by Ann Tarasewicz, CEO at Axis, a programmatic middleware that facilitates connections between suppliers and advertisers, streamlining the process of partnership acquisition.
The numbers tell a compelling story about CTV and advertising. According to eMarketer, U.S. CTV ad spending is projected to hit $42 billion by 2027, up from $24 billion in 2023—a nearly 75% increase over four years. This growth is driven by the ballooning number of CTV households, expected to reach 121 million by 2027, covering more than 90% of American households. These statistics do not just show a trend; they demonstrate a significant shift in how content is consumed and how advertisers connect with their target audiences.
In contrast, traditional linear TV has been witnessing a steady decline. Nielsen reports that in June 2024, streaming accounted for 40.3% of TV usage, surpassing cable TV (27.2%) and broadcast TV (20.5%). This shift is particularly pronounced among younger demographics, with Gen Z and Millennials spending more than 50% of their TV time on streaming platforms, according to Deloitte’s 2023 Digital Media Trends survey.
Key factors driving of this growth include:
Targeting capabilities
CTV enables highly precise targeting, surpassing traditional TV in this aspect. Advertisers can utilise first-party data along with insights from viewing behaviour to craft extremely targeted audience segments.
This is backed by industry data. CTV campaigns achieve engagement rates 4.6 times higher than mobile video and 10.3 times higher than desktop video, highlighting the effectiveness of targeted messaging in this environment.
Measurable and actionable insights
The data transparency and detailed metrics available on CTV platforms give advertisers valuable insights to optimise campaigns in real time, unlike traditional TV, which often provides only broad estimates. CTV offers specific metrics like view-through rates, completion rates, and even post-view actions, providing actionable information for advertisers.
Cross-device integration and omnichannel strategies
CTV’s seamless integration with other digital channels allows for coherent omnichannel marketing strategies. A viewer could encounter an ad on their CTV and then receive a related ad on their mobile device or desktop, creating a unified brand experience. This cross-device targeting is especially effective in driving conversions as it reinforces brand messaging across multiple touchpoints.
CTV vs linear TV & other channels
The shift towards CTV is not happening in isolation. Advertisers are reallocating budgets from both traditional TV and other digital channels to capitalise on the benefits of CTV. According to a recent survey by Advertiser Perceptions, 60% of advertisers are planning to boost their spending on CTV ads, and 45% of advertising executives anticipate a significant shift in ad dollars from linear TV to CTV.
Cost efficiency and ROI
While CTV advertising may seem more costly initially based on CPM, it often provides a better return on investment due to precise targeting and high engagement rates. According to research by Analytic Partners, CTV campaigns can generate up to a 30% higher ROI compared to other marketing channels.
Brand safety and ad fraud prevention
Brand safety and ad fraud pose significant challenges in digital advertising. However, the rise of Connected Television (CTV) offers a level of control for advertisers. By making substantial investments in brand safety measures and partnering with reputable verification companies, these platforms stand out. This strategic approach ensures advertisers that their ads appear alongside high-quality content, reducing the risks of detrimental brand placements.
Industry perspectives
As AI rapidly advances, CTV technologies are also evolving by integrating the latest AI models. In the near future, CTV marketers will be able to use Generative AI (GenAI) and Multimodal Large Language Models (MLLMs) to analyse sounds, images, and text in CTV content. This will allow them to understand the specific emotions that a piece of content evokes and translate this data into measurable and actionable insights with unprecedented efficiency and scale.
By employing GenAI and MLLMs to capture these insights, marketers will quickly create personalized campaigns that resonate with the prevailing moods and emotions of viewers globally, fostering genuine connections and increasing brand engagement.
Nevertheless, challenges persist. The fragmentation of the CTV ecosystem—featuring multiple platforms, devices, and standards—poses scalability issues for advertisers. Standardized measurement and unified targeting across platforms are crucial for CTV to fully realise its potential.
The emergence of CTV marks a major shift in the world of programmatic advertising. As people continue to shift towards streaming platforms, advertisers are compelled to follow suit by reallocating budgets from traditional TV and other digital channels to capitalise on the unique benefits of CTV. Improved targeting, measurable results, and cross-device integration make CTV a crucial channel for advertisers looking to maximise ROI in a rapidly evolving digital landscape.
The future of advertising is closely tied to the ongoing expansion and development of CTV. For brands, adopting CTV is not just a choice but a strategic necessity that will determine their ability to connect with increasingly diverse and discerning audiences in the years ahead.
