The way consumers access TV content has changed significantly over the past five years. The proliferation of smart TVs, ad-funded TV channels, and broadcaster streaming services provides consumers with more ways to access the ever-growing library of TV content available. Up to now, connected TV (CTV) ad spend has somewhat lagged behind the eyeballs in Europe- but forecasts show that this is set to change in 2023. Here, we explore the factors that will fuel this catch-up.
Local market expertise
There is a correlation between the level of competition in linear TV and the stage of development of CTV that is specific to individual markets. For example, in the US and the UK, where there are multiple linear TV providers that have established a high level of competition, the CTV market is relatively strong. Each player needs to innovate to drive revenues, as do new entrants to the market. Compare this to many southern European countries where there are one or two dominant traditional broadcasters and we see slower growth and evolution, though this is set to change.
Over the next 12 months, these markets will see accelerated growth in CTV as local expertise increases in line with continued investment from broadcasters, international CTV businesses, and technology platforms in market-specific capabilities, partnerships, and teams.
New premium inventory and more direct relationships
Ad funded models from Netflix, Disney+, and Warner Bros Discovery will drive significant increases in premium CTV inventory. In addition, more premium, first run content will migrate from its traditional home on broadcasters to the new CTV platforms. As eyeballs follow the content, viewing on these new platforms will grow, making CTV an even greater priority for advertisers.
Over the past two years, programmatic guaranteed (PG) has been the preferred route to market for many CTV buyers. This shines a light on the fact that in a fragmented market that commands high CPMs, relationships are key. As spend increases, we will see more of these direct relationships as buyers and sellers collaborate to discover the most effective ways to reach and engage audiences.
Breaking down barriers to entry
For smaller brands, TV has often been off the table due to high capital costs. Advances in programmatic CTV capabilities, specifically in open marketplaces, will democratize TV for those smaller brands by removing the need to commit to the minimum spends commanded by broadcasters. CTV’s ability to target at a granular level, and the return path data available, will make it increasingly attractive to performance and DTC advertisers, who have hitherto spent huge amounts in social media. The opportunity to drive performance and brand metrics on the biggest screen in the home will be an attractive one.
From a publishers perspective, the growth of PMP’s and open marketplaces will create more opportunities to monetize inventory outside direct deals, provide a way to tap into the long-tail, as well as generate leads for direct sales teams. The key to the growth of biddable CTV will be trust. Buyers of all shapes and sizes need to be confident that the platforms that aggregate supply have cast iron (or titanium) policies around brand safety, fraud and direct content owner relationships. Sadly, CTV will attract its fair share of unsavory players, it is down to programmatic platforms to reassure the market that CTV will not go down the path that display took in the past.
Measurement and targeting
To date, measurement has been cited as one of the biggest barriers to the growth of CTV. Where advertisers are looking to CTV to help reach audiences that are difficult or expensive to reach via traditional TV, they need data to back this up. With CTV data sitting in multiple, siloed platforms, getting this data has been challenging to say the least. However, there are signs that things are moving in the right direction. In the UK, BARB will be measuring Netflix audiences, and already has Disney and Discovery as subscribers. BARB is also looking to expand measurement to other “TV like” services. Whatever you may think of BARB, it is considered by advertisers and agency buyers to be the gold standard of TV measurement, and including new CTV services will allow advertisers to plan, buy and measure on a like-for-like basis with their traditional TV activity. Given the shifts in viewing to CTV, this will likely lead to a reallocation of budgets to these newer services.
In addition, there are a number of measurement businesses that are helping to track performance based objectives on CTV. Typically, they look at upper funnel metrics, such as website visits post exposure to a CTV ad, but they can also look at other measures of ROI, including sales. CTV’s ability to provide return-path data in this way will really help drive uptake among performance and DTC brands, who previously prioritized social media or traditional DRTV.
Targeting on CTV can also be quite fragmented, with different platforms providing different data signals and different capabilities. Over time, this area will become more consistent, though much depends on how viewer ID’s are tracked, and how this fits in with privacy requirements. In the next year, we will see content and context data becoming more widely used. CTV media owners are starting to see the commercial benefits of passing content data signals to buyers in order to aid targeting and reporting. These signals have the opportunity to be far more consistent, particularly if the media owners adhere to the IAB’s Open RTB standards around content taxonomies.
How can we carve the best path for CTV?
Everything starts with the advertiser. All of the players within the TV and CTV landscape need to recognize that changes in TV viewing behavior will require changes in where and how TV advertising budgets are spent. We need to make it easier for advertisers to justify these shifts in spend, and demonstrate that TV is still doing the great job it has always done, albeit over a more fragmented landscape. This will require a reboot to traditional TV thinking and planning, and as much collaboration and standardization as is humanly possible. It will also require a certain amount of agility, as no doubt unforeseen changes will impact this space, and will need to be responded to.