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CTV Advertising: 2022’s Golden Growth Opportunity

Published: February 8, 2022

Author: Tom Leonard


Insights from the Experts: Growth Labs Series with Tom Leonard, Senior Director of Emerging Media

Why Connected TV Advertising is Poised to Have a Breakout Year

We’ve been hearing about the rise in popularity of Connected TV (CTV) from both consumers and advertisers alike, but expect 2022 to be one for the books. Where consumer eyeballs go, so do advertiser dollars (albeit, a couple years later). We saw this with a 60% growth in CTV ad spending in 2021 after the CTV viewership trend was amplified by COVID-19, and eMarketer predicts a 20-30% increase in spending from brands pouring into the channel for the next few years. I’ll argue that two simple facts are positioning CTV to have a breakout year:

  1. Consumers continue to cut the cord, with 2024 being predicted as the year that non-pay-TV households exceed pay-TV households.
  2. Advertisers want more bang for their buck, specifically sales lift, brand lift, and conversions. But what they’re getting right now is more traditional front-end media metrics.

The truth is though, these trends have been visible for a while. Why do we think 2022 will be special? Well, we’re glad you asked!

Ad-supported Video on Demand (AVOD) has been overlooked

One of the fastest-growing segments of the CTV ecosystem is ad-supported streaming video on demand (AVOD), which is expected to boast viewership of over 50% of U.S. internet users in the next three years. Consumers have been bombarded with “pluses” over the last two years. The reality though is if consumers wanted to have twelve $7.99/month streaming services they would have kept the cable bundle in the first place! The latest research shows that consumers are spending roughly $47 on paid streaming services. We’ve hit a ceiling. So, at the same time networks were adding a “plus” option to their own apps, they also bought up the big free TV players like Pluto (ViacomCBS), Tubi (Fox), and Xumo (Comcast). These aggregators of free content offer consumers a TV-like experience with expanding video libraries. And they’re growing, with eMarketer predicting that Tubi and Pluto will each cross the 50 million monthly U.S. viewers mark this year. Unlike many other ad mediums, there’s a clear value exchange here: free, premium content in exchange for a few minutes of ads, often a fraction of the ad load of linear TV. This poses a massive opportunity for advertisers and allows the advertising opportunity within CTV to catch up with viewership.

Advertisers have settled

The other area that will contribute to crazy CTV ad spending in 2022 is measurement. It’s hard to avoid seeing headlines in advertising publications like, “CTV measurement is lacking standardization,” or something that I can only read as “I miss my GRPs.” There are two flocks of advertisers turning to CTV: those coming from linear TV looking to reconnect with their audience or a new demographic, and those coming from search and social looking for the next great performance channel. What’s so unique about CTV is it offers a solution for both.

For advertisers that have built their brands on linear TV, CTV is extremely attractive and offers brands with several opportunities: reaching an audience moving away from linear TV; diversifying their reach younger; and leveraging targeting beyond broad demo buckets. Sign me up!

However, there are a few pitfalls these advertisers face. There’s lots of excitement around one CTV value prop (targeting) without giving enough consideration to the other (measurement). And the attention that measurement receives is misguided, often a frustration of the difficulty to get an accurate understanding of reach and frequency across their disparate buys. I read the following quote from an eMarketer study last year that made me scream, “IT DOESN’T HAVE TO BE THIS WAY!”

“The top KPIs advertisers desired for their digital video campaigns were sales lift, action, and brand lift—whereas the KPIs they were most likely to use were completed views, audience delivery, and engagement.”

-eMarketer

On the flip side, many advertisers focused on direct response (DR) come to CTV seeking the next growth engine after they’ve tapped out Paid Search and Social – or increasingly due to difficulties scaling DR further on Facebook. I’ve long argued CTV is so attractive because, despite performance marketers’ desires to only look through the lens of last-click attribution, CTV doesn’t allow for it! Cross-device, view-through conversion tracking must suffice, and improvements have made it a reliable backbone for CTV measurement.

However, in the chase of an ‘absoluteness’ of attribution, we see advertisers grow more infatuated with non-CTV over-the-top streaming (that being mobile/desktop/tablet full episode players (FEP) instead of the big screen). Now don’t get us wrong, there’s nothing inherently wrong with FEP inventory. But when most advertisers think of CTV…that ain’t it, chief. And for good reason! Because while it may be easier to attribute, we’ve also been able to measure that it doesn’t pack the brand lift punch. Both together can be a powerful combination, but they should be viewed uniquely, and advertisers should know where they’re spending, not letting an automated system or agency shift more and more dollars from CTV to mobile and claim they’re optimizing.

There’s no reason to settle for either reach or easy attribution. We don’t need “standardized measurement.” We just need to be able to answer the question of “Did running this campaign drive growth for my business?” And today, this is a question that can be answered.

There’s a better way

Over the last couple of years, technological improvements have enabled us to deliver the best for both types of advertisers. Unified buying strategies mitigate overfrequency and difficult reach measurement for traditionally linear buyers, while introducing them to the wide array of measurement opportunities CTV offers. And for traditional performance advertisers, the ability to strike a balance between demand capture and demand creation in order to craft a campaign that delivers on TV’s promise of brand building and digital’s promise of optimizing for conversions is extremely attractive. And it’s much more sustainable than picking off small pockets of low hanging fruit. The best part is that this is all done while providing transparency that both sides of the marketing coin desperately crave and finding solutions to measure CTV’s incrementality, ensuring attributed conversions are truly additive to a brands’ bottom line. We’ve finally unlocked the answer to “which 50% of my advertising is working,” and can avoid the black box that prevents learnings from being used cross-channel.

It’s true that there will be headwinds from the potential obfuscation of IP addresses (a key part of cross-device attribution) and competitive pressures from new CTV advertisers entering the arena. However, the recent convergence of consumer behavior, advertiser needs, and technological capabilities make CTV arguably the most exciting channel for brand and performance advertisers alike, making it a must-have tool in the toolkit of a Growth Marketer.

If you’re looking to dive into CTV or are thinking, “there’s got to be a better way,” reach out to 3Q Digital today!


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