Connected TV Advertising: What It Is, How It Works, and Why It Matters

The skyrocketing popularity of programmatic TV advertising is evident in many ways, including the variety of ad types. Thus, CTV advertising examples include but aren’t limited to video, audio, display, and companion ads. But what about other benefits? What are the key challenges? How does connected TV advertising work?

In this guide, we clarify the CTV marketing meaning, dive deep into the types of TV advertising, explore the advantages, and not only. Read on to discover how CTV advertising can enhance your strategy and help you drive conversions.

What is connected TV?

What is CTV advertising? Let’s find out the CTV meaning first. Standing for Connected TV, CTV is a device that enables video content streaming. The most obvious example is a smart TV connected to the Internet, although gaming consoles and gadgets like the Roku Streaming Stick are also on the list of connected TV devices. 

What is connected TV advertising?

Now, let’s finally answer the question, “what is CTV in advertising”. Connected TV is like a video entertainment hub that allows you to watch regular TV, satellite TV, and stream Internet-based media all on the same device. In 2024, US adults were projected to spend, on average, nearly two hours daily using CTV devices. 

People are increasingly turning to CTV because of its convenience and improved entertainment value. 88% of US households have at least one Internet-connected TV device, while the number of CTV users exceeds 110 million among Gen Z and Millennials.

This number can’t help but draw the attention of brands and advertisers. They include this channel in their marketing strategy because CTV allows for reaching solvent audiences with improved targeting solutions and delivers better campaign results than linear TV advertising. And as regular TV viewing declines further, CTV will become one of the most prolific advertising channels in the coming years. 

How connected TV advertising works

Since you are already familiar with the CTV advertising meaning, let’s discover how CTV advertising works. 

Programmatic CTV advertising explained

Connected TV does not operate like traditional television; hence, displaying ads on CTV works quite differently and may demand a digitally inclined approach. The Internet enables connected TV, suggesting that the programmatic ad approach will be the most effective method to publish CTV ads – especially as programmatic video ads trends continue to shape how brands connect with viewers across streaming platforms.

Programmatic advertising enables the automated purchase and display of digital advertisements. You do not need to manually search for channels to display your ads with programmatic systems. 

Thanks to a data-driven approach and real-time bidding, your ads are automatically served to the right audience. In this scenario, programmatic ad technology assists in purchasing ad inventories specifically designed for connected TV devices.

Also, programmatic CTV advertising enables marketers to serve custom ads for different audiences. In this case, different ads can be displayed to various individuals who are viewing the same show broadcast on separate devices.

How CTV ads are delivered

Programmatic technology streamlines the process of ad delivery:

1. An ad impression becomes available, and the information about it is sent to an SSP (supply-side platform).

2. A bid request is sent to a DSP (demand-side platform).

3. Bids are placed.

4. The real-time bidding auction starts on the ad exchange platform. 

5. After the winning bid is identified, the ad is sent to the media owner and displayed to a user. The whole process takes less than a second.

Note that large platforms like Netflix also offer their own advertising solutions.

The steps you need to take

To launch programmatic CTV campaigns, you should first choose an effective DSP that supports CTV advertising. The next key steps are as follows:

1. Create your ad: Come up with a commercial (make sure it’s catchy) and upload it to the selected platform.

2. Set up targeting: Go through the targeting settings and provide as many details about your audience as possible. The more targeted the campaign is, the better results it delivers.

3. Set your budget: Specify your budget and launch the campaign. Note that programmatic connected TV advertising platforms often have bid optimization features that you can benefit from.

4. Analyze and optimize: Monitor the performance of your campaigns continuously to adjust your strategy accordingly.

5. Go omnichannel: To ensure the campaign’s success, it’s essential to reach users across multiple channels and devices. Prepare creatives that would match your CTV ads to build brand awareness.

8 types of connected TV ads

Smart TV advertising can be interactive, skippable, or non-skippable. 

• Interactive ads boost viewer engagement by encouraging audiences to interact with an ad by clicking links, scanning QR codes, etc.

• Skippable ads allow viewers to omit an advertisement after a few seconds. The time may vary, but naturally, it’s 3 or 5 seconds. Advertisers don’t pay if users skip an ad, but pay when they watch a certain percentage of the ad. 

• Non-skippable ads don’t allow for moving to the streaming content instantly, and viewers have to watch an advertisement till the end. It takes approximately 15-30 seconds.

These are a few connected TV examples. Let’s delve into more details and consider the most popular CTV ad types.

Instream or linear video ads

This type of CTV advertising emerges when users consume video content in the digital space. Instream ads may resemble traditional TV ads since they are aired in three formats when users watch movies or TV shows: pre-, mid-, and post-rolls. 

• Pre-roll ads emerge before the main video content. Sometimes, viewers can skip an ad after several seconds or watch the full version of the advertisement before they can access their desired content. 

• Mid-roll ads interrupt the show or movie in the middle of streaming long content, just like a commercial break on linear TV.

• Post-roll ads show up at the end of the streamed video. 

Non-linear ads

Non-linear video ads, also known as overlay ads, display over the screen concurrently with the video playback and without interrupting streaming. These are small static images, texts, videos, or animated media with call-to-action buttons or clickable links that deliver improved engagement with an audience. 

• Picture-in-picture ads, or a ‘Double Box’ format, are a type of nonlinear CTV video overlay advertising. Streaming content plays in the small window simultaneously with advertisements.

Companion ads

Another CTV ads example, companion ads, may appear in parallel with linear or nonlinear ads. Companion ads display in different forms, from static images and text to rich media and creatives wrapping around the screen. 

Advertisers use companion ads to be visible to viewers when they consume content. This type of ad minimizes the disruption of content viewing and enhances a flawless user experience.    

Display ads

The interface is another place where static or animated banners are delivered across CTV platforms. Display ads appear in the menu section, home screen, inline placement, etc. 

Display ads on CTV provide the same experience as display ads on the web without interfering with streaming. 

Audio ads

These are audio-only ads that play during audio streaming services on CTV platforms. They are effective for reaching viewers who listen to music or podcasts.

Dynamic ad insertion in CTV (DAI)

DAI technology allows advertisers to serve personalized advertisements to individual viewers based on their profile and viewing behavior. This enables highly targeted and relevant ad experiences.

360-degree videos

These immersive videos allow viewers to interact with the content by changing their perspective. They are especially effective for showcasing products or immersive storytelling.

Augmented reality (AR) ads

AR ads incorporate augmented reality elements into the viewing experience, allowing viewers to interact with digital objects or information overlaid on their screens.

The abundance of CTV advertising demonstrates that advertisers can engage with viewers in multiple ways and test the most effective types of ads. What are the benefits of connected TV advertising? 

Key benefits of CTV advertising

Connected TV advertising offers a result-oriented approach to TV media buying. It enables precise targeting based on data analytics and demographical preferences. Compared to traditional TV commercials, CTV ads provide superior insights, precision, and measurable results, especially when it comes to programmatic. While linear TV advertisers can target only based on the context of the broadcasted TV show, CTV ads can be served programmatically to a preferred audience in line with particular features of this audience.

When it comes to linear TV vs connected TV, CTV provides advertisers with more advanced targeting and the ability to track and optimize campaign performance, making it a more effective advertising option.

Access to a wider and more engaged audience

Advertisers prefer connected TV to linear TV because the ads projected on CTV channels have more views than ads on linear TV. Besides, the CTV audience is better engaged with ads because of the convenience and varying entertainment options. This means that an increasing number of targeted viewers will see and interact with a CTV ad.

Optimized ad spend

What does CTV mean in advertising in terms of cost-effectiveness? CTV ads are 53% less expensive and more efficient than traditional TV ads. A CTV ad displayed on one device might reach numerous individuals simultaneously. This is a more efficient marketing approach than displaying ads on mobile devices, and CTV ad measurement helps verify and optimize this efficiency by tracking real reach and performance.

Moreover, CTV commercials are data-driven, ensuring ads are aired at specified times. They target the right people instead of the spray-and-pray strategy of linear TV ads. With this data-driven method coupled with programmatic ad-buying processes, your ad budget is spent only when necessary and based on insights.

Precise targeting

Granular targeting capabilities allow CTV advertising to outcompete other marketing channels in efficiency. Smart TVs and other CTV devices offer personalized user experiences based on first-party data, including language preference, location, or other information. This data can be harnessed for more precise and insightful targeting.

In addition to targeting, the information can also be used for retargeting and cross-targeting. Users who have shown interest in a brand or ad on one digital channel can be retargeted on a CTV channel and vice versa.

Targeting and retargeting on CTV channels is more effective because it allows sending more individualized ads to a specific and relevant audience rather than to a general audience.

Support for multiple ad formats

By displaying ads on CTV, advertisers can test different ad formats to know which is best for a particular campaign. Marketers can try static images, graphics, interactive video ad formats, etc., to find the most engaging for their audience. Most of these formats raise user involvement as they make it possible for ads to interact with the audience. This greatly promotes brand-user relationships, brand recall, and enhanced customer satisfaction.

Campaign performance measurement and tracking

With linear TV ads, tracking and measuring ad performance is impossible. However, this is not the case with CTV advertising. On the CTV programmatic platform, marketers can measure their campaign performance and track user engagement. 

So advertisers can track and monitor campaign impressions, completion rates, and total reach in the CTV space.  

• A campaign impression is the number of times an advertisement has been served.

• The completion rate is the number of times an advertisement has been watched to the end. This indicates how many individuals watched through the entire commercial. 

• Total reach represents all the unique devices and homes where the CTV ad is displayed.

Interactive and responsive advertising

Connected TV advertisements can be broadcast when viewers are most receptive. For instance, ads can be delivered to target viewers when certain events are airing. For example, sports lovers can be targeted in a game final. Also, people can interact with ads by sending messages, choosing options on creative, or clicking prompts. Interactive ads offer the advantage of higher engagement and conversion rates.

How to increase CTV ad reach with a proven strategy? 

CTV advertising strategies

When it comes to building a CTV advertising strategy, it’s essential to keep in mind several factors. 

Use trusted data only

Partner up with reliable data providers who can give you a database for your advertising campaigns. Otherwise, there’s a risk of compromising the brand’s reputation and failing the ad campaign.

Reaching and engaging with relevant viewers via your ads is a practical approach to hitting your marketing goals cost- and time-effectively since the ads are served to the right audience when they are ready to engage. 

Leverage precise targeting opportunities

With datasets in the CTV landscape, advertisers can segment their audience and serve the right messages to the relevant viewers. The CTV viewers are filtered and precisely targeted by their demographic or regional peculiarities, types of devices, and other features. Plus, cross-device targeting on CTV enables advertisers to engage with the audience through multiple devices and serve relevant ads. 

Integrate the latest tech trends

It’s hard to impress modern viewers with traditional approaches to ad creation. The audience is tech-savvy and picky in terms of content quality. Therefore, using a creative approach and integrating advanced technologies into ads (e.g., augmented reality (AR), virtual reality (VR), interactive elements, dynamic personalization, etc.) are the keys to success. 

Besides, choose relevant ad formats and placements aligned with streamed content and the audience’s experience. By giving these ads an interactive touch (e.g., polls and clickable buttons), there are more chances to hook viewers’ attention.

Remember about retargeting to enhance ROI

Give users a second chance to like your product and expand it again through retargeting. This method allows for reaching a truly interested audience, so brands can get better results while eliminating budget waste.

3 best practices for CTV advertising

The following practices seek to enhance ad campaigns on the CTV platforms. 

Track results

Various ad types deliver different results, so advertisers can A/B test and streamline their ads. The CTV space offers multiple opportunities to monitor ad campaign performance in real time and adjust it instantly for better results. 

Go for programmatic

87.2% of US CTV ad spending (including YouTube) is programmatic. Advertisers and brands use programmatic CTV advertising platforms to meet their targeted consumers, optimize campaigns, and boost ROI with precise data. 

Set up frequency capping

CTV users can see the same ad across multiple platforms during a short period of time. Frequency capping allows for properly allocating the ad budget and minimizing possible irritation from the repetitive ad display. This CTV feature limits the number of views for every viewer and thus boosts ad performance and engagement.

Challenges in CTV advertising

As for the challenges related to CTV advertising, they are as follows.

The risk of fraud

CTV is an appealing space not only for advertisers but also for fraudsters. In 2022, malicious activity in the CTV space spiked by 69% compared to the previous years. So, ad fraud is the biggest challenge for industry players and stands for invalid traffic presented by counterfeit clicks, impressions, and conversions. 

This malicious activity compromises the return on media investment and leads to a decrease or total loss of revenue. Ad fraud occurs on sites and apps, or can be caused by malicious bots. 

• Website fraud is presented in the form of non-human traffic, impression laundering, and hidden ads. 

• Background and spoofed apps, hidden ads, and performance manipulation take place on mobile devices like phones and tablets. 

• Bot fraud is software that intentionally generates ad views and clicks to pump out money from advertisers. 

The good news is that AdTech companies can detect and minimize the effect of fraudulent schemes on ad displays by cooperating with trusted partners. Working with Attekmi solutions, you can use an integrated ad fraud detection system.

Ecosystem fragmentation

CTV ad inventory is spread across an entire range of platforms, devices, apps, and media owners, which makes the ecosystem fragmented. As a result, reach can become duplicated or simply inefficient.

Leveraging ID-based targeting is a way to reach specific users or audience segments and deliver personalized ads with increased precision. Adopting the supply-path optimization practices can help as well.

Lack of standardized measurement

Unfortunately, there are no universal metrics – each platform reports them differently. Therefore, it can be hard to measure reach and other results, as well as to adjust your strategy accordingly. 

With cross-device attribution, you can track how ads delivered via CTV devices impact actions on other gadgets like laptops or smartphones. This ensures a more comprehensive view of a customer journey. Besides, keep an eye on the outcome-based KPIs, like, for instance, the number of new customers. This will help you understand if you are achieving your business objectives.

Keep up to date with Attekmi

At Attekmi, we understand that the key to success in this rapidly changing landscape lies in staying highly up-to-date. That’s why Attekmi solutions support all kinds of traffic types and ad formats, including connected TV advertising (CTV).

Stay tuned for the most relevant and up-to-the-minute news and updates on the CTV industry and not only. Our commitment to delivering the latest industry insights ensures you’re well-equipped to navigate the dynamic world of technology.

Summing up

What is CTV in marketing? It’s all about benefits for advertisers, including precise targeting and multiple ad formats. The owners of Attekmi solutions can also take full advantage of CTV media trading in their marketplaces. Our products support an entire set of formats (CTV is on the list), so there is no need for you to build such functionalities from scratch. Instead, you can start earning money through media trading after only one week. 

Does Attekmi look like the right choice? Let’s talk! 

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