Television advertising has come a long way since the early days of broadcast, and today Connected TV (CTV) is a major player in the advertising landscape. With the rise of streaming services and internet-connected devices, CTV has become a popular medium for reaching audiences in the digital age. However, the question remains: can CTV evolve into a performance advertising medium similar to search?
At first glance, it may seem challenging to transform CTV into a pure performance advertising vehicle. Search advertising thrives on its ability to deliver highly relevant and targeted ads to users actively seeking specific information or products. In contrast, CTV's content is primarily designed for entertainment purposes.
Brand Awareness
People don’t typically watch TV specifically to find products they’re looking for. TV has hence historically fallen under the category of “brand awareness” rather than “performance” - where performance is tied to the ability to deterministically tie a sale or other action directly to an ad exposure.
Nevertheless, there are ways to make CTV more attributable and improve its performance advertising capabilities. Advanced measurement techniques and better targeting options have enabled advertisers to gain deeper insights into viewer behavior and the effectiveness of their CTV campaigns.
For example, software can identify all of the digital devices in a household (phones, tablets, laptops, etc) to a single IP address associated with that home’s WiFi, then determine if any of those devices took part in a conversion and attribute the CTV ad accordingly (this method assumes that the individual who made a purchase via mobile device did, in fact, see the relevant ad play on the household TV). While it may not reach the same level of granularity as search, advertisers can still gather valuable data to optimize their ad placements and drive ROI.
The primary dilemma is that TV advertising lacks a direct-response mechanism.
The primary dilemma is that TV advertising lacks a direct-response mechanism. Unlike digital display or digital video ads that have interactivity built-in (a “learn more” button, for example), the only way to track the performance of any TV advertisement has historically been to tie inbound leads to outcomes like inbound telephone calls from a “call now” call to action.
In many ways, rather than pure performance, CTV delivers the most value as a component of omnichannel campaigns. Connecting with potential customers across various touchpoints enables advertisers to stay relevant and be present when they are ready to make a purchase decision.
Audience Engagement
In an omnichannel campaign, CTV can complement other advertising channels and contribute to an effective overall strategy by engaging with audiences in different places, thereby increasing their chances of being top-of-mind when consumers are ready to convert.
Making CTV a pure performance vehicle for high-demand content, however, remains problematic. Popular shows and events draw significant audiences, making it challenging to disrupt the viewing experience with performance-focused ads. When most advertisers think of performance vehicles, they’re thinking of direct response, which isn’t a practical format for most TV advertising. Privacy regulations add another layer of complexity, limiting the data that advertisers can access and use for targeting purposes.
Despite the rise of streaming services and CTV, traditional television is still prevalent. The big screen in the living room remains a hub for family entertainment. The future of CTV and streaming services will undoubtedly involve consolidation amongst networks and platforms, and not all streaming platforms will survive in a highly competitive landscape.
The industry will find its equilibrium as the space matures, with the most valuable and sustainable services prevailing. As we move toward more privacy-compliant targeting methods for digital advertising, consumers will likewise enjoy an experience where their every action isn’t tracked for advertising purposes.
While CTV may not entirely replicate the performance advertising model seen in search, it has the potential to become more attributable and contribute significantly to an omnichannel advertising strategy. Brands should explore different ad-based models and take into account viewer preferences to strike the right balance between user experience and revenue generation.
With continued advancements in measurement and targeting capabilities, CTV will remain a powerful tool in the advertiser's toolkit, playing a crucial role in the ever-evolving world of advertising. The big screen in the living room is bigger, brighter and more connected than ever before, and it promises to play a central role in the ad campaigns of the future.
