As CTV Advertising Evolves, Here’s What It Can Learn from the $200B Paid Search Model
Driven by COVID-19, consumers have drastically shifted the bulk of their purchasing habits to online. In response, brands and advertisers have had to pivot their business models to reach those digitally reliant consumers. Companies also have to grapple with getting the attention of consumers who are constantly plugged into content on digital devices.
As of 2022, 92% of households were reported to be reachable by CTV programmatic advertising. Additionally, 85% of consumers report using second devices such as smartphones or tablets while watching television. And while marketers have always intuitively grasped television’s ability to influence sales, the arena has been historically dominated by a handful of advertisers who could afford the medium’s high cost-of-entry and smaller businesses have been forced to sit on the sidelines.
CTV advertisers are certainly doubling down. Digital ad spend increased by 49% and CTV advertising spend is expected to reach $50 billion by the end of 2022. That number is only forecast to grow as we enter into the 2023 planning season. Marketers of all sizes have before them a unique opportunity to capitalize on this evolving format.
But before they do that, it’s important to take a look at where innovation currently lies within CTV advertising, where it has room to grow, and how marketers of all sizes can find their place in the medium. Ironically, it’s likely going to require the industry to think back to the early days of paid search—and apply some of those same market principles to today’s formats—to usher in the renaissance of CTV advertising.
Where we’re at as an industry now
Television has never been inclusive of smaller brands and measurement of its effectiveness has always been elusive since it is not “clickable.” Traditionally, it has been anchored in 1:1 sales processes, expensive ad buys, and notoriously poor measurement and attribution.
These factors have resulted in the roughly $75 billion TV market being dominated by 500 advertisers who drive 85% of TV ad spend. Largely because of that, the market has stagnated while performance-based digital media, with its sophisticated approaches to precision ROI, has seen virtually unimpeded growth, and now accounts for over $200 billion in annual spend.
This does not have to be the case.
An important look back to understand how we got here
For the last 20 years, as consumers have spent more time online, ecommerce has exploded. And the key driver of online commerce is a concept that was introduced 25 years ago by marketing visionary Bill Gross in an Internet incubator in Pasadena, California. The advent of this revolutionary model would forever impact how goods and services were sold.
From today’s vantage point, his thought process behind this at-the-time startling innovation was fairly straightforward: What if consumers could identify people who already had a need for or an interest in something and put a relevant ad in front of them at the exact moment when they expressed it? And what if media were sold in an automated marketplace, where any marketer could reach a global audience instead of just a few, a few hundred or even a few thousand people?
This marketplace model was first implemented in Bill’s paid search engine, GoTo.com, which launched in 1997 and generated quick adoption by enabling millions of businesses to advertise to mass audiences. And that was just for starters—the marketplace model ultimately led to the re-invention of all digital media, from paid search (Yahoo, Google, Bing) to social media (Facebook, Snap, etc.) to display and video advertising (Yahoo, The Trade Desk, etc.), as well as new categories including ride sharing (Uber), food delivery (Instacart), event tickets (StubHub), real estate (Realtor.com) and property rentals (Airbnb). Today, nine million businesses participate in digital marketplaces like Google and Facebook, spending more than $200 billion annually.
History repeats itself; it will take marrying the old with the new to advance
So as the global marketplace becomes even more reliant on digital advertising, how can digital advertisers reach audiences that have become increasingly tech-savvy over the past few years?
Streaming TV is quickly becoming the dominant way consumers watch TV—today there are nearly half a billion paying subscribers between Netflix and Disney+ alone. This trend will only accelerate. And to reach these consumers, advertisers are flocking to TV in record numbers, enabled by search-like, self-managed CTV buying and measurement consoles that can measure actual business outcomes (e.g., website visitors and sales) and ROI that result from TV ad viewing on a deterministic basis. By 2024, more than 200,000 search and social advertisers will be active on CTV. Digital-first marketers that move to TV will usher in a new renaissance period of television advertising, benefiting content producers and consumers. And it starts today.
[Editor's note: This is a contributed article from tvScientific. Streaming Media accepts vendor bylines based solely on their value to our readers.]
Related Articles
A joint study by Vevo and Channel 4 found an almost 50% rise in consumers with a notable preference for premium television content. Roxanne Harley, Director of Client Strategy at Azerion, explains how advertisers can adapt to this consumer preference shift and optimize ad placement strategies within CTV environments to impactfully and accurately reach incremental, addressable audiences.
15 Mar 2024
CEO of AdImpact Kyle Roberts discusses how television wastes ad impressions for Tier II media buyers focused on driving traffic to specific, local businesses, why this is a significant problem, and how new tech that allows for finer-tuned zip code analysis is the solution.
25 Apr 2023
Despite a worldwide ad spending slowdown, CTV is expected to continue its meteoric growth into 2023. While CTV is so popular it's immune to spending cuts, it still has issues, especially regarding brand safety, suitability, and data transparency. Mario Diez, CEO Peer39, discusses the challenges currently facing CTV.
09 Jan 2023
Tony Mooney of ThinkAnalytics discusses approaches for optimizing TV behavioral targeting at whatever speed suits the local market or operational constraints.
07 Dec 2022
Will Offeman, Chief Product Officer of WideOrbit, outlines the top seven automation processes to help streamline ad sales from pitch to payment, saving broadcasters time and money.
05 Dec 2022
As the fight for eyeballs intensifies, we are seeing more and more companies diversify their monetization strategies to include ad-supported revenue models that scale their advertising offerings and capabilities. As companies like Disney and Netflix debut ad-supported models, marketers and advertisers can take advantage by integrating themselves into the OTT mix to create campaigns that hook viewers in.
01 Nov 2022
Why is CTV one of digital advertising's fastest-growing channels, and where is CTV advertising heading? The channel is likely to keep growing fast thanks to larger audiences and viewer demographics, rich storytelling possibilities in a medium poised to capture consumer attention, and evolving measurement capabilities that will make CTV a go-to for both brand and performance marketing.
24 Aug 2022
At the end of the day, the goal in having publishers extend their content offerings to the CTV medium is to prime themselves for the future—to continue to grow their audience and diversify their content in a way that will have impact, and resonate. The time to take the leap is now.
03 Jan 2022
CTV is shaping TV's transformation and putting pressure on the need for measurement innovation in the age of converged TV. Measurement innovation must sit at the center of this transformation, and take on the role of redefining how we evaluate TV altogether, from the common metrics used across both linear and streaming, to how we create a more interoperable ecosystem that delivers value to us all, from viewers to advertisers and publishers.
12 Nov 2021
Connected TV still might not yield the numbers that traditional TV does, but its targeting capabilities make it a better buy than linear
09 Nov 2021