As younger viewers drift from traditional TV, Connected TV viewership climbs worldwide. CTV refers to video content on an internet-connected TV, watched on a smart TV or through a device like Apple TV or a game console, and it has become a talking point as a digital ad channel. This piece looks at CTV as a channel and the opportunities and challenges ahead.
CTV as an ad channel
CTV has grown fast as a channel and draws more attention than before, and the budgets aimed at it keep rising. The digital ad research firm eMarketer reported CTV ad budgets growing from 3.44 billion US dollars in 2019 to 10.29 billion in 2021, and CTV's share of programmatic budgets doubled over that span to around 10%. That points to CTV becoming a more appealing channel for advertisers across a wide range of industries.
Wide reach
One advantage of CTV is the breadth of its reach. A study by Leichtman Research Group, which specializes in entertainment media, found that about 80% of US households own a CTV-capable device. Japan shows roughly the same trend, where about a third of households own an internet-capable TV, and the share strengthens year by year. With CTV viewing expanding among younger viewers in particular, it suits reaching that layer through the TV.
A high first hurdle, but good efficiency
Media buying on CTV runs complex and layered. The inventory options span internet-capable TVs and devices like Amazon Fire TV through streaming apps and programmatic platforms, so building a well-matched portfolio takes effort. The CTV monetization platform The ViewPoint suggests that the intensity of the competition can sometimes lower CPM. On top of that, the more precise targeting than traditional TV makes CTV appealing on cost efficiency, which is part of why some budget is shifting from traditional TV to CTV.
Rising hopes for data
Traditional TV makes measuring ad results hard, but CTV is digital, so reach, impressions, and view rate are easy to capture and a campaign's effect turns into numbers. The CTV ecosystem runs across many providers and services, though, so attribution accuracy still has gaps. Viewability has room to improve too, with cases of CTV ad impressions registering even while a device was powered off. CTV is still a relatively new channel, so an integrated solution for reliable reporting will likely become the norm sooner or later.
User experience: a challenge and a chance
How users respond to CTV ads stays mixed. A survey by the US ad and media trade title Ad Age found that about 80% complained of seeing the same ad too often and of the timing of ad breaks, and many turn to other activities like browsing while an ad runs, which shows CTV fighting the same problems as traditional TV. On the other side, about half said they have no resistance to engaging with CTV ads, and about a third showed intent to buy a product shown. Device makers, ad platforms, and publishers all face a call to make the experience smoother.
Innovation ahead
The innovation driver in CTV may be the big players of the digital ad business. Google named CTV a top priority, and Amazon offered a new ad format around the same time that lets a viewer buy smoothly while watching video content. In an ideal form, CTV could combine the visual strength of traditional TV with the data advantage of digital ad formats. Reaching that will take time. But CTV is already a compelling topic, worth putting on the near-term roadmap for many advertisers.
