Transforming Advertising: The Proven Effectiveness of Connected TV Ads

Connected TV (CTV) advertising has gotten a lot of attention in recent years -- and with good cause. Consumers are cutting the cord from traditional tv and moving towards streaming platforms, while advertisers are looking for more robust and cost-effective ways to measure TV ad success.

This has caused marketing budgets to pivot from linear tv advertising towards CTV advertising. CTV ads can be precisely targeted, provide access to detailed metrics and CTV devices clearly have a higher adoption rate for consumers today.

In this blog post, we will explore the proven effectiveness of CTV advertising: from the evolution of CTV to the increase in CTV ad spend, the types of Connected TV ads, proven examples of CTV ad success and how you can set up successful CTV campaigns to promote growth for your business.

The Evolution of Connected TV 

The Internet Protocol TV (IPTV) first launched in the mid-1990s but it another decade before the first few major online content streaming platforms began to appear.

YouTube made its start in 2005, Netflix followed in 2007 and Hulu launched in 2008. While it took some time for these services to grow in popularity, viewer preferences began to shift by the early 2010s towards online viewing. As more and more CTV and OTT (Over-the-top) devices were developed for mass audiences, the number of those who were “cord-cutting” Linear TV grew. Over the past decade, these trends have only accelerated, ultimately leading to the explosion of the CTV advertising space over the last five years to match.

The Growth in CTV Ad Spend

Having recognized the enormous potential of Connected TV advertising, marketers are heavily investing in this channel, leading to a paradigm shift in the advertising landscape.

In fact, there are 213 million Americans watching content on CTV, 98% of U.S households own a CTV device and 66% of advertisers increased their CTV budgets last year.  By 2027, CTV ad spend will reach a whopping $42.5 billion dollars.

What is Connected TV Advertising?

So, what exactly is CTV and how does it differ from traditional television? Connected TV (CTV) is any television device that is used to stream video content over the internet - that is, Your Apple TV, Amazon Fire TV Stick, etc. The ads that play within video content on these devices are CTV ads.

On most streaming TV services, CTV represents over 80% of all viewing. The remainder happens on other devices connected to the internet (laptops, smartphones and tablets).

While the terms “CTV” and “OTT” are often used interchangeably, “OTT” technically refers to all viewing, while “CTV” only refers to viewing that takes place on a Connected TV device.

What is the Difference between CTV and Linear TV?

Connected TV and linear TV are two forms of television broadcasting; each has its own attributes and characteristics. Linear TV ads play during commercial breaks on TV programming, where as, CTV ads play before, between and after streaming content.The key differences are:  

Content on-Demand vs. Set Schedule:

CTV devices deliver content via the internet through streaming services; users can access on-demand content, including movies and TV shows, at their own convenience. By contrast, linear TV follows a predetermined schedule set by broadcasters. Viewers watch this content in real time (or record it to watch later).  

Different Hardware:

CTV utilizes internet connectivity to stream content. It relies on smart TVs and streaming media players to access online streaming services. Traditional linear TV uses broadcasting signals transmitted through cable, satellite, or antenna connections, and does not require an internet connection for viewing.  

More Flexibility:

CTV allows greater flexibility when consuming content. You can choose what to watch, and when you want to watch it. You can pause, rewind, fast-forward, or select episodes or movies from a library of options. With Linear TV, you have less control. You must follow the broadcasting schedule and only watch shows or events being aired (unless you’ve recorded a show using a recording feature offered by your provider).

Why is CTV Effective for Advertisers?

The rise of CTV as a premier advertising solution can be directly attributed to its effectiveness. By being able to target key audiences down to the most granular demographic, as well as provide real-time feedback on ad performance, CTV occupies a space between both traditional TV advertising and digital marketing that wasn’t previously possible for marketers.

With CTV advertising, brands have easier creative management, including the ability to upload a video file themselves. Similarly, Connected TV improves audience targeting by streamlining the process and allowing advertisers to pick their specific audiences—from the broad to the niche for advanced targeting capabilities.

After an ad is served, advertisers can see how the ad is performing—allowing them to adjust creative if necessary—then track the customer to see if they engage with the brand or make a purchase after seeing an ad. If they don’t, follow-up ads can be retargeted and creative can easily be refreshed as needed. 

The result of these capabilities is a channel that provides a reliable and precise way to serve relevant ads to consumers—which in turn has led to viewers being more receptive to advertising in general.

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The Effectiveness of CTV Ads

According to a survey from Digiday and Innovid, 59% of marketers and agency executives believe CTV investment is boosting brand awareness and engagement, while 39% credit CTV for increasing return on ad spend (ROAS).

CTV has proven to brands that it can turn TV advertising into a down-funnel, direct-to-consumer, and direct response approach due to shifting customer habits. In fact, a study by Comscore found that CTV advertising had a significant impact on brand lift, with a lift of 25% in brand awareness, 20% in purchase intent, and 25% in recall- highlighting the effectiveness of CTV advertising in driving brand awareness, purchase intent, and recall.

Similarly, another study by the Video Advertising Bureau (VAB) found that CTV advertising generated a 20% lift in brand awareness, a 15% lift in consideration, and a 10% lift in intent to purchase.

CTV’s effectiveness lies in both its technological capabilities and in an audience that is not only receptive to watching relevant ads but actively enjoys them even when they understand they’re targeted. That effectiveness is leading directly to customer conversions – conversions that can be directly tracked.

The effectiveness of these capabilities is pushing more brands to expand their CTV marketing budget, with ad spend increasing faster than experts predicted. 

CTV Success Story: How a Jewelry Company Outperformed its VCR Goal

In the month leading up to Mother’s Day, a jewelry company wanted to run a CTV & OTT campaign to increase awareness during this key sales period. It partnered with Havas Media Group to generate a video completion rate (VCR) of 90%.

GumGum's contextual intelligence platform, Verity™, and IRIS.TV worked together to drive a strong VCR metric by utilizing Verity™ Video PMPs to target contextually relevant videos related to fashion, parenting, shopping, and more. In addition to targeting these IAB contexts, the Verity™ team created a custom Mother’s Day segment for this advertiser.

Results:

• Together, GumGum and IRIS.TV exceeded the client’s goal, generating a VCR of 98.54%.
• The Verity™ Video PMP campaign also outperformed the advertiser’s two other CTV providers, achieving a higher VCR than both and a lower CPM than one.

CTV Success Story: How Lincoln Amplified its Brand Awareness

For a new campaign, Lincoln looked to GumGum’s In-Video unit to help drive awareness as part of their CTV strategy.

The In-Video unit is a non-intrusive overlay ad that seamlessly fades in and out of the screen without the need for any human interaction. This unit is served in CTV & OTT environments and can be delivered in contextually-relevant environments to maximize attention, brand recall and purchase intent.

Results:

• +14% Lift in Familiarity -3.8x higher than the auto industry standard of 3.7% lift
• +13.5% Lift in Favorability -4x higher than the auto industry standard of 3.4% lift
• +5.5% Lift in Aided Awareness -1.4x higher than the auto industry standard of 3.8% lift
• +4.0% Lift in Purchase Intent - 3x higher than the auto industry standard of 1.3% lift

By utilizing GumGum’s In-Video unit, Lincoln was able to greatly outperform industry standards in regards to a lift in brand awareness, familiarity and favorability.