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By David A. Kelly
Sometimes big changes can be hard to spot.
Take TV. While your television set itself might not look any different than it did a little while ago there’s a good chance your TV services do.
Perhaps you’ve cut the cable cord to save money. Or added a streaming stick like a Roku or Amazon Fire for flexibility and choice. Or maybe you are casting video channels from your smartphone for fun.
Those small changes to how consumers are accessing streaming TV channels and online video content are known as “connected TV” or CTV, and are leading to big trends—especially for advertisers.
“CTV isn’t a different type of TV. It’s a different way of watching TV,” says Doug Gould, professor of the practice, advertising at Boston University’s College of Communication. “The way we all grew up watching television is now referred to as linear TV, or LTV.”
That switchover, from traditional (or linear) TV to streaming TV and today’s world of on-demand video and online channels or apps like Pluto TV and Tubi has happened quickly. The percentage of households with CTV expanded rapidly over the past few years while the number of households with conventional cable or pay-TV shrunk.
“CTV device penetration is 80 percent, while only 66 percent of households have paid TV,” says Terence Scroope, vice president, Insights & Solutions at Tremor Video, a video advertising company with expertise in CTV, instream, and in-app advertising opportunities. “CTV is really usurping traditional broadcast markets and will continue to steal more and more attention and consumer focus in the future. All the numbers really point to a great future for CTV.”
The COVID pandemic only accelerated that trend over 2020, as more and more people stayed home and accessed more content from connected TV devices.
“After years of steady growth, the pandemic accelerated trial and adoption of CTV as two out of three consumers were open to trying new platforms,” says Danielle DeLauro, executive vice president of VAB, a video advertising insights-driven organization based in New York City.
While CTV might feel similar to traditional TV to consumers, with more flexibility, different onscreen menus, and perhaps more subscriptions, the CTV growth trend has huge implications for advertisers.
“When it comes to traditional linear TV, the target audience isn’t necessarily there anymore,” Scroope says. “The consumers move to CTV needs to be factored into advertising budgets if brands don’t want to miss out on segments of their potential audience.”
Traditionally, advertising buyers have focused on either digital opportunities or TV placements, but CTV is changing that practice.
“CTV is a bridge between digital buyers and TV buyers,” says Les Seifer, vice president and head of creative at Tremor Video. “Over time the distinction between linear TV and mobile or desktop screens will erode and merge. That’s why CTV advertising opportunities will continue to grow.”
And it’s definitely growing. According to eMarketer, a digital marketing research company, U.S. advertising spend on CTV ads will increase from $11 billion in 2021 to $18 billion in 2024.
The explosive growth is propelled by value. “CTV provides a blend of data-driven targeting and lighter commercial loads in a premium video environment that delivers advertisers a relevant, highly engaged viewer,” DeLauro says. “Due to its digital nature, CTV advertisers can move beyond the thirty-second commercial and test non-traditional creative such as interactive or shoppable ads in a TV environment.”
Since CTV ads can be dynamic and changeable, they allow brands much more control over the messages that segments of the audience see. For example, a car company might take a basic video ad for a certain car and use digital overlays or branded frames around the video in a CTV environment to make the ad more relevant to different audiences, such as people who already own the car, or ones that are looking for a new car.
“With CTV one ad can be turned into ten, one hundred, or one thousand ads for different audiences,” Seifer says. “New elements can be worked into existing video and with the more advanced dynamic CTV ads any element can change in real time, based on who’s watching, what the time of day is, the weather, or any other data trigger that can inform the ad and change the content.”
Another reason that the action is tilting in favor of CTV advertising and its effectiveness is simply the audience.
“Cord-cutters tend to skew younger, so it’s easier to reach a younger audience through CTV,” Boston University’s Gould says. “Traditional TV viewers are skewing older. Brand loyalty begins when we are young, so brands who want to remain top-of-mind and relevant to younger audiences need to be using CTV.”
When it comes to changes that are revolutionizing the TV landscape, consumers might be paying more attention to which streaming service has the best content or which TVs have the best display technology. But brand and advertising executives need to pay attention to something very different—the impact that CTV will have future advertising spend and CTV’s opportunities for more effective ways to reach customers. With their 2021 CTV guide, Tremor outlines the opportunities for advertisers in this landscape.
“CTV should be a consideration for any premium video advertiser as it extends the reach of a traditional campaign or can act as a low-barrier, test-and-learn environment for new TV advertisers,” DeLauro says. “With one out of three people adding a streaming service since the pandemic, viewers now actively toggle between traditional and streaming environments, making CTV a must-consider for any advertisers looking to maximize their revenue and potential.”