Our Guide to CTV: What is connected TV, advertising, CTV devices & more
In April 1998, Netflix launched as the world’s first online DVD rental store. Since then, Netflix completely transformed its business model towards subscription-based, streaming media, reaching 155 million users today. Netflix paved the way for connected TV and OTT, and kicked off the “streaming wars”.
Connected TV vs OTT
Traditionally, video content was delivered to consumers through a cable provider and the delivery happened through a closed and private ecosystem. Today, more and more consumers are seeking entertainment through content providers like Netflix and Hulu, and these services are giving consumers the ability to stream their video content through the internet. The streaming that takes place here is called “over the top” or OTT.
What is connected TV?
The IAB defines Connected TV (CTV) as “video content consumed on a TV screen delivered via an internet connection..”
CTV simply is any TV that’s connected to the internet. A CTV can stream OTT content through different applications. A regular TV can become a CTV as well through devices like Apple TV or Roku - basically anything that allows a regular TV to connect to the internet. In the US alone, 75% of the population have a TV-connected device in their home.
Top 5 connected TV devices
- Amazon Fire
- Apple TV
What is connected TV advertising?
Connected TV advertising occurs while users are actively consuming digital video content on their TVs. These are the ads we see before and during streaming content, typically appearing in 25 to 30 second segments. CTV serves pre-roll and mid-roll advertising at times when users are most willing to experience an ad.
The future of CTV advertising is bright: 8B hours a month are streamed on CTV devices and 50% of all video ad impressions in Q2 2019 was through CTV. If these numbers aren’t indicative of the explosive growth we’re experiencing in this space, CTV is expected to reach $9B in revenue in 2020.
How does connected TV advertising work?
CTV falls into the programmatic media ecosystem, and the advertising takes place in a private marketplace which sits one level above the open exchange. Since the marketplace is private, this means that advertisers must be invited to participate in the exchange. This is a favorable position for marketers who are seeking targeted placements in an auction with fewer bidders and higher win rates.
The future of CTV advertising: trends, demographics, and programmatic advertising
One big trend that impacts this space is the ongoing “streaming wars”. Studies show that $20 is the maximum US consumers will spend a month on streaming service. This means that in 2020, SVOD (subscription video on demand) channels like Netflix and Amazon Prime Video will need to adopt AVOD (advertising video on demand) if they want to retain their users. This gap represents a new way for channels to engage and reach new audiences.