CTV advertising is growing in confidence — and so should marketers
Opinion
In response to research that found marketers are still hesitant about CTV, Next Episode argues that there is a myriad of opportunities as the medium is poised for further growth.
Contrary to the hesitancy highlighted by some, the connected TV (CTV) advertising market is seeing significant growth and presenting compelling opportunities for brands and their agencies.
In fact, by the end of 2024, it is estimated that adspend on CTV will reach over $30bn.
CTV services are rapidly gaining users, including standalone advertising-based VOD apps and the growing number of proprietary free advertising-supported TV (FAST) channels now being promoted by TV original equipment manufacturers (OEMs). This influx of high-quality, and often free, streaming content has encouraged TV audiences to spend more time streaming their TV rather than tuning into traditional linear television.
This shift opens new avenues for targeted, interactive and shoppable advertising as TV content is increasingly delivered to households via internet protocol (IP), not the TV aerials attached to their roofs.
Unlike traditional TV, CTV offers advanced data-driven targeting and precise measurement, allowing advertisers to tailor their messages to specific audiences and measure the effectiveness of their campaigns more accurately.
CTV can also offer advertisers a feedback loop of data, so they can optimise their TV ads like never before mid-flight and in real time to capitalise on the creative nuances that are resonating with their target audiences.
What’s holding advertisers back?
While initial CPM costs might seem high in comparison to other media channels, the ability to target specific demographics effectively reduces wastage and increases return on advertising investment (ROAS).
This means the precision and measurability of CTV can often lead to more cost-effective campaigns in the long run.
CTV advertising complements existing linear and digital strategies, providing a seamless way to extend reach and frequency across multiple channels. This integrated approach ensures a cohesive brand message and maximises campaign impact.
At Next Episode, we often see our clients harnessing the data output from CTV to help inform wider parts of their marketing and communications strategies, thus creating a flywheel of signals that enable them to test, learn and optimise the ad creatives they are delivering across all screens, including CTV.
Not ‘second rate’
CTV allows for innovative ad formats, including interactive and shoppable ads, enhancing viewer engagement and providing unique brand experiences that traditional TV has thus far struggled to offer.
Leading brands are increasingly investing in CTV, recognising its potential to reach highly engaged audiences that are proving harder to reach via traditional linear or broadcaster VOD (BVOD) offerings.
This trend indicates growing confidence in the medium’s effectiveness. Advances in CTV support programmatic buying and AI, streamline the TV creative and ad buying processes while optimising campaign performance, making it easier for marketers to leverage CTV.
As more consumers cut the cord and switch to streaming services, CTV becomes a crucial touchpoint for reaching diverse audiences, particularly younger demographics, who are less accessible through traditional TV or the growing number of BVOD services.
No longer should CTV content be perceived as second rate. In fact, many TV OEM FAST services are now streaming free Hollywood movies and popular shows that have been licensed from networks and broadcasters.
Recent examples of premium single IP channels available via Samsung TV Plus in the UK include The Graham Norton Show, The Diary of a CEO and a channel dedicated to Jamie Oliver that CTV audiences are increasingly leaning in to and which supplement their BVOD and subscription VOD viewing.
Numerous case studies demonstrate successful CTV campaigns with impressive results in brand awareness, engagement and sales uplift, encouraging more marketers to explore this channel.
According to IAB Compass, ad investment in CTV could reach £2.81bn by 2026 as viewing continues to shift to on-demand services.
Meanwhile, MiQ’s Behind the Screens report found that, in the UK, 74% of adults are CTV users and CTV ad expenditure is set to reach an eye-watering £2bn by 2025.
The same study found more than half (51%) of people in the UK interact and engage with an ad in some way during programming.
Additional MiQ data revealed UK households with TVs serving both linear and CTV spend around 72% more time watching TV than linear-only households. This makes streaming the most popular way for UK viewers to consume content.
Growth brings more benefits
The CTV market is poised for continued growth, with increasing investments in infrastructure and content.
As the ecosystem matures, the benefits of CTV advertising will become even more apparent, driving wider adoption from television audiences.
At Next Episode, we have built a platform that empowers those on both the buy and sell sides of CTV advertising to truly understand the value of environment and context.
These unique signals can be used to help inform both real-time creative and publishers’ yield optimisation to deliver better ROAS to ad buyers, better overall advertising revenues to publishers and a seamless viewing experience to CTV audiences.
While there may be initial challenges, the potential of CTV advertising to deliver targeted, measurable and engaging campaigns makes it a vital component of modern marketing strategies. Marketers should embrace this evolving medium to stay ahead in the competitive advertising landscape.
Jason Trout is founding partner at Next Episode