Understanding the Connected TV Opportunity

Alyssa Nejaime  | 

As we’ve noted in recent blogs and Video Benchmark reports, TV viewers are connecting big time with Connected TV. According to an eMarketer report, CTV users in the US stand at more than 180 million today and are projected to reach more than 200 million viewers—or approximately 60% percent of the population—by 2020. But advertising spend continues to lag consumer interest with investments still hovering in the single digits due to lingering concerns around insufficient scale, fragmentation among inventory sources and nascent measurement standards. Nevertheless, the skyrocketing popularity of the medium makes it an advertising necessity in the short term. Here are a few words of advice from eMarketer on how to view the CTV opportunity.

Fragmentation Is the New Reality—and It’s Not Really New
Long gone are the days in which making an ad buy was an exercise in choosing among a set of shows on a handful of broadcast networks. Connected TV ad buys can be made through those same networks, but also through device manufacturers, content aggregators and programmatic ad tech providers. The number of choices brings incredible complexity into decision making, but, according to eMarketer, it’s better to experiment than to sit out of CTV plays. “Fragmentation in connected TV can certainly be a challenge, but many TV buyers have faced this type of situation for years,” Chris LaHaise of dataxu told eMarketer. Programmatic buys may help address the issue in the future, LaHaise and others believe, but for now, CTV is not the most efficient way for advertisers to get reach.

Scale Is NOT Here for CTV
Related to the above, CTV scale pales in comparison to linear TV, regardless of recent (dramatic) growth in on-demand and live-TV digital streaming services. That may change over time, but for now, despite all the talk of the demise of linear TV, there is still no medium that offers the reach and broad-scale branding power of linear television. Still, what connected TV platforms lack in scale they make up for with the data they’re able to collect and deliver on the viewing audience. Looked at another way, the audiences might be smaller, but the targeting and measurement capabilities are more refined. In addition, CTV offers a way for advertisers to follow the cord-cutters and cord-shavers as they embrace new ways of watching the living room screen.

Ad Frequency Remains a Big Issue for CTV
In yet another example of the impact of the fragmentation of the CTV landscape, ad frequency continues to inhibit connected TV advertising investments. Advertisers who are accustomed to linear TV and gravitating toward CTV to follow their audiences are expecting reach guarantees in spite of the differences between the channels. The only way CTV can deliver on those expectations is to serve the same ad repeatedly, much to the annoyance of viewers. Until the inventory increases, frequency will remain an issue that advertisers will have to work around.

Given these significant issues, it’s understandable that advertisers are hesitant to throw precious ad dollars toward CTV. But with consumers gravitating toward streaming en masse, those who wait are missing a prime opportunity to stay connected with their audiences. For now, the best strategy forward may be to view CTV not as an either or investment but as a complement to linear TV. There’s no two ways about it: to get the best of both worlds, you have to advertise in both worlds.

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