In the 1970s, the first cable TV networks began to emerge to the wider U.S. audience. Names like HBO, ESPN, and Nickelodeon offered viewers new and exciting content compared to what we were used to.
At the same time, TV advertisers were pushed outside of their comfort zone to learn how to advertise on this new “coax cable” — scrambling to understand new terminology, what new content was available, and best practices for reaching the audiences shifting away from the antenna.
Today, we’re seeing a similar shift happening where viewers are “cutting the cord” to stream content over the internet to all of their different devices, including their connected TVs (CTV). Advertisers who have been successful in traditional TV now need to expand their expertise to include this new and growing technology.
But what do traditional TV advertisers need to know? While this is a bigger conversation than a blog post, we’ve outlined seven insights to get you started.
1. Audiences are shifting to connected TV. Fast!
According to numbers from eMarketer, 33 million U.S. consumers have cancelled their pay-TV services (cord-cutters), opting to stream their TV from non-linear providers. And by 2021, that number will nearly equal the number of people who have never subscribed to a pay-TV subscription in the first place (cord-nevers).
In order to reach your target audience in this new dynamic of TV viewership, it’s more important than ever for traditional TV advertisers to include connected TV into their overall strategy.
2. Targeting focuses on audience, not content.
Targeting is arguably one of the biggest conceptual shifts traditional TV advertisers must make when approaching connected TV. With a traditional TV strategy, reaching a targeted demo typically includes finding a high-indexing show or daypart (e.g., prime-time). With CTV, advertisers instead focus on creating richly defined audience segments that will be reached on whatever the audience chooses to watch, whenever they choose to watch it.
Instead of serving an ad during a show based on indexing – you determine who you want to serve ads to and only pay for the ads they see. That’s the shift to connected TV: You are buying audience, not content.
3. Localized geographic targeting is much more efficient.
Focusing your ads on a specific region or designated market area can be a powerful and effective advertising strategy. But with traditional TV, it can also be pricey.
A local TV spot — targeting say, women 18-34 in New York — might cost upwards of $300 CPM when purchased as part of a spot market buy. Because of connected TV’s digital nature and inherent efficiencies, targeting the same demo in the same market might cost around $50 CPM. If your TV strategy includes localized audience segments, you will want to start investing in connected TV.
4. Reporting is in real-time.
Instead of waiting to hear how your TV schedule performed after it is complete, connected TV capitalizes on the real-time speed of digital reporting. This gives agencies the ability to pass insights along to the brand and immediately show them how the campaign is performing.
At SpotX, advertisers are given weekly pulses about their connected TV campaign’s performance, covering:
- How the campaign is pacing
- What inventory is performing well
- Suggestions on optimization
5. Insights are immediately actionable.
Many advertisers tend to under-utilize the actionable insights available to them while their CTV campaign is running. Based on their weekly reporting, advertisers can review how a creative is performing and have the ability to quickly optimize messaging to maximize the impact of a live flight. Different ad creatives can be A/B tested to see which one performs best as well. And in a world that demands hyper-relevant messaging (ahem, political season), creatives can be quickly rotated to best match what’s most pressing to your audience at the moment.
6. Data unification is still evolving.
Truth be told, it’s not all rainbows and butterflies with connected TV. With traditional TV, advertisers have grown accustomed to a standardized ratings system (i.e., Nielsen) in order to plan and measure their TV schedule.
However with connected TV, each media owner can pass their own set of metrics — each with different levels of granularity. One media owner might pass inventory reporting down to the “show,” while another might only pass reporting by “network.” This makes it difficult to compare your traditional TV and connected TV reporting in an apples-to-apples fashion. However, there are initiatives taking place in the industry to alleviate these challenges. There are also CTV attribution products available to advertisers that can demonstrate a campaign’s effect on brand perception, store traffic, and sales lift.
7. CTV can complement your traditional linear buys.
While we think connected TV is pretty great, it should not be your entire advertising strategy! There are certain situations where the scale of traditional linear TV and the ability to target by specific shows make sense.
The strength of connected TV is in its ability to provide precision targeting and efficiency, coupled with reaching the growing audience of TV viewers who cannot be reached by traditional TV.
In many cases the smart strategy will be to use the advantages of connected TV to complement traditional linear buys.
So there you go! Some quick tips and insight into the world of CTV. But that’s only scratching the surface. We haven’t talked about things like the differences and similarities of inventory or how to enable attribution measurement.
That’s why we’re creating an all new SpotX University course designed specifically for linear TV buyers, helping them navigate how to include connected TV into their overall TV media strategy. Pre-register by filling out the form below and we’ll send you early access once it’s live.
This article was written by Nick Hoffmann, director of global client education at SpotX.