Everything you need to know about Connected TV advertising—what it is, how it works, and how to harness its power.
For over 50 years, the way television advertising was bought, sold, and delivered to audiences stayed the same because, well, the way consumers watched television also stayed the same. The vast majority of programming was only available over the air, through cable, or via satellite. All of that has changed in the last 10 years. Viewing audiences have more choices when it comes to what they watch and an ever growing list of options for how to access that content – all made possible by a connection to the Internet.
With technology revolutionizing the industry at such a rapid pace, understanding and navigating this new world of connected TV advertising can be difficult for even the most seasoned advertising executive. That is why we created this guide. In it we provide a rundown of Connected TV advertising, including what it is, how it works, and what advertisers want to know.
Connected TV (CTV) advertising refers to digital video advertisements that run with live and on-demand TV content streamed over the Internet to a television screen.. CTV gives advertisers the power to pinpoint their audience through ad targeting and advertise directly to them.
Connected TV ads are played with content accessed through channels and apps on Internet-connected devices, viewed on large format TV screens. Not only does a robust marketplace of advertising opportunities currently exist, the number of channels and apps offering ad-supported services is growing daily.
Great question! “CTV advertising” and “OTT advertising” are often used interchangeably, but there is an important distinction. OTT (over-the-top) describes how TV content is delivered (Internet) whereas CTV describes what the content is viewed on (television).
So, CTV advertising exclusively refers to content viewed on large format TV screens , while OTT advertising could refer to streaming content viewed on devices other than TV (mobile, tablet, etc.).
Before getting too far into things, a quick primer in CTV acronyms and terms is essential. Otherwise this: “When advertising to CTV by way of the Sling TV vMVPD on a Roku OTT device, the SSP and DSP communicate through an ad exchange via a PG PMP deal where the SSP provides the IDs from the OTT device and the DSP programmatically adjusts the advertiser’s bid based on AI evaluation of likelihood of conversion,” will make no sense.
CTV Device: 1. Any television device connected to the internet. 2. A synonym for OTT Device when that device is connected to a television for viewing.
CTV App: see OTT service.
CTV Advertising: Commercials served over the internet to CTVs.
Addressable TV: CTV advertising strategy that emphasizes audience segmentation for relevant messaging.
OTT Device: Any device used to access streaming media over the internet.
OTT Service: An application used to access streaming content.
OTT Content: Streaming programming, live or on-demand, accessed through an OTT Service/OTT Media/Advanced TV.
OTT Advertising: Commercials served over the internet to any device accessing OTT Content.
Programmatic Advertising or, simply, Programmatic: 1. A blanket term describing the method of using software to automate bidding when transacting ads over the internet. 2. A synonym for display and non-CTV video advertising
Real-time bidding (RTB): A system for auctioning ad inventory over the internet that permits data to be exchanged and a transaction to be made in the time between when an ad is requested from the OTT Device and the time the content loads.
Full-episode Player (FEP): Any media player or spot featuring full episodes of premium half-hour or hour-long content with commercial breaks.
Video On Demand (VOD)
Direct Insertion Order (Direct IO): A contract between a supplier (usually a publisher) and an advertiser to run ads on their properties during a specified timeframe.
Programmatic Guaranteed Deal (PG): A contract between a supplier and an advertiser to provide defined impressions on their properties for a specified campaign. Sometimes this involves preferential treatment in private RTB auctions or access to a more exclusive private auction.
Private Marketplace Deal (PMP): A contract between a supplier and a buyer to gain access to a private auction for some programmatic advertising.
Owned and Operated Apps (O&O): TV Networks that have developed their own OTT Service are said to have O&O apps.
Multichannel Video Programming Distributor (MVPD): A service that packages together content from multiple networks. Cable, Satellite, and broadband TV services are traditional MVPDs.
Virtual MVPD (vMVPD): A distribution service that activates over the internet. vMVPDs are also referred to as Skinny Bundles.
Supply-Side Platform (SSP): A software service that publishers can partner with to make their inventory available for programmatic advertising. SSPs play a critical role in the programmatic infrastructure by communicating with DSPs and Ad Exchanges and providing data back to publishers.
Demand-Side Platform (DSP): A software service that advertisers can partner with to buy programmatic advertising. DSPs play a critical role in the programmatic infrastructure by communicating with SSPs and Ad Exchanges and providing data back to advertisers.
Personally Identifiable Information (PII): Data that, on its own or with other data, may be used to identify a person. Name, address, and phone number (NAP) are prime examples of PII.
Cross-Device Graph: A relational database that can associate devices with people or households. This can be accomplished by using a common key, say the same person authenticates to the same service on multiple devices (logged into Facebook on phone and laptop) or by using deep learning to analyze all data signals and project likelihood that devices are associated at a particular level (person or household). The common key usage is called deterministic while the deep learning approach is called probabilistic. If a cross-device graph also includes PII, it can be referred to as an identity graph.
CTV advertising videos run before and during live and on-demand programming. This type of advertising can be purchased traditionally, but most CTV advertising is bought and sold programmatically through RTB, or real-time bidding. Here are the basics:
First, you need an ad. Most publishers and platforms require high-quality :15 or :30 videos.
Then, you need a paddle. An auction paddle, that is. The OTT service requesting the ad shares its sales pitch (who’s watching, what device, operating system, etc.) which the auctioneer then relays to the bidders and the interested buyers submit their bids. The highest bid wins the spot. There are also extra-fancy private auctions where only select buyers are invited. The most premium inventory is often sold in private auctions.
That’s it! The bidding happens in real-time and the winning ad spot runs the moment the auction is over.
Direct IO (Insertion Order)
This is the traditional method. Advertisers, or their hired firm, talk to the supplier and make a deal.
PG (Programmatic Guaranteed)
This is like an insertion order, but one that can be transacted programmatically. It requires brand verification, spend commitment, and flight dates and guarantees the amount of impressions.
PMP (Private Marketplace) Deals
These deals are done with a paddle at an auction (above).
Open Market: “Bidder Beware”
The open market for CTV inventory is a bit hazardous. The kind of content that most advertisers want access to generally isn’t available on the open market. Purchases in the open market can be very risky.
Not to be dramatic about it, but it is completely different in every way imaginable.
Okay, okay, there is one thing they have in common: they are formatted for and run on TVs. Let’s take a look at the 5Ws (and that one pesky H) to see how they compare.
|Connected TV||Traditional TV|
|Who?||With ad targeting, the audience can be whoever the advertiser wants them to be.||Anyone who falls within the broad demographic most likely to be viewing the TV programming.|
|What?||Ads can be more audience-specific and customized because the audience can be more customized.||Ads to maximize appeal to the broadest audience watching the program during the specific spot.|
|Where?||Large format TV||Large format TV|
|When?||Any time, day or night, whenever an individual chooses to watch TV programming.||At the prescribed runtime or during programming that measures well for the desired audience, depending on the purchase deal.|
|Why?||Advertisers want to target their audience with custom messaging. Smaller brands with smaller budgets want to reach their specific audience. Advertisers want to reach cord-cutters and the cordless who no longer consume traditional TV. Advertisers desire measurable business outcomes.||Advertisers want the largest reach possible.|
|How?||Ads are purchased either up front in private contracts or programmatically in-the-moment and run for the specific viewer.||Ads are purchased up front, often at great cost, to run at specific times or during programming that measures well for their audience.|
Audience targeting with Connected TV is truly revolutionary. Through identity resolution, offline data from prospective customers can be digitally mapped to them and then, by extension, their homes and the TVs located within them. The power in ad targeting comes when you take identity resolution and combine it with first-party data targeting, third-party data targeting, and geotargeting.
This gives advertisers the power to pinpoint prospective customers who are, say, married, in their 30s with credit scores over 800 and have visited Wal-Mart in the last 30 days, and then advertise directly to them through the TVs in their home.
With audience targeting, Connected TV advertising offers virtually limitless opportunities to get creative. Because advertisers can pick and choose their ideal audience, they can advertise directly to that audience or even smaller segments of that audience by tweaking ads to appeal more directly to each type of viewer. For example, a car manufacturer might run an ad that is exactly the same except that men see the ad with men driving, women, see the ad with women driving, and parents see the ad with children also riding in the car.
That’s super exciting, but really you just want the specs, right?
|File Size||1GB Max|
|Resolution||16:9 ratio at 1920×1080|
|Bitrate||15,025 to 30,000 kbps|
|Frame Rate||23.98 or 29.97 fps|
|Audio Sample Rate||48 kHz|
|Duration||15 or 30 seconds|
Like everything else, Connected TV ad traffic measurement and attribution is next level. When the audience views an ad, impression-time data is immediately logged by the technology partners participating in the ad buy. With that data, a number of identifiers from those impression logs can be associated with people/households through identity resolution, which can then be used to collect household devices and, together with tracking tags on the site or app, monitor for conversions linked to the ad served. In other words, if Jane watches a CTV ad for Super Soft Socks (patent pending) on her Smart TV then later makes a purchase from Super Soft Socks on her mobile phone, attribution can be assigned because it has been determined through identity resolution that the Smart TV and mobile phone belong to Jane who just saw that ad.
It is also possible for identifiers to be compiled with a third-party measurement provider’s own data for other types of conversions, such as location visits or offline sales. So, if Jane decides to buy Super Soft Socks at Wal-Mart after seeing the ad, it is still possible to assign the attribution.
Commercials that convert