters directly to a variety of new applications and services to homes, mainly for the young, middle-aged, and older adult population. Such a robust, tech-savvy audience represents incredible marketing opportunities. The brands that are looking for ways to increase engagement and raise brand awareness can target their users multi-screen.

Market potential for connected TV ads

Benefits of connected TV advertising

When ratings of TV channels are dropping, and price for the linear broadcasting climbs high, connected television provides a new medium to growing your audiences that never watch live television. Consumer migration to internet-enabled TVs and over-the-top devices is a unique opportunity for advertisers to reach the audience they aim for. Information about how customers behave on the Internet, what they bought earlier, their lifestyle preferences, etc., opens the gateway to endless CTV advertising opportunities.

  • Budget. Soon, there will be no Smart TV without ads since digital advertising has massively shifted on television. For advertisers, it’s a chance to save up on an impression cost. When users watch an ad on their personal device on the web, only one person views the creative. According to stats, people watch Smart TV with family and friends (in the company of at least 2-3 viewers). Watching the ad on Smart TV means that the same ad will be seen by several people at once, which significantly reduces the cost per one impression for the advertiser. IAB Video Ad Spend Study illustrates the worldwide OTT video advertising revenues are growing quite fast. In 2022 they’re expected to reach 80 billion dollars.
  • Targeting: Targeting is one of the best connected TV benefits recognized by marketers in 2020. In order to use Smart TV, users are required to log in via universal identifiers such as Facebook or Google accounts. The technology will use third-party data to complete users’ profiles based on geolocation, zip code, interests, online behavior, device, language, and others. Precise audience segmentation allows targeting brand-receptive audiences with relevant messages, bringing more value to the brand.
  • Ad quality: Connected TV supports the transmission of targeted, highly personalized, HD-quality ads with stereo sound, delivered fullscreen. Better ad quality, as a result, promotes brand loyalty and boosts brand exposure.
  • Ad formats: CTV advertising is highly entertaining. It allows marketers to experiment with animated, static, call-to-action, and interactive video ads that drive consumer engagement and increase the performance of the video content.
  • Video completion rate: Connected TV is a natural large screen experience that results in high ad viewability. It imitates the traditional cable TV experience. Consumers not only pay more attention to CTV ads but also tend to watch them for a more extended period.
  • Real-time metrics: With connected TV advertising, marketers can actually measure ad campaign effectiveness by tracking the number of views, clicks, conversions, and direct responses.
  • Responsive audiences: Smart TV-connected users choose the content they want to watch and the way to consume it and interact with it. Such high levels of control trigger high levels of satisfaction among viewers, which leads to a better perception and positive attitudes towards ads.
  • Premium audiences: More than 20 percent of daily ad requests for CTVs are registered during primetime hours while premium content streaming. This time includes live concerts and important sporting events, which suggests unique audiences and potentially impressive returns for advertisers.

Best practices to follow with Smart TV ads

Best internet-connected TV practices will be slightly different from those applied on the web, mostly because the medium will require good quality creatives developed in high resolution. Brands often underestimate the impact of original and memorable creative, but that is an essential visual hook that is supposed to convert viewers on big screens.

The rest of the practices for CTV advertising remain to be the same. They’re equal to those typically applied for programmatic advertising.

An example. You sell the product for women aged 21 to 35, who have children and whose income is above average. Thus you need to set the target options accordingly in the dashboard of the CTV advertising platform. After you launch a campaign, it analyzes the data received from household devices: two laptops, a tablet, and two smartphones, the system interprets that:

  1. Laptop No. 1 and smartphone No. 1 are mainly used by a man of a certain age and income level.
  2. Laptop No. 2 and smartphone No.2 is used by a woman aged 22-36 years.
  3. The tablet is mainly used by a child aged 1 to 8 years.

Thus, the algorithm understands that this household corresponds to the portrait of the perfect customer. After collecting information about the activity on individual devices, the algorithm determines that the primary content consumer in the family is a woman and delivers most of the smart TV ads accordingly. With SmartyAds advertisers receive access to premium OTT and CTV placements during primetime for various categories of content.

connected TV practices

SmartyAds programmatic advertising platform for CTV advertising supports all kinds of inventory for media buying on connected TV devices. The solution brings massive benefits to both demand and supply partners, who can tune it according to their own needs:

  • For publishers, we provide connected TV integrations. For app developers and web publishers interested in monetizing their video inventory across all devices and screens we provide powerful SDKs. With easy tag-based integrations, publishers can generate maximum yield on the connected TV platform. You can get direct access to "connected TV" inventory through SmartyAds supply-side platform. Unlock the real value of your inventory, and attract the best advertisers on TV medium!
  • The media buyers and advertisers can now target their audiences in a highly responsive CTV environment delivering 15-second and 30-second full-screen video ads on SmartyAds demand-side platform. CTV advertising is a powerful and efficient way to reach potential consumers through cross-device targeting. Know where your audiences are, and stay connected with them anytime!

Be the first to know about TV advertising opportunities. Request our CTV media kit or let us assist you with a campaign star. Contact us!

Written by
Irina Kovalenko, CMO of SmartyAds
November 2020