Moving Ad Budget To CTV

Anand Gopal Feb 01, 2023

Today, the world of television is going through a revolution. With increased digital penetration and technological advancements, more and more consumers are cutting the cord on traditional TV options and switching to streaming apps and connected TV (CTV).

According to a survey conducted by Leichtman Research Group, ‘82 per cent of U.S. TV households have at least one internet-connected TV device’. This list includes CTV sets, separate set-top-box devices, and connected video game systems. Another study reveals that YouTubers in the U.S. prefer to watch video content on CTV, with 62 per cent saying they access streaming apps on TV. The mobile phone is a distant second choice at 9 per cent.

This shift in consumer behaviour has advertisers around the globe focussing on CTV as a key strategy to drive revenue.

According to eMarketer’s report, CTV ad spending in the US will ‘more than double’ by 2025, crossing USD 30 billion. In another report by Cadent, ‘TV's New Wave: Marketers Take on the Shift to OTT, CTV, & Addressable,’ the reason advertisers are moving their ad dollars to CTV is apparent. As per the report, 62 per cent of respondents consider TV, both linear and CTV, as a premium advertising channel (compared to online videos) because the platform is more brand safe.

Benefits of CTV advertising

There are several reasons why publishers find CTV lucrative for earning ad revenue. CTV has a vast reach, which includes all connected TV devices, including smart TVs, gaming consoles, and streaming devices. These devices are also more interactive than traditional TV. It’s also a win-win for both brands and their audience as advertisers get access to a premium inventory of consumers with high purchasing power and viewers get a high-quality personalised experience.

Another aspect that works out in favor of CTV is the buying cycle of the television. Unlike a phone, once a household buys a TV, it is not replaced for a few years. On top of that, a Smart TV comes with WiFi and an Operating System. This is of incredible value to advertisers to gain accurate audience intelligence.

Challenges in Driving Revenue Through CTV

As promising as the CTV landscape is, there are hurdles that need to be addressed to overcome the hesitance of advertisers in investing in CTV. Some of those challenges include ad fraud, cross-platform measurement and lack of a single measurement standard across OEM providers.

The CTV market is also fairly fragmented, with multiple digital devices and different measurement methods being used that need to be more transparent. This makes it difficult for advertisers to measure frequency and reach across viewers.

India’s CTV story

As per a Finecast (part of GroupM) report, ‘The Changing Landscape of Indian TV,’ India is set to become the third largest TV market in the next five years, with CTV advertising expected to grow at 47 per cent CAGR. By 2027, India is expected to reach $395 million in CTV advertising. India has economies of scale and amazing purchasing power and in the APAC region, India and China are the biggest markets for TV.

While CTV penetration is only to around 12 M homes, according to a 2022 TRAI report, the ability to buy any other type of TV will soon be phased out. The genie is out of the bottle in how we consume content from our mobile phones and Indians are flag bearers of mobile adoption. With cheap data plans and consumer behavior moving towards internet-driven content consumption, the presence of a connected TV screen in the majority of Indian households is the imminent future.

The CTV market is an attractive yet evolving landscape. More conversations about standards and models of measurement need to take place between key stakeholders to make it an effective model to drive ad revenue.

To ensure that advertisers and publishers are able to make the most of CTV, publishers and advertisers need to understand how to use the right tech solutions for a better user experience. They also need to bring unified measurement and attribution tools to ensure that advertisers can transition from linear TV media planning to a more feasible plan for the CTV ecosystem.

The future of CTV lies in programmatic innovation that may help deliver scale and addressability and set a standardised approach to ensure a fair value exchange. Advertisers and media owners need to understand how to continue offering premium experiences while automating the process of media buying to have better control of their inventory and maximise yield on every ad dollar spent.