By Jason Fairchild, CEO of tvScientific
For decades, TV advertising has been based on reach and frequency. Advertisers negotiated payments based on the number of people or households exposed to their ads, combined with the total number of times the ads were shown. As technology advances and consumer behavior shifts, it’s high time for a paradigm shift – one that allows advertisers to align their spending with tangible marketing goals and pay exclusively for outcomes that reflect their desired results.
Enterprises have traditionally allocated their advertising budgets based on the potential reach of an ad campaign. While this method has provided a broad perspective on the audience base, it fails to capture a true representation of engagement and conversion. In a world where digital transformation is reshaping consumer habits, advertisers must adapt their strategies to focus on outcome-driven metrics that truly reflect the effectiveness of their campaigns.
The emergence of ad-supported streaming channels has accelerated a shift in advertising philosophy. As more viewers gravitate towards these platforms, advertisers have an unprecedented opportunity to reach engaged audiences. However, to make the most of this transition, the industry must evolve from a model centered around exposure to one centered around measurable results.
The concept of aligning ad spend with marketing objectives isn’t new. In the realm of online advertising, platforms like search engines and social media have long offered models like Cost-per-Click (CPC) and Cost-per-Action (CPA). These models tie spending directly to user engagement, whether it’s clicking an ad or completing a specific action. Such models provide advertisers with a clearer picture of the return on their investment. By translating dollars spent into actual user actions, advertisers gain invaluable insights into the efficacy of their campaigns and are able to generate greater returns.
Applying this same philosophy to CTV is not just an exciting prospect; it’s an essential step towards embracing the potential of the medium. By shifting the focus from passive exposure to active engagement and conversions, advertisers can not only improve the viewer experience by delivering more relevant content, but also make informed decisions about their strategies.
The ability to track user actions beyond the screen – such as online purchases, post-viewing website visits, and even physical store visits – opens up a realm of possibilities for advertisers to optimize their campaigns in real time. An ad’s success needn’t be determined just by the number of eyes it reaches, but by the tangible increase in sales it generates.
The numbers speak for themselves. The performance advertising market in the United States, worth nearly $200 billion, is poised to undergo a significant shift towards CTV as the technology matures. Advertisers are awakening to the realization that the key to unlocking the full potential of this medium lies in focusing on outcomes that truly matter. Whether it’s achieving a specific Return on Ad Spend (ROAS), driving sales, or increasing post-CTV campaign traffic, the new era of CTV advertising is all about results.
The time has come for advertisers to shed the shackles of outdated metrics and embrace a future where every advertising dollar spent can be directly linked to tangible outcomes. As consumers continue to migrate towards ad-supported streaming channels, the potential for CTV advertising to transform the marketing landscape is immense. By embracing outcome-driven models and leveraging technology to measure the real impact of campaigns, advertisers can tap into a goldmine of opportunities and create a win-win scenario for both themselves and their audiences. It’s time to usher in a new era of CTV advertising – an era where results matter more than ever before.