According to data published by Strategy Analytics, more than 80 per cent of European households will own a smart TV by 2026 and as more televisions are connected to the internet, it seems inevitable that viewing habits will continue to evolve. In particular, more streamed content will be watched on big screens. This presents a real opportunity for brands to combine the impact of TV advertising with at least some of the targeting capability and accountability of online campaigns. But what will that mean in practice?
There is little doubt that the way we consume television is changing. Linear TV remains hugely important but the audience share enjoyed by traditional broadcasters has been eroded by SVOD (Subscription Video on Demand) services. Subscription, however, is not the only game in town. Just as we've all grown accustomed to the ad-free delights of Netflix, Amazon Prime, Apple TV and the rest, a new cohort of advertising-supported video on demand (AVOD) apps are beginning to make their presence felt.
The US is currently the most developed AVOD market, with the number of viewers expected to grow 17.6 per cent to 128 million by the end of 2021, according to research published by Insider Intelligence in its latest eMarketer Survey. Meanwhile, In the UK, Amazon has just launched an ad-funded service dubbed IMDb TV. Initially, this will sit inside the Amazon Prime subscription service but it will also be available via a standalone app. Elsewhere, public service broadcaster Channel 4 is reportedly planning to launch an AVOD service while smart television apps such as Rakuten are carving out their own market niche.
And there does appear to be demand. Research published in January by adtech company Integral Ad Science suggests that 83 per cent of UK viewers are willing to watch ad-funded streaming services, with more than 50 per cent actively planning to do so. So that's the backdrop, but what does all this mean for advertisers? The short answer is that with smart TV penetration running at high rates, increasing amounts of online video will be watched on the big screen rather than on smartphones,tablets and laptops. "The biggest opportunity is the ability to target viewers who are watching on the big screen," says Robbert van der Hulst, Insights Director at Candid Platform. "The impact of an ad on a big television screen is much greater than on other devices."
In that respect, CTV enables advertisers to run effective branding and awareness-raising campaigns while also taking advantage of targeting data provided by the platforms, apps and ad exchanges.
It's important to stress that when compared with what's possible on the web, CTV advertisers have fewer targeting options. Spend any time watching YouTube videos on a laptop and you quickly become aware that the app knows a lot about you. Ads are served up based not only on what you've watched before but also what you've been searching for on Google.
Targeting on Connected TV isn't like that. Richard Brant is head of Advanced TV at music video company, Vevo. In addition to making its content available through YouTube, the company's videos are also distributed for CTV via Roku, Sky Q and the Virgin Box. As he points out, the available data is limited. "A lot of the apps don't really have a relationship with the viewer," he says. "So you've got contextual activity and data on where the content is being consumed. At the level of the platform operator, you've also login data." In practice, that means brands can target ads according to location, device - because not all CTV programming is consumed on a television - time of day, and genre.
" So a lot of advertising is location-based," adds Brant. "But you can also look at the demographics and use CTV to reach underserved audiences. For instance, Vevo reaches a young audience." He cites the example of a campaign Vevo carried for an automotive company. An analysis of the stats suggested that out of a total of four million impressions, a quarter were incremental in terms of their reach. What's more, viewing was skewed towards 18-44-year-olds. Van der Hulst says this is one of the potential strengths of CTV. . "Linear TV broadcasts to the masses. You can use CTV to reach young people and other hard to reach groups," he says.
The Whole Household
But there is perhaps a CTV problem when it comes to basing campaigns on logins and contextual data. Whereas video on mobile phones tends to be watched mainly by the owner of the handset, televisions are watched by numerous people within a household. The login details don't necessarily provide an accurate picture of who is actually viewing.
Matt Keating is Director of Sales at VDX.tv, a company specialising in creating "video experiences" for advertisers. Having built the business by making videos for online devices, it is now moving into the CTV space. As Keating explains, in that context, VDX focuses on targeting households rather than individuals. "With CTV we can target whole households and as such we can influence whole households," he says,
If this sounds suspiciously like conventional TV advertising, the ads delivered via the television represent only part of the story. "We can follow up with advertising served to the phone or the laptop," he says. In addition to addressing individual members of the household, this also adds a degree of interactivity that isn't generally possible if serving ads to a TV set alone.Keating says IOP is the main targeting tool.
CTV ads can be served programmatically or bought on a bespoke basis. In terms of format, they tend to follow the model of conventional television creative and tend not to be interactive. So what does that mean in terms of metrics? Van der Hulst says the key metrics are viewing rates and completion rates. "People don't want to click through on CTV ads," he says. "So they are more effective for the upper funnel. They won't be very good for getting people to click through to websites.
Beatty agrees that view-through rates, along with reach and scale are key measures. "But brands are also asking about incrementality." This he says, requires a comparison between digital and linear campaigns. Campaigns can also be measured in terms of the impact on performance during the campaign. "You can look at whether footfall has risen or whether there has been an upliftin sales," says Brant.
As Brant points out,consensus on how to measure the effectiveness of CTV advertising is still some way off. That's perhaps because the lines between pure CTV - as watched on a television - and content watched on mobile devices and laptops are very blurred. Similar content may be watched by the same person on a range of devices at different times with different targeting and data options.
This is an interesting time for the TV market. Over the past few years, broadcasters have felt threatened by streaming services such as Netflix. Now it seems the subscriber services are facing a challenge from AVOD. What happens next probably depends on whether AVOD platforms and apps can acquire the content they need to lure viewers away from subscription services. Juray Vanko, Chief Marketing Officer at AVOD company Filmzie says content owners are becoming more responsive to the advertising-led model. "A lot of studios were not willing to share the blockbusters on AVOD platforms, but that is changing. We are now able to talk to major studios about the best movies."
As he acknowledges, Europe is behind the US in terms of AVOD uptake, not least because it is a fragmented media marketplace. But AVOD is coming and it will change the TV advertising space.