Connected TV (CTV) is taking the world by storm. Even if you’ve never heard the term before, there’s a good chance you’re already using the technology. eMarketer estimates that there are over 168 million CTV users in the U.S. alone – slightly over half the population – up from just 83.7 million in 2013.
CTV is the key to the cord-cutting movement that’s slowly chipping away at broadcast television’s audience. Below, we’ll lay out for you exactly what it is and what it means for digital advertising.
So, what is Connected TV?
CTV refers to any device that enables users to stream digital video on their television sets, as opposed to tuning into traditional broadcast channels. That could include anything from a Smart TV, to a streaming device like a Roku, to a gaming console like Xbox One – the number of CTV devices keeps on growing.
CTV is not to be confused with over-the-top TV (OTT – yes, ad tech remains an acronym-heavy industry), but the two are very much related. OTT refers to the software products that deliver video content to CTV devices. That can mean subscription services like Netflix, free but ad-supported alternatives like Crackle, or pay-for-what-you-watch services like the iTunes Video Store.
What does Connected TV mean for digital advertising?
Broadcast television has long been the dominant advertising medium – 2016 was the first year digital surpassed it as the channel attracting the highest ad spend – but its audience is gradually shrinking as CTV’s keeps growing. Consumers are happy to ditch big cable packages filled with channels they’ll never watch in favor of cheaper options that let them choose the content they’re most interested in à la carte –and then watch it on their own time. If current trends continue, CTV could become the primary way for advertisers to reach users in their living rooms while they’re watching their favorite shows.
It’s more than just the size of the audience that has advertisers excited though. With broadcast TV, advertisers have to show the same ads to their entire audience, the individual members of which they have limited information on. But as a digital channel, CTV lets advertisers tap into huge swaths of user data and serve ads programmatically. Through a process called dynamic ad insertion, they can tailor ads to each individual viewer based on factors like age, gender, location, and purchase history, as well as the frequency and recency with which they’ve seen specific advertisements.
That’s not just good for advertisers – more relevant ads make for a better user experience, which is of course top of mind for publishers. Combining the reach of television with the data-driven targeting of digital is a promising development for the entire ecosystem.
How can publishers and advertisers get started?
CTV is still in its early stages. Advertisers this year are expected to spend $1.13 billion on the channel, which is just 1.6% of total TV ad spend. But we expect those numbers to grow in the coming years as more ad tech providers expand into CTV.
It’s an effort AppNexus is moving full steam ahead on. In May, we were pleased to announce new features for publishers and advertisers to reach and monetize their audiences through CTV. Console for Buyers users can now target their buys on CTV devices and integrate them into cross-channel video campaigns, along with buys on desktop internet, mobile internet, and mobile app.
On the publishers’ side of the table, AppNexus Adserver users can apply our open dynamic allocation system to CTV inventory, automatically striking a balance between fulfilling guaranteed deals and sourcing programmatic demand. Yieldex clients can also now forecast CTV audiences to predict future inventory.
CTV is the chance to bring programmatic’s precision targeting to long-form television content, and the opportunity is getting bigger every year. The future is bright for video publishers and advertisers.