As consumption habits have shifted rapidly in the last year, advertisers are left with the decision of where to allocate audio visual (AV) advertising budgets which would usually have been placed on cinema, linear TV and radio. Mediums such as cinema, where advertisers could once reach undisrupted ABC1 audiences, are currently out of bounds, and linear TV has fallen victim to measurable streaming platforms: on demand and over-the-top (OTT) services.
In December 2020 Forbes reported that Magna expected to see global ad spend rise by 7.6% in 2021 to $612bn, with digital media seeing growth of 10.4%. Linear media is also predicted to grow, but at a much more modest rate of 3.5%, with the total spend now at $42bn, less than in 2019.
With many of us at home more than ever, and with little to do for some of us but binge-watch TV, it is staggering to see linear media budgets so out of line with the exponential growth of other digital mediums. The Drum’s recent piece on 2021 predictions, forecast that 40% of households will be ‘cord cutters’ by 2023 (see CTV Audiences).
Given the stunt in growth for traditional forms of AV advertising, how will advertisers serve consumers through advanced AV mediums? Within this article I’ll be reviewing the OTT/CTV landscape and the challenges that this industry will have to overcome to stand out against the crowd.
CTV v linear
Unlike linear TV which can be found on Freeview and paid subscriptions such as Sky, CTV channels are accessed via an internet connected OTT device (smart TVs/ game consoles and plug-and-play devices). These subsets fall into the overarching category of advanced TV, which enables advertisers to serve personalized ads to one household, as opposed to broadcasting adverts to the masses.
Half of total TV viewing households are now using CTV devices to watch content on their big screen at home. These audiences continue to watch a huge amount of TV, with the average US adult supposedly watching three-and-a-half hours of linear TV per day, and an extra two hours of TV content via OTT devices. Reported by Nielsen, video streaming has leaped from 19% in Q3 last year, to 25% in Q4.
The three core consumer groups which advertisers should be aware of include:
Pay TV households – households that have paid subscriptions to linear TV but have adopted the use of some CTV channels.
Cord-cutters – households who have cut the cord on their previously paid for subscriptions (Sky/Virgin/BT), transferring over to CTV services.
Cord-nevers – households which have never paid for TV and have solely adopted CTV channels.
As consumer adoption of connected TV devices increase, marketers can use this data to identify audience segments to compliment, or even enhance, linear and programmatic strategies. The breadth of data that CTV mediums deliver allows advertisers/ media buyers to optimize their CTV media buys, this optimization goes as far as enabling buyers to expose their audiences to ads at times where viewers are most likely to absorb and engage with ads.
Opportunities for CTV and advertising
Advanced TV provides a full-funnel solution to marketers that will enable them to maximise reach and continue brand building. Magna found that ads served on CTV devices create more positive emotion across all age groups, with a higher retention rate. The benefits are also underpinned by marketers’ need for flexibility within media contracts, consumer insights, and more precise measurement.
Use of owned audience data and technology
The pandemic has only heightened the need to collect data on consumers’ changing behaviours and consumption habits. Channel 4’s head of digital and partnership innovation, Jonathan Lewis, has stated that there will soon be a greater mix of audiences available within their All 4’s data suites, for advertisers to buy against. The evolution of client owned first party data will start to become important as technology such as Channel 4’s BRANDM4TCH and Samsung’s ACR are adopted market-wide.
BRANDM4TCH enables advertisers to ‘Bring Your Own Data’ which can help identify and match individuals within All 4’s 24 million customer base. This ensures buyers are selecting the right channel and content mix for their consumers. Additionally, BRANDM4TCH unlocks further capabilities such specific messaging and A/B testing.
Samsung offers advertisers the possibility to target consumers based on their interests and consumption habits through leveraging their ACR technology (automatic content recognition). ACR provides data driven insights and targeting capabilities, which enable media buyers to deliver relevant ads, tailored to viewers interests at scale.
Technology, such as the above, will give marketers more transparency and understanding of the value of their buys: two critical elements which have impacted the CTV landscape. The return of data currently available from CTV platforms gives marketers the transparency needed to analyze and optimize campaigns in real time, without needing to lock into lengthy upfront commitments.
Barriers and challenges to overcome
There are several barriers that have slowed down advertisers play in CTV: a lack of understanding and the ongoing issue of fraud.
Lack of knowledge
According to research from Xandr, one of the biggest challenges is the lack of understanding about this emerging industry. Half of UK advertisers fear that they are not reaching their audiences effectively. Sales representatives need to do more to guide advertisers through sharing knowledge of the different platforms, which they can leverage as part of clients’ media strategies. Recent movements within the industry such as Magnite’s acquisition of SpotX will shape the way for CTV platforms and publishers, as the two companies now form the largest independent CTV platform in the programmatic marketplace. This step will accelerate growth in best practice across the market, leading to more investment in industry standard measurement frameworks and more use cases around programmatic advertising within CTV.
Combatting CTV fraud
CTV sellers must also address the elephant in the CTV room: Fraud. Last year saw a 225% year-on-year increase in fraudulent traffic within the CTV environment. This occurs when bots pretend to be OTT devices to generate video ad impressions, increasing their own ad revenue, driving up CPM prices. Verification technology which you’ll find on VoD platforms such as Channel 4 and ITV are protecting ad content and giving broadcasters the ability to monitor traffic effectively. Double Verify’s MD blames this on the inconsistency around technology across the industry, demonstrating the need for collaboration and greater transparency. Double Verify have solely developed reporting technology which has innovated this space, meaning that certain apps are safeguarded, providing security for trusted suppliers and advertisers.
The future of CTV and advertising strategies
It is inevitable that CTV will become part of marketing strategies, where not already. This will allow greater accessibility for advertisers to their consumers across a range of formats, and on their preferred channels. Pairing the mediums with first-party data will also allow marketers to create a defined omni-channel approach, strategically tuning into consumer insights and targeting more effectively.
My general feeling, however, is that until best practice and use cases around CTV success come to market, and barriers such as fraud becomes conquerable at scale, adoption will be slow. Advertisers should look to take a test and learn approach within the medium, so that they can strike the right balance between linear and CTV efforts, and subsequently increase their ROAS over time. This approach is one that many would agree on, rather than replacing linear television, which 60% of consumers will still consume in 2023, CTV should instead be a cog which advertisers embrace to help augment consumers experience across the overall AV landscape.
Are you looking to amplify your media strategy and tap into CTV, then feel free to get in touch to see how we can help.
Nathalie Bannon is a digital marketing and media consultant for Capgemini Invent.