Discover the key advertising trends and opportunities that will impact agencies in 2025.
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‘Ask the Expert’ is a series that breaks down the tools, tech, and trends you’ve been hearing about in the trade pubs and around the office. We ask our in-house experts the tough questions and write up the answers in bite-sized pieces for your reading pleasure.
This month’s topic? Connected TV (CTV). We brought in Basis Technologies VP of Media Innovations and Technology, Noor Naseer, to give us the breakdown.
CTV consumption has already grown significantly these past few years. It continues to grow at a rate that makes the shifts in consumption more actionable for advertisers to buy against.
Nearly 70% of all internet users are currently using CTV. And CTV ad spending is soaring in kind, passing $25 billion in 2023 and forecast to hit $40 billion by 2027. Even for those who aren’t actively watching it, chances are likely that they’re equipped to. The same eMarketer report forecasts that more than 85% of households already have a CTV device in their household.
MVPD stands for ‘Multichannel Video Programming Distributor.’ While the term may sound unfamiliar, it’s likely that many consumers have signed up for one or know someone else who has. These distributors provide access to multiple TV channels through a single service. The first iterations of MVPDs that most consumers are familiar with are cable and satellite providers, like Comcast Xfinity, Charter Spectrum, DirectTV, and Cox.
The current iteration of MVPD that has led the term to recirculate is ‘Virtual MVPD’. The addition of the word ‘virtual’ is in reference to new cord-cutting options that provide access to content channels without needing to supply a data transport infrastructure, à la coaxial cable, satellite or fiber.
Like so many things in today’s digital advertising landscape, the CTV advertising space can best be described as fragmented. There are many disparate ways to consume connected content. Accordingly, many advertising opportunities may need to be strategically considered and bought disparately.
One popular means of consumption is through streaming VOD, or ‘Video on Demand.' To date, some highly popular VOD services strictly generate revenue through a subscription model and do not offer advertising opportunities. Examples of providers that don’t run ads include Netflix and Amazon Prime Video.
However, there are plenty of VOD providers and streaming players that do have advertising offerings. Popular ad-supported options include Hulu, FuboTV, Sling TV, and Roku.
While there is still a significant amount of inventory in the paid TV space, the slow diminishment of available inventory has TV ad buyers paying more for the same type and volume of inventory they’ve paid for in the past. Simultaneously, forecasts are showing that 10s of millions of traditional TV consumers are expecting to cut the cord in the next few years. This means that the volume of traditional, linear TV inventory will continue to decline.
With the continued decline in traditional TV inventory, the time to start testing and learning in the CTV space is now. CTV advertising is a great fit for advertisers for whom massive reach and branding goals are essential. It also has additional benefits paralleling the traditional TV space, like mostly non-skippable ads, 100% viewability, and viewer dedication to a single piece of content. Advertisers also have the flexibility to enhance targeting through buying based on the audience, as opposed to building their buy strategy against programming or content type.
Digital video advertising enables an advertiser to leverage sight, sound, and motion without constraining their buy to the confines of the TV screen format. Research suggests that this inventory type will continue to steeply increase. eMarketer and IAB reports indicate that more than half of digital video ad spend will be driven by video ads featuring original content.
With a volume of inventory and ad-supported spaces that far outnumber CTV, digital video can enable much more granular targeting. Digital video advertising also implies a ‘hands-on-keyboard’ element for the user experience. This allows the consumer to more immediately engage with the brand on a deeper level than they otherwise would be able to in a TV-viewing environment.
A media planner should start by evaluating the consumption habits of the audience they are seeking to reach. For instance, if an advertiser has brand awareness goals to reach a demographic that primarily consumes traditional paid TV, it might make less sense to heavily shift dollars into alternative digital video strategies. Conversely, if the target audience is heavily made up of cord-cutters and video consumers, there will be many digital video tactics worth considering.
After taking screen-based habits into consideration, the buyer can delve deeper into the combination of ad formats that will resonate best with that audience. Popular programmatic formats include full episode players, in-stream, out-stream, and in-banner. If the target audience skews younger and consumes a lot of social content, the planner may want to consider preparing vertical video assets as well. From there, more targeted video strategies and tactics can be determined based on the goals and objectives of the campaign.
Basis has solutions both for digital video and CTV. Buyers can access and discover CTV and video ad inventory by private marketplaces and the open exchange. Inventory can be aggregated a few different ways. One popular means is by audience type, such as ‘homeowner,’ ‘in-market auto shopper,’ or ‘travel enthusiast.' It can also be organized by the type of content the viewer has consumed, such as sports, news, comedy, home improvement, etc.