Web ecosystem has been a perfect medium for delivering and consumption of myriads ad formats to these days. Unlike linear television, the Internet as a platform is universal in the ability to make content available from any spot on the world. In 2019, the Internet-connected television is massively pawing the road for CTV advertising.

What is connected TV and how does it work?

Connected television is any device which is designed to support multimedia and connect to the Internet (internet-capable TV set, video game consoles such as Xbox, PlayStation, Blu-ray Disk Player or streaming video device).

Without going deep into technical subtleties, it’s worth to point 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, 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 connected TV devices, the viewers can access video streaming services (Netflix, Hulu, YouTube, Pandora) and search 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 that can be accessed through software applications or web widgets.

Connected TV evolution

This scheme depicts the evolution of television over time. 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 linear broadcasting doesn’t support the Internet connection, it can’t transmit the 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 smart TV advertising capabilities. As was mentioned above, connected TV examples include using various 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 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 platforms. Advertisers and publishers organize automatically performed ad placement on programmatic platforms tuning the dashboards according to their marketing objectives.

Programmatic TV is essential for advertising individualization. Using PTV, the brand can deliver a specific commercial to the 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.

 

Programmatic TV landscape

How big is connected TV?

By the end of May 2018, around 13.5 million households have abandoned traditional (linear) TV consumption due to the broad adoption of Internet-powered television. More than a half (55.5%) of U.S population makes their TV smart with Roku, Apple TV or gaming consoles, according to an eMarketer survey. This means that more than 164 million U.S. internet users access video content via connected TV devices, and this number is predicted to grow 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 surpass 50 % of households over the next two years, according to the Interactive Advertising Bureau.

Connected TV 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. CTV viewers represent 8.1 percent of the overall TV viewing for adults aged 18 to 49. These people are a savvy, diverse audience who stream the content via various devices.

addressable tv devices

Such robust, tech-savvy audience represents incredible marketing opportunities. The brands that are looking for ways to increase engagement and raise brand awareness can tagget their users multi-screen.

Additionally, according to in-depth consumer research, by May 2018, 87 percent of consumers reported using over-the-top devices (smartphone, computer, tablet) when watching digital content on a connected TV for:

  • Texting with friends about the show or movie;

  • Searching for information about the actor/movie/show;

  • Reading and posting on social media about the show/movie;

  • Searching for reviews of a product that they saw on a TV commercial;

  • or Posting on social media about a commercial.

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 the 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., open 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 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 2018 illustrates the worldwide OTT revenues are growing quite fast. From 2016 to 2022 they’re expected to reach 80 billion dollars.

Targeting

Targeting is one of the best connected TV benefits recognized by marketers in 2018. 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 segmentations allows targeting brand-receptive audiences with relevant messages, bringing more value to the brand.

Addressable TV top benefits

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 all video ad formats: animated, static, call-to-action and interactive video ads that drive consumer engagement and increase the performance of the video ad campaigns.

High completion rates

Connected TV is a natural large screen experience that results in high ads 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 triggers high levels of satisfaction among viewers, which leads to 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 the 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 are 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 the most of ads accordingly.

SmartyAds 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 monetization solutions for monetizing their video inventory across all devices and screens we provide powerful SDKs. With easy tag-based integrations publishers can generate maximum yield on 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 through SmartyAds DSP in highly responsive CTV environment delivering 15-second and 30-second full-screen video ads that genuinely matter. 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 what is connected TV advertising on practice. Let us assist you with a campaign start!

Written by
Irina Kovalenko, CMO of SmartyAds
February 2018