With live sports on streaming platforms and ad-supported tiers on Netflix and Prime Video, it’s safe to say television advertising is undergoing a massive shift. 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.
What is CTV?
CTV refers to any television that can connect to the internet and stream online video content. 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
In the US, adults average 2 hours and 15 minutes every day watching CTV, far surpassing desktop and laptops, and steadily closing the gap with mobile.
Source: eMarketer
What is CTV advertising?
CTV advertising refers to video ads delivered through internet-connected TV devices. This $30-billion market is the fastest-growing major ad channel in the US and differs significantly from other forms of TV advertising.
CTV vs. Linear TV advertising
Linear TV advertising follows the traditional broadcast model, where ads are shown to all viewers watching a program at its scheduled time. CTV advertising, by contrast, enables personalized ad delivery based on viewer data, viewing habits, and other digital signals. This allows for more precise targeting, real-time optimization, and detailed performance.
Even as streaming has eclipsed linear TV in overall time spent, advertisers are still over-indexed to the past, with roughly 58% of TV advertising budgets going to linear. This presents an attention-cost arbitrage opportunity for marketers willing to lean into digital.
Source: eMarketer
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
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.
Maximize CTV advertising with data collaboration
CTV has become an indispensable channel for modern marketers. Yet with the challenge of fragmentation and cookie-free environments, success requires locking arms with key business partners. Data collaboration helps companies work together to combine data sources in privacy-conscious ways and get the insights you need to maximize your CTV investments.
Brands can activate their first-party data (such as CRM data, purchase history, and website behavior) across CTV platforms to expand their audience reach, deliver deeply personalized experiences, and innovate while being privacy conscious.
Derek Leonard, Head of Data Collaboration at Roku, noted at RampUp 2024 that he sees endless possibilities in these latest innovations: “With clean room technology, you can bring in data from multiple brands and show offline conversions, or bring in other CTV providers or retail partners. All of these things are part of a larger ecosystem that becomes more powerful.”
