30-second summary:
Massive popularity translated into the explosive surge in CTV media buying. At the end of the 2010s, globally programmatic advertising on CTV grew by a whopping 330 percent.
In a nutshell, both content consumption on CTV and ad spend are climbing while the ad budgets on traditional television are decreasing. Since CTV has been the least affected ad placement in the lockdown, the ad spend on this channel is expected to reach $16 million per advertiser.
Impressive as it may be, the future looks even brighter. In 2021, connected TV ad spend is estimated to hit the significant sum of of $10.81 billion. Most of the cash will end up in the pockets of such ad-supported giants as YouTube, Roku, and Hulu.
When it comes to efficiency, video ads on connected TV should be the should be the choice you make. Compared to any other communication channel, CTV drives the highest level of both cost-efficient responses and sales. 52 percent of the responses caused by the media come from connected TV.
Furthermore, the powerful built-in algorithms will spare marketers headaches as they identify the best-performing creative and display it first while running campaigns to maximize efficiency.
Imagine the amusement of our grandparents’ generation when they first got a TV set. What a delight it must have been to watch pictures not in the movies sitting next to strangers surrounded by cigarette smoke, but in the comfort of their living room.
Linear television that millennials and Gen Z’ers take for granted (and oftentimes smirk at) was revolutionary at the time. That was then.
Today, it seems like TV has always been here. Spoiled by seemingly unlimited choices, younger viewers no longer wish to play by the rules of “boomers”.
For them, it is unthinkable to check TV guides looking for favorite shows and then adjusting plans according to the whims of broadcasters. They want to watch whatever they want, whenever they want.
Connected TV offers such freedom. This is one of the reasons why CTV threatens its predecessor. But is it the only one? Let’s take a look at the CTV’s rapid uptake, where it leaves linear TV, and what it all means for advertisers.
Fertile grounds for CTV
The previous decade was definitely great for connected TV. For example Roku, the largest CTV platform, had managed to gather an astronomical number of users: nearly 85 million. And yet, this number accounts for only 46.9 percent of CTV users in the United States.
Such massive popularity translated into the explosive surge in CTV media buying. At the end of the 2010s, globally programmatic advertising on CTV grew by a whopping 330 percent.
What prompted such interest in connected TV?
First, younger generations stepped onto the scene. As mentioned previously, millennials and Gen-Z’ers ruthlessly cut the cords of linear TV in favor of streaming. As a result, most evasive audiences gather in one place ready to consume their favorite shows and whatever is displayed alongside.
Second, CTV is omnipresent. Three out five tech giants (Amazon, Apple, and Google) spotted the huge interest in connected TV and now sell not only hardware that makes your TV set connected, but also offer their own environments where viewers get to enjoy the content.
Moreover, many companies that deliver content on CTV make it available further over the top by enabling users to stream videos in mobile apps.
And third, even though it is principally different from linear TV, the experience does not diverge. Since viewers were trained to watch commercial breaks for years, they don’t feel opposed to seeing ads on connected TV.
They realize that this is a small price to pay for free content, especially in the age of SVOT.
Modern-day TV consumption and its future
In a nutshell, both content consumption on CTV and ad spend are climbing while the ad budgets on traditional television are decreasing. Since CTV has been the least affected ad placement in the lockdown, the ad spend on this channel is expected to reach $16 million per advertiser.
Also, 52 percent of respondents admit that they redirect their cable TV ad budgets. Moreover, in the US during lockdown the time spent watching videos on CTV grew by 81 percent.
Ad platforms support the optimistic forecast with their own data. BidMind by Fiksu, a globally recognized cross-channel advertising platform focused on CTV, has surveyed the ad spend by categories only to confirm the enormous growth.
The findings of the analysis of the same periods from January to May in 2019 and 2020 reveal the largest surges in telecommunications (550%), ecommerce (500%), money transfer (300%), and entertainment (350%).
Impressive as it may be, the future looks even brighter. In 2021, CTV ad spend is estimated to hit the significant sum of of $10.81 billion. Most of the cash will end up in the pockets of such ad-supported giants as YouTube, Roku, and Hulu.
Furthermore, provided the CTV ad-buying keeps growing at its current pace, in 2023 the total amount of money invested in CTV ads will comprise 14 billion.
Marketers crippling fears
Now, having beheld the exponential growth of CTV as a medium and its popularity as a destination for ads, the question that hangs in the air is: what stops marketers from stepping up their game and following the lead of the innovative (and dare we say, successful) marketers?
Here are some of the most important concerns that hold marketers back:
1) How do I scale?
The lack of scalable solutions remains due to the popular belief that the audience size and the amount of inventory are rather narrow. What worries marketers is that even though the growth has been outrageous, the total number of users is no larger than 200 million.
Moreover, not all content is available to sell to advertisers. One of the largest platforms Netflix is still ad-free (and there’s no sign of this changing in the nearest future), whereas Amazon Prime Video runs ads to promote its own platform.
2) Where should the spending come from?
Allocating budgets is quite simple when it comes to traditional TV or social media. The former comes from “television ad budget”, the latter comes from “digital”.
CTV, however, is something in between, and many advertisers find themselves in a pickle trying to determine the type of expenditure for connected TV.
3) Where do I get a comprehensive report?
If you have already tested the waters of CTV ad placement, then you must have faced a hard truth: the CTV environment is fragmented, really fragmented.
Therefore, the data available in reports varies greatly from platform to platform. This creates a challenge for marketers to see how well their dollars are spent. And unfortunately, this concern is a major deal-breaker for many advertisers thinking of hopping on the CTV ads gravy train.
No Time to Fear
Fear causes limitations. And the danger of limitations could be what makes you drop out of the game. Marketers shouldn’t be afraid to tip their toes into the CTV waters.
A wiser response would be to embrace the might of the new ad placement landscape and ride the wave for your brand’s good. The time is right and here’s why:
1) CTV is the destination
Viewers’ mass migration has started. And as trends indicate it is irreversible. The recent lockdown has demonstrated that no matter what happens, the CTV industry will probably withstand it.
This is good news for marketers since CTV ads allow marketers to offer a TV-like experience to viewers at a much lower price and with much more powerful targeting capabilities.
2) CTV is about results
When it comes to efficiency, video ads on connected TV should be the should be the choice you make. Compared to any other communication channel, CTV drives the highest level of both cost-efficient responses and sales. 52 percent of the responses caused by the media come from connected TV.
Moreover, ad retention here is significantly higher compared to linear TV, as ads are not only personalized but also much shorter than traditional commercial breaks.
3) CTV is freedom
Especially if marketers run CTV ads on a self-serve platform. In this case, advertisers get to fine-tune their accounts on such a platform according to their objectives, KPIs, budgets, and business types.
Furthermore, the powerful built-in algorithms will spare marketers headaches as they identify the best-performing creative and display it first while running campaigns to maximize efficiency.
It has been a glorious reign that of linear TV, but its successor is already here winning the audience’s attention. It’s time for us in the advertising business to acknowledge the new rules of content consumption and adjust our marketing strategies accordingly.
Even though there may be some challenges and pitfalls at the beginning, if addressed smartly, the rich CTV capabilities will turn into treasured gold.
Anna Kuzmenko is the COO at BidMind by Fiksu. Anna is a business leader and project manager with experience in strategy development, crisis management, and staff coaching. Being passionate for ad technology and video content ad monetization, Anna applies innovative approaches in the digital marketing ecosystem further advancement.
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