Due to the rise of CTV’s popularity and audiences shifting away from linear TV, advertising strategies had to adapt and evolve in the new technological landscape.
This article examines the essential differences between CTV and linear TV and how they changed TV advertising. In particular, we focus on CTV advertising and how it leverages contextual data allowing marketers to improve their advertising campaigns.
Connected TV (CTV) is a term used to describe any type of TV capable of streaming digital video content. This includes smart TVs and other TVs connected to a device that can facilitate streaming digital TV content. For example, Roku and Amazon Fire Stick, or consoles like Xbox and Playstation - hooked up to a television - are all called connected TV as they facilitate digital video streaming.
Most over-the-top (OTT) content is delivered by CTV, dramatically changing how people watch TV. This means that the content is provided by digital means over the internet instead of the traditional cable or satellite routes, needing a digital TV platform, CTV - either a smart TV or any connected device that can stream the content. With this structural change come new ways of engaging with content, such as “binge-watching,” viewing advertising content on a large screen, accessing on-demand content when and where we like, and much more.
Before we discuss CTV advertising, it is essential to look at how CTV is different from linear TV, as this relationship marks the direction of the changes in television advertising.
Linear TV is the traditional broadcasting method used in the past decades since the beginning of television programming. Viewers subscribe to a cable or satellite service or use over-the-air broadcasting to watch the scheduled TV program available at the time.
The term “linear” refers to how the viewers consume content; they can only watch a program on a specific channel when it is scheduled. Those who prefer watching the programs later can record them through a DVR.
Although CTV and TV seem very similar at first glance, it is essential to note that linear TV refers to how content is delivered, while CTV relates to the platforms/device that provides the content via OTT. It helps us understand this concept if we appreciate the fact that CTV can be used to stream linear content.
If we talk about linear TV in its narrower definition - cable and satellite broadcasting - it is easy to see that it is taking a deep dive. In the US alone, the number of households subscribed to cable TV has declined by 5% between 2019 and 2022, and it is predicted to follow this trend in the future. If we look at the younger demographic (18-24), the statistics show that 50% are expected to cancel their subscriptions by 2025.
In this context, the term “cord-cutting” describes the phenomenon of viewers canceling their cable and satellite subscriptions in favor of TV content delivered by CTV. Although the statistics and predictions suggest that cable and satellite TV are doomed, the linear method of broadcasting will stay. However, it will have to adapt to new distribution trends. For example, Free Ad-Supported Streaming (FAST) is a content delivery service that streams linear content via the internet.
CTV advertising is video advertising for TVs that are connected to the internet. It differs from OTT advertising in that it does not include all smart devices such as phones, tablets, and laptops but only connected TV devices. CTV advertising also differs from linear TV advertising, where ads are only scheduled during commercial breaks. CTV ads also include those that appear before and after streaming content. Additionally, linear TV advertisement slots are very competitive due to limited airtime, while CTV ads allow advertisers to reach niche audiences in several ways.
CTV advertising offers various benefits to brands and businesses, such as reaching younger audiences, tracking advertisement success, and creating targeted content for specific users at specific times. CTV ad campaigns use audience targeting features such as video and display ads on popular streaming platforms such as Hulu and Netflix, capitalizing on their access to specific audience segments.
In the next section, we take a closer look at contextual - or data-driven - targeting and how it enables CTV marketers to communicate with their target audience. Most importantly, we will discuss why CTV is the most trusted and leading source of advertising while it is also accessible with smaller budgets.
Contextual targeting is a strategy used in contextual advertising, allowing marketers to target users with ads based on the content they consume on CTV.
In contextual advertising, marketers can use data related to what is happening on the screen to target them with the most relevant advertising depending on what they are watching and what's being said at that moment - instead of targeting them based on generic data, such as genre or title. This way, viewers are more likely to find advertising content more relevant due to exposure to it at the right time.
By measuring specific metrics on CTV and thus gaining a contextual understanding of what's happening throughout a programme, CTV ads can be more precisely optimized and targeted at audiences we understand more deeply.
Targeted advertising highly depends on the quality and type of data sourced from viewers, as ad creative must be aligned with the content the user is already consuming. This way, advertisers can create a genuine and personalized connection with their target audience and ensure the success of marketing campaigns. The following metrics are measured to achieve success:
To be able to target viewers more effectively, the following parameters are measured: platform, program, time of viewing, topics, keywords, negative keywords, location, and language. Using this information, marketers can target viewers in a personalized way.
Reporting metrics refer to the information gained to understand targeting success. These parameters are unique and total reach, frequency, CPM, impressions, and video completion.
Understanding your content with contextual TV segments by building a profile of the language, topics, and sentiment within your programs will enable you to find better targeting options for your marketing campaigns. With CTV advertising that uses contextual targeting, you will benefit in the following ways.
CTV leverages a targeting strategy similar to other programmatic media - display, native, and audio - allowing you to track and assess your targeting campaign’s progress while it is live - and adjust when necessary. By employing CTV targeting metrics, you can focus on your target segment better and gain other business leads. For example, you can target lookalike audiences such as households that look most like your 1st-party audience. Moreover, you can also track users across streaming devices which has an incredible potential to boost your conversions.
With CTV advertising and its power to unlock contextual data, you can benefit from advertising way more than from linear TV advertising. You can proactively learn about your audience while your content is streaming, allowing you to adjust your ads for increased relevance and engagement.
Once you have optimized your ad content, you can retarget your audience with more relevant and engaging advertising ensuring that you are making the most of your budget. Another benefit is that you can track campaign success online and offline as sales metrics are measured online and in-store.
CTV advertising is within reach for anyone with a lower budget. Typical marketing channels are very competitive due to limited airtime and are often unattainable for smaller businesses. CTV ads, however, offer incredible value. Not only are CTV ads are less expensive, but more cost-effective as you get to target your audience directly based on the available contextual data.
Based on 2022 data, we can see that CTV advertising is rising while spending on linear TV advertising is declining. Even though there has been an economic downturn, CTV ad spending maintained growth even in Q3 of 2022, while traditional TV ad spending went in the opposite direction.
In fact, according to IAB research, 2023 will see a further increase in CTV ad spending by 14.4% on all platforms, while linear is expected to decrease further by 6.3% YoY.
As the data and current trends show, the future of CTV advertising is bright and full of new opportunities. If you want to make the most of your advertising budget and are interested in leveraging your data to boost your sales, read on to find out how 7th Minute can assist you.
7th Minute can help you improve your advertising success by leveraging contextual targeting on TV. Our 7M Discovery tool can help you identify the types of programs you should be advertising on by searching for a brand, competitor, or product terms and thus learning when and where a program would a mention be successful. You can also search for the sentiment of your brand/product to ensure that you are advertising in a positive context.
You can also use the insights gained with the help of our 7M Discovery tool to inform your marketing strategy, find new audiences and make the most of your advertising budget thanks to the broader range of relevant programs you can discover.
If you’d like to learn more about how 7M Discovery can help you identify premium ad opportunities and understand when and where you should advertise, follow this link and try our tool for free.
Access video-level contextual data for programming across the top UK channels and find when relevant mentions are happening on TV.