What Is Connected TV (CTV) Advertising? Definition, How it Works + Examples

With live sports on streaming platforms and ad-supported tiers on Netflix and Prime Video, it’s safe to say TV advertising has officially entered its digital era. When it comes to the biggest screen in the home, the foundational technology underlying all these complex changes is connected TV (CTV), which now accounts for nearly a quarter of ad spend in the US. With 88% of households owning at least one CTV device and nearly one in three viewers making purchases after seeing CTV ads, this platform has become an essential part of any modern advertising strategy. [embed]https://www.youtube.com/watch?v=4pK0kzdLM0A[/embed]

Here's how brand and agency marketers are maximizing their impact on the biggest screen in the home.

Key takeaways

• Connected TV (CTV) is any television that streams online video, including smart TVs, streaming devices, and gaming consoles. 
• CTV advertising delivers video ads through internet-connected TVs, combining big-screen impact with digital-marketing precision. 
• As audiences shift from linear to streaming, CTV has become essential for reaching cord-cutters and younger, tech-savvy consumers. 
• The channel offers 1:1 audience targeting, real-time measurement, and incremental reach across high-value audiences.

What is connected TV?

Connected TV (CTV) is any television that can connect to the internet and stream online video. This includes both smart TVs with built-in connections and traditional TVs that access the internet through devices like:

• Streaming sticks (Roku, Chromecast, Amazon Fire TV, Apple TV)
• Gaming consoles (PlayStation, Xbox)
• Connected Blu-ray players

The CTV device is the hardware that enables internet connectivity. The content delivered over these sets includes both traditional cable, or broadcast as well as free and ad-supported streaming. 

In the US, 88% of households now own at least one CTV device, and adults average 2 hours and 15 minutes every day watching CTV content, far surpassing desktops and laptops, and steadily closing the gap with mobile. At media companies like Paramount, roughly 90% of digital impressions now come from CTV devices, notes VP David Krenn.

Source: eMarketer

What is CTV advertising?

CTV advertising refers to video ads delivered through internet-connected TV devices. These ads appear within streaming apps and services, including ad-supported tiers on platforms like Netflix, Hulu, and Peacock, as well as free ad-supported streaming TV (FAST) services like Pluto TV and Tubi.

Unlike traditional TV commercials that reach all broadcast viewers simultaneously, CTV ads can be targeted to specific households or viewers based on data signals. This creates opportunities for personalization that weren't possible with linear TV. 

CTV ads can appear in several formats:

• Pre-roll ads play before streaming content begins
• Mid-roll ads appear during natural breaks in programming
• Takeover ads display when viewers pause content
• Interactive units invite viewers to engage directly 

This $30 billion market is the fastest-growing major ad channel in the US, now accounting for nearly a quarter of ad spend.

How CTV advertising works

While linear TV ads were traditionally slotted days or weeks in advance, CTV advertising decisions are made in milliseconds across a programmatic supply chain:

1. Viewer opens a streaming app: A viewer launches a streaming application on their CTV device, whether that's a smart TV, streaming stick, or gaming console.
2. Ad request is triggered: When the viewer reaches an ad break, the streaming platform sends an ad request through its ad server, supply-side platform (SSP), or directly to demand-side platforms (DSPs).
3. Targeting parameters are matched: The system evaluates available audience data, advertiser targeting criteria (e.g., behaviors, interest, intent), frequency caps, and budget parameters to determine which ad to serve.
4. Ad is delivered to the viewer: The winning ad streams to the viewer's television screen, appearing seamlessly within their content experience.
5. Performance data is captured: Impression delivery, viewability, completion rates, and outcome data are logged for measurement and optimization.

As CTV evolves, media owners like Microsoft and major SSPs such as Magnite are using data collaboration to enhance addressability, activation, and measurement. 

Benefits of CTV advertising

CTV advertising offers distinct advantages over traditional marketing strategies:

• Precise audience targeting: Reach specific households or audience segments based on behaviors, interests, purchase intent, and first-party data – moving beyond broad demographic or geographic targeting.
• Measurable performance: Track reach, frequency, completion rates, and outcomes in ways that linear TV simply can't match. Understand incremental reach versus your linear buys and tie exposure to business results.
• Premium, brand-safe environments: CTV ads appear alongside professional streaming content, avoiding the risks of social and ensuring brands appear in high-quality contexts viewers have chosen to watch.
• Cross-device reach: Coordinate CTV campaigns with mobile, desktop, and other digital channels to create cohesive customer experiences across screens.
• Flexible buying options: Access inventory through programmatic buying, private marketplace deals, or direct relationships with publishers – choosing the approach that best fits your goals and budget.
• Expanded audience access: Reach cord-cutters, cord-nevers, and younger audiences who have moved away from traditional TV but remain highly engaged with streaming video content.

CTV vs. Linear TV vs. OTT: Key differences

With acronyms flying across digital media, understanding the distinctions between CTV, linear TV, and OTT helps clarify where each fits within a comprehensive video strategy.

Linear TV follows the traditional broadcast model. Ads are shown to all viewers watching a program at its scheduled time, offering broad reach but limited targeting. Measurement relies primarily on panel-based estimates vs. impression-level data.

OTT (over-the-top) is video content delivered over the internet, bypassing traditional cable or satellite providers. OTT content can be accessed on any internet-connected device, including smartphones, tablets, and computers, as well as TV sets.

CTV is a subset of OTT that specifically refers to streaming content viewed on television screens. If your family watches a live sports broadcast on ESPN+ through a Roku? That's CTV. Catching the highlights on your phone during your commute? That's OTT, but not CTV – the content never hit a TV screen.

Even as streaming has eclipsed linear TV in viewing time, advertisers are still over-indexed to the past, with 58% of TV ad budgets going to linear. This presents opportunities for marketers willing to follow audiences to where they're watching.

Comparison at a Glance

CTV vs. OTT advertising

While often used interchangeably, CTV specifically refers to the device that connects to the internet and displays content on a TV screen, while OTT, or over-the-top, is the video content streamed over the internet, bypassing traditional cable or satellite providers. While CTV advertising appears only on television screens, OTT advertising can appear on any device streaming video content, including smartphones, tablets, and computers.

Source: IAB Tech Lab

CTV targeting and identity

Precision in CTV advertising depends on the ability to identify and reach specific audiences. This is where first-party data and identity solutions become essential.

Unlike web-based advertising, CTV environments have always been free of third-party cookies. Instead, audience targeting relies on deterministic data connections, often powered by authenticated user information and privacy-enhancing technologies like data clean rooms.

Some marketers rely on hashed emails for CTV identity, but match rates tend to be low and reconciliation can take weeks – often longer than the campaign itself. A purpose-built identity engine can unify first-party data in hours, giving teams confidence they're reaching the right audiences while the campaign is still running.

Marketers can activate several types of audiences for CTV campaigns:

• CRM-based targeting allows brands to reach their existing customers on streaming platforms by matching customer records to CTV inventory. 
• Retail and purchase-based audiences enable targeting based on actual buying behavior, connecting what people purchase to what they watch. ‍
• Lookalike and modeled audiences extend reach by finding new viewers who share characteristics with a brand's best customers.

How does CTV advertising work?

CTV advertising combines the impact of traditional TV commercials with the precision of digital marketing. The process works through several key components:

1. Data integration

CTV platforms collect and analyze viewer data, including watching habits, content preferences, and engagement patterns. This data can be enriched with first-party customer data from advertisers and third-party audience insights made available through a trusted data marketplace.

2. Audience targeting

Unlike traditional TV's broad demographic targeting, CTV enables advertisers to reach specific audience segments based on behaviors, interests, and purchase intent.

3. Ad delivery

When a viewer streams content, the CTV platform delivers personalized ads in real time based on the viewer's profile and the advertiser's targeting criteria.

4. Cross-screen coordination

Modern CTV advertising is moving toward unified campaigns across devices, so viewers can see a related offer on their mobile device after watching a CTV ad. This interoperability of data and insights is facilitated by privacy-focused technologies like data clean rooms and durable identifiers.“Roughly 90% of our digital impressions now come from CTV devices,” says David Krenn, VP of Data Advancement and Vendor Enablement at Paramount. “By developing a private identity graph with LiveRamp, we’re able to unlock one of the largest connected TV addressable inventory sets on the market and send that data to third-party measurement partners.”

Approaches to buying CTV advertising space

There are two primary methods for purchasing CTV advertising space, each with advantages and constraints:

Direct buying

In a direct buy, advertisers purchase directly from CTV publishers or streaming platforms. This approach offers greater control over ad placement and context, including custom integrations. Many types of premium CTV inventory might be available exclusively through direct buys, but these deals can also come with a higher minimum spend, less refined targeting, and limited scale.

Programmatic buying

Programmatic buys use automated systems to purchase CTV ad inventory across multiple platforms and publishers, often using real-time bidding and optimization. This advanced approach offers broader reach and finer targeting, though it also requires sifting through potential concerns around inventory quality and higher costs per impression.As streaming continues to grow in popularity, programmatic is likely the future of TV advertising. The 2024 Olympics, for example, included programmatic CTV inventory for the first time.

Benefits of CTV advertising

Expanded audience reach

As more audiences move away from traditional television, CTV is the only way to reach many valuable cord-cutters and younger, tech-savvy consumers. The platform enables coverage across multiple streaming services and devices, reaching viewers however they consume content on the home’s biggest screen.

Deeply personalized targeting

With advanced data and targeting capabilities, CTV enables highly relevant ad delivery to specific households or viewers. Advertisers can tailor messages based on viewing patterns, preferences, and behavioral data, creating more resonant advertising experiences.For example, streaming platform Roku and grocery retailer Kroger have teamed up to combine store purchase data with OTT viewing data, unlocking hyper-precise, in-market audience targeting and closing the loop on measuring ad effectiveness.

Higher engagement rates

CTV ads see higher completion rates – the percentage of viewers who watch a video ad in its entirety – than other digital video formats, often exceeding 95%. They also drive engagement rates 4.6 times higher than mobile video and 10.3 times higher than desktop video. This superior performance stems from the non-skippable nature of many CTV ads and the engaged viewing environment of television screens.CTV further enables interactive ad formats and immediate response options, allowing viewers to engage directly with advertisements through their remote controls or connected devices.

Premium ad inventory

CTV platforms maintain higher standards for ad quality, ensuring your brand appears alongside premium content in a brand-safe environment. The large-screen format showcases high-definition creative content effectively, elevating the overall advertising experience.

Real-time metrics

Unlike traditional TV, CTV provides detailed, real-time performance metrics, including viewer engagement, ad completion rates, audience reach, frequency of exposure, and attribution data. This immediate feedback enables rapid optimization and improved campaign performance.

Cost-effectiveness

The ability to target specific audiences and measure results helps optimize ad spend and improve return on investment. Advertisers can adjust campaigns in real time based on performance data, ensuring maximum efficiency and impact for their advertising budgets.

Sticky brand awareness

Combining the emotional impact of television with digital precision, CTV ads help brands build awareness among highly relevant audiences. The premium, full-screen viewing experience ensures high visibility and impact, allowing advertisers to make lasting impressions.

Privacy-conscious innovation

Unlike digital advertising across the web, CTV environments have always been free of third-party cookies or trackers. While fragmentation is still a challenge for measurement, new methods like data clean rooms enable the pseudonymized sharing of data and insights, allowing advertisers to deliver on personalization without compromising viewer privacy. For example, NBCUniversal was one of the first major CTV providers to use Google’s Display & Video 360 Publisher Advertiser Identity Reconciliation (PAIR), which enables the secure matching of the network’s first-party data with marketers’ data. As a result, advertisers can drive personalized CTV campaigns, resulting in up to 67% higher return on ad spend (ROAS) than competitor campaigns.

CTV advertising metrics and measurement

Understanding CTV performance requires familiarity with key metrics that help advertisers measure and optimize their campaigns:

Reach

Reach measures the total number of unique viewers who see your ad. CTV platforms can track reach across different devices and platforms, helping advertisers understand their true audience size and avoid oversaturating specific viewers.

Frequency

Frequency measures how often the same viewer sees your ad. CTV's digital capabilities allow for cross-platform frequency capping to prevent ad fatigue, optimal exposure level testing, and household-level frequency control.

Impressions

Impressions count how many times your ad is displayed on CTV devices. Unlike traditional TV gross ratings points, CTV impressions provide more precise viewer counts and can distinguish between household and individual viewing.

Conversions

Conversions track specific actions taken by viewers after seeing your ad. CTV enables sophisticated conversion tracking through cross-device attribution, QR code responses, direct website visits, and in-store purchase tracking.

Cost per acquisition (CPA)

CPA measures the total advertising cost divided by the number of conversions. In CTV advertising, this might include website visits, online purchases after viewing an ad, app downloads, and sign-ups or registrations.

Return on ad spend (ROAS)

ROAS calculates the revenue generated for every dollar spent on advertising. CTV's advanced tracking capabilities allow advertisers to attribute sales and conversions back to specific campaigns, providing more accurate ROAS measurements than traditional TV.

Cross-screen measurement

Cross-screen measurement tracks viewer engagement across devices and platforms. This holistic view helps advertisers understand the complete customer journey, optimize ad placement across channels, measure incremental reach, and coordinate messaging.

Outcome measurement connects ad exposure to business results: website visits, app installs, online purchases, and even offline sales and store visits through deterministic matching.

Marketers typically use multiple measurement approaches. Attribution models connect individual exposures to conversions, while incrementality testing isolates the true lift driven by CTV ads. Marketing mix modeling (MMM) evaluates CTV's contribution alongside other channels (e.g. search, social, email) within the broader media plan.

CTV advertising use cases and examples

Connecting streaming ads to store sales

Roku and Kroger teamed up to connect CTV ad impressions directly to retail outcomes. By combining viewership data with retail loyalty card information in a data clean room, brands advertising on Roku can target in-market grocery shoppers and measure whether ad exposure actually drives in-store purchases. The result: enhanced return on ad spend (ROAS) visibility and the ability to optimize campaigns based on real sales data, not just media metrics.

Streaming campaign for new product launch

A CPG brand introduces a new product with a streaming-first campaign. The brand builds custom audience segments based on purchase intent signals and competitive ownership data, then uses sequential messaging to move viewers from awareness through consideration. Mondelēz took a similar approach for its Triscuit brand, partnering with Pinterest and Albertsons Media Collective to target consumers actively searching for charcuterie inspiration – resulting in a 16% lift in sales and a 19% lift in buyers.

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How to get started with CTV advertising

Ready to add CTV to your media mix? Here's a straightforward path to getting started:

1. Define your objectives. Are you focused on building awareness, driving response, or measuring sales impact? Your goals will shape targeting, creative, and measurement approaches.
   
   
2. Identify your target audiences. Determine which audience segments you want to reach and what data assets you can activate – whether that's first-party CRM data, purchase-based segments, or modeled audiences.
   
   
3. Select supply sources and partners. Choose how you'll access CTV inventory: direct deals with premium publishers, private marketplaces, or programmatic buying. Consider partners who can help with identity, measurement, and cross-platform coordination.
   
   
4. Plan your measurement framework. Establish how you'll evaluate success before campaigns launch. Define KPIs, set up attribution or incrementality tests, and ensure you have the identity infrastructure to connect exposure to outcomes.
   
   
5. Launch, learn, and optimize. Start with focused tests, gather performance data, and iterate using CTV's real-time measurement and optimization. 

Turn up the signal on your CTV investment

CTV has become an essential piece of the media mix, yet realizing its full potential requires connecting data across fragmented platforms and partners.

Data collaboration helps companies like yours combine data sources in privacy-conscious ways, unlocking the insights needed to maximize CTV investments. Brands can activate their first-party data across streaming platforms to expand audience reach, deliver personalized experiences, and measure true business outcomes – all while respecting consumer privacy.

The possibilities continue to expand as clean room technology enables new forms of collaboration between brands, publishers, and platforms. With the right foundation of identity, connectivity, and measurement, CTV starts delivering the clarity your media investment deserves.

Ready to get more bang for your TV advertising dollars? Our CTV Activation Guide for Brands offers a step-by-step plan to activate your first-party data, from leading experts at companies like NBCU, Roku, Kroger, and Nielsen, and maximize your CTV spend.