The CTV boom has the advertising industry buzzing at the unique opportunities it presents. 80% of U.S. households owning one or more CTV devices and more users than ever choosing to cut the cable cord and pivot to OTT video offerings, CTV now represents the fastest growing video advertising channel. Ad dollars are following this surging market, with a $7 billion in CTV ad spend in 2022.
Publishers already understand the profitability of video offerings. Those with the technological ability stand to benefit from additional expansion into the CTV space. As the industry moves from targeting based on third-party cookies to contextual targeting, publishers are in a strong position to connect advertisers with highly engaged audiences.
Though related, CTV and OTT are different things. “CTV” represents the devices that stream video content, and “OTT” refers to the content delivery method. For example, using a Roku device to stream Law & Order from NBC’s Peacock service would constitute using CTV to stream OTT.
Why Publishers are Embracing CTV
One of the biggest advantages CTV presents for publishers is expanding audience reach. Users have been migrating away from linear TV for years, and now linear TV only accounts for about one-third of all TV viewing. The COVID-19 pandemic and streaming-only prestige television have also worked to drive up the CTV user base, and now 40% of TV households watch video on a connected device daily. These numbers, which show no sign of slowing down, demonstrate why CTV is an essential strategy for publishers to maximize their audience.
With the expanding audience, advertisers are soon to follow. Advertising spend in CTV continues to erode the dominance of linear TV as advertisers move to reach the growing number of viewers. The trend is poised to continue, with CTV advertising becoming among the fastest growing sectors in the entire ad landscape.
Contextual Targeting and the Quality of CTV Inventory
The rise of CTV comes when contextual targeting is also gaining traction on the tail of industry-wide privacy concerns. It offers advertisers a privacy-friendly alternative to traditional targeting while offering publishers scalable pathways to enhance yield. The growth of CTV audiences puts publishers in a strong position to offer contextual targeting packages based on aggregate metadata at scale.
In addition, expanding CTV offerings will bolster publisher’s supply of premium video inventory that advertisers are looking for. Data shows that CTV viewability rates are superior to other forms of digital video, and also offer brands the opportunity to expand on their stories with in-stream ad breaks. It’s not surprising, considering these factors, that global CTV ad spend is projected to exceed $20 billion in 2022.
Challenges with CTV Quality and Measurement
Clearly, the CTV boom presents publishers with many ways to benefit, but the vast majority of the CTV space remains unexplored. That’s because while the rewards may be high, there are still a lot of unknowns associated with the CTV environment.
One of the primary concerns is a lack of standardized measurement for CTV metrics. As it stands, there is a lot of fragmented and isolated data in comparison to linear TV, including in areas like viewability and targeting, which can present measurement and performance issues for advertisers and monetization challenges for publishers. If advertisers don’t feel confident in their spend, they will likely move budgets to a channel that allows them to better understand ad performance.
This issue also ties in with another measurement challenge facing the CTV space: brand safety. Like brand safety concerns on the internet, there are equivalents in CTV environments. This puts an onus on publishers to find a way to classify their content and leaves them open to revenue loss if they cannot deliver acceptable content transparency to brands.
Advertiser concerns around quality extend into the issues surrounding ad fraud. CTV fraud generates fraudulent impressions, which is no different from invalid traffic on desktop and mobile devices. The most common type of CTV fraud is ‘spoofing’, wherein marketers purchase a premium-looking impression which goes on to be served to a different device or audience than intended. However, as the CTV space has grown, simple schemes have become more complicated and sophisticated in nature. An example is the recent ‘Smokescreen’ CTV fraud scheme, which used screensavers to hijack CTV devices, generating fraudulent impressions even while the device screen was turned off.
DV is supporting the growth of this ecosystem by offering a suite of tools that enable independent measurement and transparency between buyers and sellers. We’re working closely with publishers, which have the unique opportunity to be at the forefront of the CTV boom. By getting involved with advertisers and tech vendors to build out the measurement ecosystem, publishers can cultivate the environment so it’s scalable and profitable.
How is your organization approaching the growth of CTV? Let us know!