The Challenges of CTV Advertising Today

Connected TV advertising is all the rage as more and more dollars flow from linear TV to content streamed via smartphones, tablets, and other devices straight into viewers’ homes. 

Despite the popularity of this digital advertising medium, there are some critical challenges of CTV advertising. Visibility into where a CTV ad runs and who it’s reaching is problematic due to data fragmentation. It’s also challenging to measure and track KPIs on CTV. How can the industry navigate these complexities so advertisers get the most out of their investment? 

Understanding Addressable and Linear Advertising vs. CTV Advertising

The digital advertising industry loves its acronyms, but it’s no different for the TV advertising space. These terms are often used interchangeably, but they are not the same. Here are some truths about TV:

• The term “over the top” originated as a way to describe content distributed initially for viewing on TVs using broadcast, cable, or satellite channels that began to be served online, according to Interactive Advertising Bureau (IAB).
• OTT now refers to content being distributed via internet-connected devices. It’s delivered through a variety of channels or streaming services and apps mostly comprised of three models: Ad-supported video on demand (AVOD) such as Amazon Fire TV, Roku, and Hulu; subscription-based video on demand (SVOD) like Prime Video and Apple TV; and transactional video on demand (TVOD), rented or purchased TV episodes or seasons like Vudu and Google Play.
• CTV refers specifically to internet-connected devices that connect to TV screens for viewing. There are three types of CTV devices: smart TVs that connect to the internet directly for streaming content; internet-connected devices for streaming to a TV, such as Roku, Chromecast, Fire TV stick, and Apple TV; and gaming consoles like Xbox, PlayStation, and Nintendo that stream to a TV.
• All content on CTV is over-the-top (OTT), but OTT content can also be viewed on non-CTV devices, such as laptops or mobile. 

Advertisers looking for OTT impressions in CTV environments will find them primarily in AVOD or ad-supported environments. Advertisers must remember that each of these models and services attracts different users they can analyze based on the platform(s) or service(s) they utilize. Consumers might get their sports content from one provider, like Fubo, and their news from a completely different one. Services providing higher-quality content or better experiences will attract users who will (likely) pay a higher subscription fee, like YouTubeTV.

OTT advertising is an increasingly attractive option thanks to the speed of growth in consumer adoption, ensuring brands show ads where their audience spends their time. CTV is an accessible channel for all advertisers, not just those with significant budgets, to invest in upfronts to reach audiences previously not part of their mix. CTV also allows advertisers to test, learn and discover new content at a fraction of the cost of traditional TV. Advertisers also benefit from the ability to reach their target audience in ways they’ve come to expect in the digital media ecosystem, like geo-targeting and audience targeting, in high-quality, long-form TV environments.

This is why the digital advertising industry increasingly shifts linear television dollars to digital ad budgets. For the first time, U.S. adults are expected to spend more time watching digital video than traditional TV, according to Insider Intelligence’s eMarketer research. CTV remains the fastest-growing major ad channel, with its ad spend expected to increase 21.2% this year to $25.09 billion. Not all households have cut the cord on traditional TV, but cords are definitely fraying. According to research from Roku, half of all US homes will be cord-cutters or -nevers by 2024.

How to Measure KPIs in CTV Advertising

If you’ve ever looked at a post-campaign report of where you ran on a CTV buy, then you know the report is filled with IDs that often look meaningless, yet there are many of them. Surprisingly, this is also an issue for the buying and selling platforms. The IDs are meant to provide an understanding of the ad opportunity. Still, with no standardization and the overwhelming number of ways that an ad opportunity can be sold to an advertiser, this has led to further fragmentation in the buying process.

As a result, buying platforms cannot surface meaningful data to advertisers for targeting with any level of confidence. This limits the targeting available to advertisers. Currently,

targeting OTT and CTV in the buying channel is limited to technical attributes, such as device, operating system, connection speed, and audience—to the extent those have been matched up. There is very little data available about the content a consumer is watching at the moment.

“The measurement part is a challenge. Even trusting and knowing that your ads will show up where you want them to is a challenge, and that you’re not over-serving on one platform,” said Andy Rhode, head of media and social at Fallon ad agency, in a recent Digiday article on CTV. 

The article says video advertising has historically been hard to measure, but the CTV landscape “is saddled with curious reselling practices and fears of ad fraud.” The general measurement approach to CTV has depended on impression delivery rather than conversions or brand awareness lift. But impressions don’t fully explain who you’re reaching and where viewability and video completion rate can be. Much like Nielsen has been called to task for its questionable measurement practices, advertisers are demanding the CTV industry figure out how to standardize video ad metrics and attribution. In addition, opaque practices often result in ad buyers thinking they’re buying premium CTV inventory when it’s cheap and poor quality. 

Part of remedying these issues lies in pursuing adtech partnerships that give visibility and value-add in CTV buys, from their advertising platforms to their brand safety vendors. The zenith is being able to run campaigns on CTV that reduce waste, improve performance, and maintain brand reputation. Marketers must translate real-time viewer information into targeted advertising across apps and streaming platforms to maximize their budget.

Peer39 enables all of the above with our Transparency Report for CTV, which gives advertisers insight into the kind of content or streaming video on which their ads run so they avoid low-quality and non-professional placements. By making sense of fragmented and unstructured data in CTV, our reports are more uniform and digestible to give a complete picture of metrics like ad completion rate, channel, content categories, production type, and show level.

The Future of Advertising is in CTV

CTV will continue facing several challenges in CTV. 

First, there’s no simple, single way to make ad buys for CTV. You can buy from the content owner (video publisher), TV network, distributor, streaming service provider, device manufacturer, specialized programmatic platforms, aggregators (like Pluto or Sling), aggregators of aggregators (like Roku and Amazon), and marketplaces. Each has its own pricing model and delivery specifications, which makes CTV buys time-consuming, complex, and inefficient.

Fragmentation is not solely restricted to the content side. It also applies to consumer viewership as well. Audience attention is distributed across multiple services, platforms, and apps with no unified point of access or insight. Budgets also pose challenges for advertisers, especially when macroeconomic factors sometimes negatively impact ad spending. CTV is significantly more expensive than digital video CPMs and comes with targeting limitations and consistency in inventory availability. 

In addition, three of the largest CTV platforms, Amazon, Samsung, and Roku, operate their own DSPs, each having privileged access to their respective company’s user data and exclusive access to some inventory. Sometimes, these DSPs buy ads beyond their platform inventory by “plugging into different programmatic marketplaces and setting up deals with publishers.”

All of this makes for an uneven playing field, and the complexity for advertisers as they’re buying CTV is not necessarily limited to specific platforms like Amazon FireTV, Samsung, or Roku. As a result, each advertiser will take a different route, and the majority of advertisers

will need to employ a multi-DSP approach to build out their CTV strategies, requiring two or more platforms.

Fragmentation is also found behind the scenes in communication between various ecosystem participants looking to transact on OTT-CTV. The problems that affect programmatic buying platforms and publishers with CTV inventory are directly connected to the challenges advertisers face.

However, the advertising industry is pursuing some significant changes to CTV advertising in 2023:

• One is the integration of OpenRTB 2.6, the latest update to the IAB Tech Lab’s standard protocol, which creates a simplified process for buying and selling inventory CTV through ad podding similar to linear TV. 
• Advanced media planning tools will simplify omnichannel CTV buying, targeting, and measurement outside the walled gardens. 
• With the deprecation of third-party cookies, contextual targeting will also increase in popularity in CTV and OTT environments this year. This will help brands strengthen audience targeting capabilities in a privacy-safe way that aligns with their brand.
• In late 2021, media agency OMG announced its Connected TV Standardization Initiative to usher in more transparency around CTV ad placement, such as show genre plus identity signals. It also encourages inventory suppliers to establish anti-fraud measures as part of IAB Tech Lab’s ads.cert 2.0 program.    

Why Brands Should Invest in CTV Now

With the help of modern brand safety and suitability tools, along with tools like our Transparency Report for CTV, brands can take advantage of the opportunities in CTV, optimizing ad spend at a reasonable cost. Echoing some of our points above, there are several vital reasons why brands should invest in CTV in 2023:

• High-impact CTV ads can capture viewers’ attention across multiple formats. Advertisers can trial interactive formats like a featured carousel to highlight product options, animations, QR codes, and multi-tab video units. Research from Yahoo and Publicis Media shows contextually relevant ads draw more attention. Two-thirds of survey respondents prefer ad experiences when they feature elements or people from the show.

• CTV is a superb channel for brand awareness campaigns. But it can also be used in a full-funnel, omnichannel advertising strategy. CTV campaign data can inform ad targeting and retargeting on other channels as it tells you where your audience is engaging. Omnichannel digital agency Digilant, which works with major DSPs like MediaMath and The Trade Desk, discusses how CTV works well with other digital ad channels. For instance, once a consumer watches a CTV ad, you can follow on with a display ad containing a timely call-to-action, a paid search campaign, or paid social video or display ads.
• Our Transparency Report for CTV consolidates and normalizes reporting data so advertisers get visibility into CTV campaign placements and ad campaign performance. With comprehensive reporting on the actual shows, networks, demographics, apps, and more advertisers reach through their CTV ad buys, they get a complete picture of what is happening with their advertising across the ecosystem.

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