What is it?

Connected TV, also known as CTV, is any TV that connects to the internet and provides access to content through the internet beyond what a basic cable subscription provides. “Connected TV” also includes any device that connects to a TV screen to stream digital video such as a Roku, Amazon Fire stick or video game console.

As many of us are familiar, these devices display content streamed from the internet with individual applications. The interface appears similar to that of a smartphone where a user opens a specific application to access content from different sources such as Netflix, Hulu, Pandora, etc.

Although an estimated 75% of US households are using connected TV today, advertisers have been slow to include these spots in their media plans. As of January 2017, connected TV accounts for roughly 1% of ad spending in the US.  Connected TV enables advertisers to reach viewers who don’t have a cable subscription and to build frequency with those who are watching both while also providing the ability to geo-target specific messages to different geographies, making a TV message more relevant to the receiving audience. As many benefits as there are to advertising with Connected TV, the details of how to buy and how to measure engagement and value of these ad spots remain uncertain. Before advertisers are comfortable making a larger investment, it needs to be clear what the investment is worth. Can these placements provide the same insight as digital media or is this purely an extension of a TV buy?

What are the hold ups?

First and foremost, there is not an established method for audience measurement with connected TV ads to validate audience size and demographics. Standardized measurements such as GRPs do not yet exist to measure connected TV viewership. As the value of CTV lies in its ability to reach viewers at a granular level with absolute accuracy, a measurement currency must follow suit. Today’s sample-based method of measurement is simply not precise enough for the capabilities of CTV. The challenge also remains of capturing accurate “co-viewing” numbers to account for when viewers are watching TV together.

Similar to digital media, CTV campaigns are currently purchased based on a CPM. Campaign performance metrics also follow that of digital ads, but vary depending on the source. Whether purchased through a programmatic vendor or directly from the content provider (Ex. Hulu, Roku), the metrics available are unable to capture behavior after a user is served a spot, such as clicks, actions taken on the advertiser’s website or any searches. Some vendors are able to retarget users who were served the spot through CTV on their desktop and mobile devices. Of the available metrics, completion rates overall for CTV spots are high as most inventory is non-skippable.

At this point, there is no guarantee that advertising messages are reaching their intended audience and that the execution was successful. Tracking technologies in place for digital advertising such as cookies and device IDs do not exist for connected TVs, making it challenging to track audiences and understand user behaviors. Along that same thread, the lack of tracking capabilities limits the ability to track key performance indicators (KPIs) and attribution that is readily available with digital advertising. Digital media provides the means to monitor campaign performance and optimize in real time towards an end goal. Currently there are no means of measuring CTV’s efficacy or its correlation to like browsing or purchasing that occur outside of the digital realm entirely. Ideally, CTV would function as another touch point within the purchase journey and would be monitored and reported on as such. In its current form, CTV exists more similarly to TV where reach in a specific geography is possible, while demographics and user behaviors remain unverified.

CTV is similar to traditional TV, yet unique in its own way. The geo-targeting component of CTV provides flexibility with messaging and the opportunity to target messaging to viewers in specific geographies. Known as Dynamic Ad Insertion in the world of On Demand, this feature is adapted to the Connected TV space and allows advertisers to provide more relevant messaging to viewers based on their location. Another benefit of Connected TV is the ability to control frequency so that users are not seeing the same ads more than once. The technology behind CTV can help digital platforms place a frequency cap on video ads, but ultimately marketer’s demand for CTV is the biggest factor to prevent oversaturation.

We know that there is an audience for Connected TV and that they can be reached, but how best to incorporate this into an overall marketing plan is still to be determined. As cable subscriptions are projected to decline, use of connected TVs will climb. Through 2020, cord-cutters and cord-nevers are expected to increase by 31%. This trend will likely give vendors an incentive to develop new technologies and the industry to determine a standard of measurement. As this occurs, advertising spend with CTV undoubtedly increase.

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