4 Factors that Will Make or Break CTV Advertising in the Year Ahead

By Nilesh Dhawale, Senior Director of Product, Emodo

Connected TV is hot. The sector is expected to grow from $12.9 billion in 2020 to $42.5 billion by 2028. Advertisers are champing at the bit for premium CTV inventory, and adtech companies are scrambling to be the ones who facilitate the shift to advertising’s hottest channel.

But what will determine the efficacy of CTV investments? Advertisers, adtech companies, and publishers should consider four factors: targeting and measurement in the face of fragmentation, supply concentration, full-funnel performance, and creative innovation.

Here’s what industry stakeholders need to know about each of these challenges and how to transform them into competitive advantages.

Fragmentation, Targeting, and Measurement

CTV is fragmented across manufacturers and platforms. Device IDs differ based on each of these variables. As a result, cohesive targeting and measurement are challenging, and most advertisers are using IP-based signals for targeting. But IP, too, is under privacy scrutiny, and if it goes away, advertisers will likely move toward alternate IDs such as RampID, UID, and others.

Advertisers should be able to tie IP addresses to devices and people using a cross-device graph. Then, using both device ID and IP, they can target individuals and households as part of one media plan, enabling sequential targeting. For example, a staple will expose a customer to an ad on CTV and follow up with a mobile activation to drive lower-funnel actions.

The fragmentation of the CTV ecosystem affects reach and frequency, too. The channel’s frequency-capping issues are well known (as anyone who saw that Rob Gronkowski insurance ad 200 times last football season can attest). More comprehensive audience IDs will improve the efficacy of ads in addition to the ability to measure their impact.

Advertisers can hedge against fragmentation by testing alternative IDs and using a tech stack that helps them make the most of their first-party data, take advantage of available third-party data, and see across device, manufacturer and platform silos.

Concentration of Supply

CTV inventory is in high demand, and there are not as many supply partners on the channel as there are for desktop and mobile. As a result, advertisers are turning to direct transactions, whether via old-school manual deals and the Upfronts or programmatic guaranteed and private marketplaces, to get their hands on supply. It’s not a coincidence that supply path optimization moves such as Magnite’s ClearLine focused on premium video.

To earn their place in this supply chain, adtech companies will need to add value that goes beyond merely connecting buyers with unique inventory. They’ll have to show that they’re more than just middlemen, offering superior ad formats or targeting that deliver higher performance for advertisers and more revenue for publishers.

Full-funnel Performance

TV has historically been thought of as a brand-first medium. Advertisers trade the more granular targeting of digital for the storytelling power of the big screen. But CTV offers the best of both worlds: targeting rivaling the precision of digital as well as the creative options available on a 65-inch screen.

CTV will increasingly expand into a full-funnel performance marketing channel. It will be expected to drive not just top-of-funnel awareness but also lower-funnel conversions. A common tactic is QR codes, which audiences can scan on mobile, bringing them to a landing page where they can take an action such as making a purchase. Emerging methods of lower-funnel ad engagement include using remotes or voice commands to interact with ads.

TV is a lean-back experience, but many consumers are used to scrolling on their phones while watching. So the CTV-mobile connection, so long as advertisers and their partners can match devices, offers a prime opportunity to take advantage of CTV’s lower-funnel opportunities. It will become normal for advertisers to provide consumers the option to engage with both programming and commercials via mobile.

Creative Innovation

Another area where advertisers, publishers, and consumers should expect to see advancements in CTV advertising is dynamic creative optimization. It is currently rare to customize CTV ads based on the audience’s characteristics and interests, even though this level of personalization is commonplace in digital advertising on other platforms. With AI, CTV DCO can go a step further, optimizing components based not only on audience data but also on the content against which CTV ads appear.

As CTV advertising becomes more of a full-funnel channel, it can also optimize against lower-funnel performance metrics such as driving site or store visits. More personalized and contextually relevant advertising should drive higher performance, which full-funnel calls to action and measurement will bear out.

The CTV boom is a natural next step for digital advertising. But let’s not let it evolve exactly the way that desktop and mobile did. The rapid growth of a new channel offers digital advertisers the chance to get this one right — using more creative, engaging, consensual, and authentic storytelling instead of static, intrusive, and distracting ads. We’re on the precipice of achieving precisely that. It will be easier if advertisers and publishers know what to look for.