In recent years, Connected TV (CTV) and Over-The-Top services (OTT) have been quickly growing in popularity as a scalable advertising channel for advertisers. Both CTV and OTT promise to bring the targeting and measurement capabilities of programmatic digital advertising channels to the legacy medium of television.
In today’s fast-changing video ad production and advertising landscape, we believe it’s critical for marketers to stay on top of emerging technologies and platforms. Many businesses owe their success largely to taking advantage of new advertising trends and platforms before their competitors. Should your brand dive into CTV and OTT?
This blog is your quick-start guide to understand the difference between OTT vs CTV, the best way to use them, and find out if your brand should advertise on them.
Before you dive into the world of CTV, you must answer the question, “Does CTV make sense for our business or our marketing goals versus another platform like social media or regular TV?”
As always, the answer is “Possibly, it depends!” There are so many factors that come into play from your product market fit to the KPIs you need to hit for business profitability. In this guide, we’ll be touching on the biggest questions from our practical experience of scaling businesses online to help you develop your own idea about whether or not exploring CTV makes sense for your business.
We've also tapped into the experience of Anthony Saladino, Director of Business Development at Socium Media, an omni-channel marketing agency, to give us his insights for running campaigns on CTV. According to Anthony, "CTV is great for advertisers looking to get their brand in front of new customers, re-engaging with users who visited their site, staying top of mind of lapsed customers, and building brand authority."
Some of the questions we’ll answer in this guide:
Ever asked yourself the question, "How does CTV advertising work?" Check out our blog for more information.
We know these terms can be confusing! And you might get different definitions depending on which marketer, agency, or ad platform you talk to. We’ll define things in a way that makes practical sense for you as an advertiser or marketer.
CTV or Connected TV refers to the physical device — any television that can be connected to the internet and used to access online content. This includes Smart TVs or physical devices that turn a regular TV into a smart TV, like Amazon Fire Stick, Roku, or Google Chromecast.
OTT or Over-The-Top refers to the streaming services themselves like Netflix, Max, Amazon Prime Video, and Disney+, Hulu, Tubi, and Peacock. OTT streaming services are subscription based (Disney+) or ad supported (Hulu free).
In a nutshell, CTV devices (Smart TVs) allow viewers to consume content through the internet using the OTT services that we all know and love. But you can also watch OTT streaming services on non-CTV devices like your smartphone.**
**In our blog, when we talk about CTV, we mean the general ability to target viewers through their living room TVs that are connected to the internet and serve OTT programming. CTV means Netflix on your living room TV, NOT Netflix on your tablet or smartphone.
Many agencies or marketers will use these terms interchangeably. So when in doubt, always ask for clarification to make sure you’re on the same page. Are you talking about the TV in the living room? Or a streaming service on a smartphone? It’s an important distinction because you will get vastly different results on a phone vs. TV. We’ll dive more into measuring results later.
The key development is that CTV marries the experience of targeted and attributable digital advertising with the incredible advertising potential of TV.
For half a century, TV has been the most powerful advertising channel because it reaches tens of millions of viewers immersed in their favorite shows and programming. Meanwhile, in the last decade, platforms like Facebook revolutionized advertising in three ways:
Now CTV promises to do all of the above!
Your business can target specific viewers based on demographics and behaviors and reach them through their living room TV when they are most engaged. Then you can analyze the data and optimize your media buying strategy and creative for A/B testing.
This is where your tech stack comes into play. There are various methods from third party web pixels to app integrations with mobile measurement partners. With these integrations, you can track who is watching based on personal device identification, IP address matching, and subscription information. you can generate large amounts of data for performance analysis and optimization.
If you don’t know how you will be targeting and tracking users, then this is a very important topic to discuss with your agency and marketing team. CTV gains a lot of its superior value from targeting and tracking capabilities.
CTV has exploded as more households buy new SmartTVs and use streaming platforms to get the majority of their entertainment.
According to eMarketer, the number of US households that use CTV devices will reach 84.5 million in 2023, up from 71.6 million in 2021. That number will only multiply further in the coming years, making CTV an indispensable part of any advertising strategy.
Given the significant shift in viewership from traditional TV to CTV platforms, it’s no secret that many established brands are growing their media buys on CTV and understand its importance.
According to Anthony Saladino from Socium Media, "CTV is a great tactic for branding, acquiring new customers, or generating web traffic. It is an excellent way to compliment other marketing efforts and is a great addition to the mid and upper funnel parts of the marketing mix. Creative strategy is also critical for success on CTV and the messaging should provide a story that compels a user to take action."
However, if you’re a brand or marketer who hasn’t advertised on TV in the past, you might still be weighing the advantages of advertising on CTV. That’s why we’ve made a list of the 9 most compelling reasons why CTV should be a part of your advertising mix.
Here are the top 10 reasons toadvertise on CTV:
As the popularity of CTV platforms such as Netflix, Hulu, Amazon Prime Video, and Disney+ continues to rise, more households are making the switch from traditional TV to CTV devices and OTT services.
The result? CTV is gaining TV’s biggest superpower: the ability to reach every household with the best content.
CTV provides a rich variety of content (OTT streaming services, remember), from blockbuster movies and hit series to niche genres and documentaries. From this wide range of viewers with diverse tastes and preferences, CTV allows you to pinpoint and target specific segments and individuals based on their viewing habits.
CTV advertising also breaks the geographical constraints of traditional TV. Because you are advertising through streaming content, you can target a specific region without needing to develop complex media buying relationships with multiple agencies.
TV can be a powerful channel, but many smaller businesses never test the medium because it seems cost prohibitive. With lower upfront costs, CTV makes it much easier to discover whether or not the channel is viable for your business. Instead of paying thousands for one spot on one program, you can pay on a per-user basis.
You might spend $50,000+ per week for a test on traditional linear TV to buy a lineup of advertisements on various programs, but CTV platforms make it possible to test for a much smaller budget. If you only have $5k to spend each week, you will still reach the same relative amount of viewers and be able to measure whether or not you reached your goals and should spend more.
CTV can be a more cost-effective strategy, especially when compared to traditional media buys on linear TV.
On traditional linear TV, you normally need to buy spots up front at pre-negotiated rates. These prices are based on an estimated CPM (cost-per-thousand impressions).
But there’s no guarantee that your ad will actually achieve that number of impressions, and you can easily overpay. It’s very much an estimated number based on historical models and forecasts.
This is one big reason TV is so intimidating for new brands. There’s no guarantee you’ll actually get what you pay for. And when you’re paying big dollars for each spot, that’s a scary proposition.
As a rule, CTV also uses a CPM pricing model, but the BIG difference is that you are buying guaranteed impressions, not an estimate. The difference is in the delivery.
CTV ads are delivered to one device at a time. This can be measured and tracked, so there’s no question that your ad was shown to someone actively watching a program on a specific device.
Compare that to traditional linear TV which shows your ad regardless if someone has their TV turned on or off, which means no guarantee that anyone was even home when your ad aired!
It’s true that CTV CPMs are often higher than linear CPMs, but in exchange you get a guarantee that someone is actively watching a program that features your ad.
Finally, advanced audience targeting makes sure those impressions are actually reaching the right kind of people who are more likely to engage with your advertisement and take the desired action. Would you rather pay $10 to reach 3 people who aren’t interested in your product or $20 to reach 1 person who will become a customer?
CTV payment models will continue to evolve beyond simple CPM pricing in order to suit advertisers’ specific goals. Digital marketers are already used to paying for deeper down the funnel actions like clicks, website visits, or purchases. And we are currently seeing platforms like MNTN begin to offer integrations that track conversions like app installs and web purchases.
For many direct response advertisers, it is much better to pay for a real conversion than for an impression. We believe these developments will open the door for growing brands who need to make sure that every dollar is spent effectively to meet their goals.
Blind CPM buying on TV will eventually be a thing of the past. We’ll keep updating this blog post with the latest developments!
With traditional TV advertising, you get more control over your time slot the more you pay. If you want to air at 8:30pm during a big game, then you need to pay top dollar. Remnant TV buys are another common way to pay bargain prices but those slots aren’t guaranteed to be filled, and you are often relegated to a time period like “prime time” rather than a specific time.
CTV has a totally different approach. You target the user, not the time. Your ideal viewer will see the ad whenever they watch their CTV, so you don’t need to guess the best time and cross your fingers.
Whereas you might have to buy traditional TV spots a couple weeks or months in advance, some CTV platforms such as MNTN support real time modifications to campaign delivery, giving advertisers the flexibility to adjust their ads based on performance data.
That means you can quickly transfer spend from a poorly performing ad to a better performing ad. This should sound familiar to anyone who has done A/B testing creative on digital.
CTV programming has less commercial interruptions than standard TV programming, so viewers are less likely to walk away during a commercial break. Viewers are more engaged when they watch their favorite streaming programming, so they won’t be quick to change the channel when an ad appears. Additionally, CTV ads are often unskippable, so your CTV ad will capture more viewer attention and leave a stronger impression.
Storytelling is a powerful way to stick out from the crowd, grow curiosity, and connect with the viewer. With CTV, you can create a series of ads that someone might see in sequence, with each ad delivering a different message. If you know someone has seen the first ad, then you can deliver the second ad.
This is another impossibility with traditional TV, where you really have no idea if someone has seen the ad. You will often see “story” ads during big events like the Super Bowl because companies are more certain that a large amount of people have seen the first ad, so they will create a second ad that builds upon the first.
A compelling narrative that emotionally resonates with the viewer is more memorable and boosts brand recognition and recall
Advertising on CTV complements and integrates with broader digital marketing strategies.
CTV ads offer new potential to retarget viewers who have seen your ad. Since CTV is a digital platform, you can track the visits to your website or mobile app through platforms like Google Analytics or Appsflyer. Then you can retarget those individuals with ads on Google, social media, or other networks, reaching users on their smartphones or laptops.
Anthony Saladino from Socium Media always recommends running other lower funnel channels along with CTV and taking a broad view in terms of performance measurement, "CTV ads aren't usually a last touch channel. Look at Google Analytics to determine if there was an overall lift in traffic, orders, and revenue since you started teh campaign. Look for a halo effect and the impact on the overall business, rather than just a number associated with campaign performance."
Frequency is also key for brand recall, and the more you can get your brand in front of the viewer, the more likely they are to remember your offer at the critical time of decision making. Adding digital retargeting ads as part of a CTV strategy is a huge advantage vs. traditional TV advertising.
Seamless integration across devices creates a consistent and coordinated brand experience for your target audience, increasing the overall effectiveness of your marketing efforts across all channels. CTV is a perfect addition to any digital campaign.
Personalization goes hand in hand with audience targeting.
Leveraging a wealth of viewer data, including viewing habits, interests, and demographics, CTV can deliver tailored ads that truly resonate with individual viewers.
Instead of a one-size-fits-all approach, CTV advertising lets you segment your audience and serve them content that matches their preferences and behaviors.
For example, a runner can be served ads for running shoes as they watch a cooking show. Meanwhile, someone in the market for a new sofa can be served an ad as they watch a basketball game. This kind of precision delivery targets the right person at the right time, regardless of the type of program. The result? An increase in ad relevance and effectiveness.
Finally, analytics can provide insights into which ads are performing well and which aren't, allowing for real-time adjustments to maximize campaign success. This data can also inform future campaigns, helping you to continuously refine and improve your advertising strategy.
Let’s be honest — CTV CPMs are almost always higher than TV or digital CPMs!
You might pay anywhere from 3-10x more than Linear TV CPMs to run on CTV. There’s two sides to this coin. Media companies and networks will tell you that you are paying a premium for the ability to target specific types of users who will automatically see your unskippable ads between their favorite programming. On the other hand, CTV CPMs are just higher because it’s still the shiny new toy, there’s less inventory available, and advertisers are just willing to pay more.
Big advertisers have big pocketbooks and they are already spending so much on TV and CTV gives them a way to spend more. These brands are less price sensitive than a D2C startup that needs immediate performance.
Although the cost is higher, there are reasons why a company may want to start with CTV. You can test with less budget and get a feeling for advertising on TV. Or you may have a very specific audience that you can address directly with CTV’s targeting capabilities.
It’s just important to acknowledge that CTV CPMs are normally higher, and media buying agencies should be upfront about those costs. High CPMs are a headwind to successful performance, but they can also be justified if the results are strong.
Paid social media marketing has become an invaluable channel for many businesses and brands. Now the evolution of Connected TV offers the same strategies and approach on TV but with added benefits:
While social media marketing remains a vital part of digital advertising, the unique benefits and growing viewership of CTV make it an appealing alternative or complement.
In this article, we’ve laid out all the reasons why you should seriously consider advertising on CTV. But there are several reasons why CTV might NOT be the best channel to spend your next advertising dollar aka your incremental ad spend.
CTV has higher CPMs than digital channels like Meta and Remnant Linear TV. Those channels are both highly scalable and can offer more cost effective solutions. You might want to consider exhausting those options before adding CTV.
Meta is easy to understand. You set up videos or static images as ads on Facebook or Instagram, and people click on the ads to visit your website. Linear TV is also simple in the traditional sense that your media buying agency will create a media plan with different channels and buy a specific number of ad spots. The spots will air, and you’ll see a spike in web traffic along with orders (hopefully!).
While CTV promises the integration of digital marketing with the power of TV, CTV streaming marketplaces are still young and there are system transparency issues. If you’ve ever watched a streaming service, you might have seen the same ad playing multiple times. If you pay for each time the ad airs, and the ad airs 3 times in a row to one person, is that the best use of your advertising dollar?
On traditional TV, imagine you have a spot airing on prime time on a big national program. When your ad airs, you should see a big spike in traffic to your website or social profiles. That’s the power of linear TV.
On CTV your ad is delivered to one person at a time depending on your targeting and their viewing habits. That means you’ll get a visitor here and a visitor there, but never all at once. This makes it hard to see an obvious spike or lift in traffic to your website.
Anthony Saladino from Socium Media emphasizes that, "If an advertiser doesn't have an advanced paid search and paid social strategy, they shouldn't consider running on CTV. CTV is not going to drive orders and revenues right away. Mid to lower funnel paid media efforts that drive revenue should be prioritized over a more branding focused like CV. You can also apply your creative learnings from paid social to CTV. Without paid social and paid search first, you are missing out on powerful insights that could help drive CTV performance and miss out on revenue."
You should consider these hurdles and decide if they obstruct your business or marketing goals. If you’re on the fence, then a small test might be the best option. If any of these issues are a deal breaker, then you should spend your ad dollars on the channels that offer the best return on investment.
As CTV develops, problems like these will surely be resolved as networks and agencies compete for advertisers who demand lower CPMs, more transparency, and better measurement.
The ever-evolving world of Connected TV advertising calls for a skilled partner.
At Filmkraft, we’re always working with businesses to produce ads that perform on CTV with a focus on high-quality production and tailored media-buying strategies with marketing and business goals in mind.
Contact us to discuss working with our team of experienced producers, creatives, and marketers to create a compelling CTV commercial that will capture the attention of your target viewer and deliver an effective message as they watch their favorite programs.
And our work doesn’t stop after the ad is delivered…
We also provide CTV media buying guidance for brands who want to launch on CTV. We can advise you on the strategies that our most successful clients have used to get results. Let us help you set the right goals and target the right viewer.
Contact us today to set up a free creative strategy call!
