The future of TV advertising: How connected TV is transforming media strategies

In the world of advertising, everything revolves around attracting the attention of the relevant target groups. Compared to traditional, linear television advertising, connected TV (CTV) offers completely new opportunities to exploit the potential of digital advertising. Mario Neumann, Director Business Development at Goldbach, explains how CTV works in a guest article on Marke41.

Television advertising was once focused solely on linear broadcasts, i.e. messages were aimed at a broad and undifferentiated audience. The introduction of Connected TV has revolutionized the way advertising is presented on TV screens. This is also highly relevant because the technological change is accompanied by a change in media consumption. Instead of a large, homogeneous TV audience that was reached on the one hand via the legendary Saturday evening shows and on the other via the exclusive content of a handful of private broadcasters, we now see highly fragmented special interest channels and target groups that can hardly or no longer be reached via conventional TV reception channels.

Examples include the target groups of so-called "cord cutters", who no longer have a cable connection but only consume internet-based content. But also people with very strong interests in individual areas - such as music fans, who can often only be reached via corresponding topic-specific environments.

In contrast to "classic" TV advertising, where ads were often placed based on broadcast times and program content, CTV enables a targeted approach based on the individual interests, demographic, contextual and technical characteristics of viewers.

This makes CTV advertising more similar to online advertising and offers comparable opportunities and possibilities for highly efficient targeting.

Data-driven advertising: How CTV is changing the advertising landscape

With CTV, advertisers can reach their target groups more precisely, make data-based decisions, place interactive advertising and improve the measurability of their campaigns. Back-channel capability in particular is of central importance here. In contrast to traditional TV advertising, data-based planning processes, playout and optimization as well as performance measurement mean being able to get the most out of campaigns on an ongoing basis. Data-based and automated CTV advertising playout thus paves the way for TV as a media genre towards "programmatic TV".

Advertisers benefit from so-called "near-time data", which enables continuous optimization of their campaigns and reveals target group behavior patterns. Near-time data is data that is updated at regular intervals. The measurability of CTV campaigns is precise thanks to known key performance indicators. All these KPIs enable campaign optimization and a precise ROI evaluation.

What CTV advertising formats are available?

The world of CTV advertising is extremely diverse. Advertisers can choose from a wide range of formats and targeting options to reach their desired audience on CTV platforms.

A distinction is made here between two generic terms: Connected TV ads are clickable advertising banners on the user interface ("homescreen") of smart TV sets and connected TV spots are digital TV spots in video streams or linear advertising placements. These are further differentiated as follows:

A general distinction is made between pre-roll ads, which are played before the video content, mid-roll ads, which - by briefly interrupting playback - are played during the video content, and post-roll ads, which are played at the end of the video content. There are also interactive overlay ads at the bottom of the screen that do not interfere with the main content, while bumper ads are played for a few seconds between the content. Interstitial ads serve as breaks or transitions between sections.

Native CTV ads integrate seamlessly into the content, while branded entertainment offers brand-funded, long-format advertising content that is cleverly integrated into the storyline and provides an in-depth brand experience.

How is the success of CTV advertising measured?

The comprehensive measurability of CTV campaigns is one of the most important benefits for advertisers. CTV-specific metrics allow advertisers to monitor and thoroughly analyze the success of their campaigns in real time. These measurements provide precise insights into campaign performance.

Media reach is measured in three dimensions: Gross Reach, Net Reach and Incremental Reach. Gross reach includes all delivered ad impressions, regardless of the variety of devices and possible multiple contacts. However, it does not reflect the exact number of viewers, as contacts are made at device level. Net reach, on the other hand, captures unique devices that the ad has reached and therefore provides a more accurate idea of the number of different CTV devices. Incremental reach shows additional contacts reached by the CTV campaign beyond the original target audience. This reflects the actual expansion of the audience, which has increased the overall reach of the campaign. Incidentally, the viewability rate for CTV commercials is 100%, as the commercials appear in full-screen mode and cannot be skipped.

Furthermore, the view through rate (VTR) and the video completion rate (VCR) are two key metrics for CTV spots to evaluate the actual viewing time. Both metrics provide insights into the effectiveness of CTV advertising by understanding how viewers interact with the content.

The click-through rate (CTR) can be used to measure ad engagement and track conversion. In particular, the latter can be used to measure how many viewers take action in line with the brand after consuming the commercials, i.e. purchase a product, subscribe to a newsletter or register for other services (app installation, downloads, contacting the company).

How do I successfully integrate CTV into the media mix?

Advertisers who want to integrate CTV into their cross-channel campaigns should consider five key aspects:

1. Contextual targeting uses content meta-data to enable personalized placements on CTV by taking into account the context of the program content.
2. Effective performance tracking is critical to accurately track viewer actions after consuming CTV commercials.
3. Second-screen usage can increase interaction by including URLs or QR codes in CTV spots.
4. Geotargeting opens up the possibility of targeting regional spots based on the viewer's location.
5. Advertisers can use CTV for cross-content marketing by integrating content in the style of a FAST channel or using host reads in CTV spots to convey an authentic and appealing advertising message.

Outlook

The transformation to digital channels and platforms - and therefore also to digital advertising - will have a major impact on the industry in the coming years. The drivers are 5G and the increasing number of publishers. Similar to "traditional" online marketing, advertising formats and strategies will also continue to evolve. AI will play a central role and provide support with important challenges. These include the personalization of advertising and the precise identification of target groups. AI will be the tool of the hour here, as it can identify and predict target groups from various data points such as technical characteristics, viewer behaviour, affinities and contexts - this is known as "predictive personalization". AI-supported predictive personalization will make programmatic CTV advertising even more efficient and relevant.