Jul 29 2022
Megan Reschke

What is Connected TV Advertising?


Over the past several years, connected TV (CTV) advertising has skyrocketed. Though linear TV still takes up the majority of ad spend in the US, CTV is making significant gains: from 2017 to 2021, US CTV advertising grew from $4.7B to $14.19B, and it’s projected to hit $38.83B by 2026!

Networks and platforms are embracing this digital evolution, with premium platforms like Disney+ and Netflix making plans to join other streaming giants like Hulu and Roku in offering in-video advertising opportunities.

Amidst all the excitement, you probably have some (very understandable!) questions. Things like: What exactly is CTV? What are all these weird acronyms I keep seeing? Why is this CTV advertising surge happening? And what does it mean for marketers? Read on to find out!

What in the World Is Connected TV?

CTV, OTT, ACR—oh my! The world of digital video streaming sure has evolved (and that’s putting it lightly!) What just a decade ago seemed like an overwhelming and unattainable piece of a digital marketing portfolio has become a must-have in every brand’s digital repertoire.

In recent years, connected TV has emerged as one critical aspect of that landscape as viewers and advertisers alike move beyond traditional linear TV or streaming video on laptop or mobile devices.

So what actually is connected TV? Simply put, a connected TV is a TV that is connected to the internet. CTVs include Smart TVs; TVs used in tandem with devices like Roku, Apple TV and Chromecast; and TVs hooked up to gaming consoles with build-in streaming capabilities like PlayStation. And CTV ads? Well, they’re those that run on CTV devices.

“Wait, hold up,” you might say. “What the heck is over-the-top (OTT) then? And how does it relate to CTV? Are all these different from linear TV? And didn’t you say something about ACR? Seriously, what is with all these acronyms?”

These are all fair questions! The evolution of digital video has been accompanied by a plethora of terms and acronyms, many of which are closely connected:

  • Linear TV: “old school” TV content that’s delivered through cable, broadcast, and satellite.
  • Over-the-top (OTT) content: video streaming that is delivered through the internet directly to consumers. This content can be viewed on mobile, desktops, and—you guessed it!—CTVs. Some of the largest OTT providers are Hulu, Netflix, Disney+, and Peacock.
  • OTT devices: all the products and gadgets that allow consumers to access OTT content. Some mainstream formats of OTT devices include Roku, Apple TV, Chromecast, and Amazon’s Fire TV Stick.
  • Automatic content recognition (ACR): technology built into smart TVs that allows the TV to identify what is playing on the screen—and helps marketers to target audiences more precisely.

Advertising on CTV devices gives marketers the ability to scale beyond traditional TV commercials and reach audiences who are watching content on their TV, but via the internet instead of cable. Next, we’ll dive into the great CTV boom—from both a consumer and advertiser perspective.

The Growth of Connected TV

Let’s take a quick walk down memory lane (we promise we won’t stay there too long). It’s March 2020, and the world is in the throes of unknown waters: the COVID-19 pandemic. The uncertainty, fear, and anxiety are all real, heightened by quarantines and stay-at-home protocols.

You, along with 64 million other households, turn to the latest Netflix craze for a much-needed escape: Tiger King. Maybe you watch it over the course of several days, or perhaps you binge all the episodes at once (no judgment here).

This is just one example of how streaming video services have exploded over the past few years. During the pandemic, online video subscriptions soared 26%, with revenues exceeding $1B worldwide. And though subscriber growth has since slowed, streaming has surpassed traditional TV as consumers’ video viewing method of choice.

It makes sense, then, that connected TV advertising would follow suit. Brands want to ensure they’re reaching consumers where they are spending the most time. And with 41.6% of the US population using ad-supported video-on-demand services (not to mention that the average time spent watching CTV is approaching 2 hours a day), CTV is a crucial part of any omnichannel marketing strategy.

How Connected TV Advertising Works

Now that we’ve tackled what a connected TV device is and how CTV has grown, let’s dive into the nitty gritty of how CTV ads work.

Once a user is streaming video on a CTV device, content distributors such as Hulu, YouTube TV, Roku, and other apps can then serve advertisements, similar to traditional TV commercials. These ads can be placed at the start of streaming (pre-roll), during ad breaks in the middle of the content (mid-roll), or once the video has finished (post-roll).

Depending on their method of purchasing CTV ads, marketers can target audiences based on a variety of factors. When purchased programmatically through a DSP, advertisers can leverage both first-party data available through the CTV vendor, as well as any third-party data that’s accessible through the DSP. This gives marketers more control over precisely who they are targeting, as well as the ability to retarget effectively.

Connected TV Advertising Inventory

CTV advertising can take a variety of forms and lengths. The most common connected TV ads run anywhere from 15 to 30 seconds, but they can be as quick as 10 or as long as 60 seconds. CTV ads also lend themselves to interactive content, such as those where a user selects their “ad experience” from a selection of two or three options—helping empower the user and giving the advertiser additional insights for use in both A/B testing and retargeting purposes. The length and format of the specific video commercial is up to the brand that is placing the advertisement, and marketers can make adjustments based on strategic priorities for their brand or product.

Connected TV advertising partners like Hulu, YouTube, Sling TV, and Roku have offered CTV ad inventory for a while, and other major streaming players like Netflix and Disney+ have announced they’ll be rolling out new ad-supported tiers as well. For advertisers, this means increased ad inventory available though their CTV advertising platforms and the opportunity to reach more consumers where they are viewing video.

Stay tuned (oof, we’re really dating ourselves with this pun…) for updates on what these new offerings will look like, and how advertisers can gain access to this premium inventory!

Wrapping Up: Connected TV Advertising Platforms

As is the case with all digital marketing channels, staying ahead of the changes and progress in CTV capabilities is an ongoing task. Basis Technologies has all the tools and resources necessary to place and execute sophisticated CTV advertising campaigns, from basic content to complex targeting parameters.

As is the case with all digital marketing channels, staying on top of all the changes and progress in connected TV capabilities is an ongoing task. That said, as a channel that’s currently booming, more and more advertisers are turning to CTV ads as part of their omnichannel strategies and seeking out platforms that help them make the most of the CTV opportunity.

Interested in learning more about CTV—including how advertisers can plan an effective CTV campaign, protect their campaigns against ad fraud, and leverage PMPs to effectively target consumers? Check out our guide for an even deeper dive on all things connected TV.