The change in the way consumers see, interact with, and receive advertisements on their television over the last 60 years is so significant that television advertisements from the 1960s almost seem like satire. Back then, there were less than 100 total TV channels, color was just making its way into the market, and all television went off-air at midnight. Now, there are more than 1,700 channels, hundreds of streaming services, countless video platforms, and numerous connected TV platforms available—all of which offer increasingly interactive advertising formats.
With millions “cutting the cord” and leaving traditional broadcast TV in favor of streaming and connected TV (CTV), why are some advertisers resisting the move to CTV? As the saying goes: “adapt or die.”
The Decline of Traditional TV Advertising
The growth in streaming platforms and connected TV programming inversely follows the decline of cable TV and set-top box users. With more options to view just the content they want, consumers are “cutting the cord” and moving online. By 2026, more than 80 million households will be cord-cutters. And most cord-cutters say they don’t miss anything about cable TV. Especially among young audiences, traditional linear TV viewership is no longer where advertisers should look to reach their audiences.
Despite the growing movement away from linear TV, traditional television advertising still pulls more advertising budget than CTV. The reasons for the lagged shift in ad dollars might include large audience or expensive ad campaigns—like Superbowl ads—on traditional TV, more efficient advertising options and targeting on CTV, and a difference in consumer spending amongst different age groups.
That being said, the delta is expected to narrow and by 2027, CTV spending will be nearly 80% of traditional TV spending. Brands looking to capture growing audiences, precisely target, avoid ad fatigue, and see more immediate results are moving their spending to CTV.
The Rise of Connected TV
Connected TV devices began to appear in the early 2000s. In the last 10 years, adoption of the platform has grown exponentially. With access to streaming services (Netflix, Hulu, Disney+), online video platforms (YouTube, Vimeo, TikTok), as well as internet-based live TV (YouTubeTV, Fubo, DirecTV Stream), CTV just offers more value for viewers. That’s why, in 2020, connected TVs accounted for 79% of all flat-screen TV sales worldwide.
With more people accessing internet-based content via their TV, advertisers have found new places to engage with their customers. Because of their internet connection, huge amounts of data on demographics, geographic location, and customer behavior can be used to accurately target audiences. Best of all, CTV ads open up two way communication with customers. Viewers can interact and take direct, attributable action from CTV ads.
It’s important to note that CTV ads are ads specifically designed for connected TVs, while over-the-top (OTT) ads are designed for video and streaming services, which can be accessed and seen on connected TVs. Oftentimes the terms are used almost interchangeably but they do have distinct meanings.
Key Features of Connected TV Advertising
CTV advertising differs from traditional TV advertising because ad placements are bought and sold in a programmatic process, with the bidding process happening automatically in fractions of a second. This is quite distinct from the legacy media buying process. It lets ads get significantly more targeted and saves companies from paying extra for ads that reach viewers outside their target audience.
CTV ads also exist in several distinct formats including video ads, display/banner ads, and sponsored content. They can include clear calls-to-action and links that drive direct responses. They don’t rely on commercial breaks to serve viewers ads like most linear TV ads do.
With precision advertising, your CTV ads can become part of a cohesive advertising journey driving your customers from awareness to purchase.
Adapting to the New Advertising Landscape
Shifting weight to CTV might involve dynamic changes in your marketing strategy. You’ll have to learn to use new CTV ad platforms (or you could work with Agility to handle CTV, display, and more). These platforms allow for targeting and filtering based on several sources of data to help build the most accurate audience.
You’ll have to change how you develop your ads. All advertisements you produce should be high-quality, but CTV might just require more ads. Whereas linear TV ads limit testing, CTV requires ads for your specific audiences and can handle multiple different iterations for testing.
What’s more, CTV ads can be much more interactive and offer the option for a direct response. Craft your messaging and call-to-action in a way that will lead to immediate conversions. With such targeted advertising and attributable results, the concept of brand awareness is dead. CTV helps convert TV advertising into performance advertising.
The metrics you care about will change too. Traditional TV metrics rely heavily on Nielsen data and include reach, gross rating points (GRP), effective reach, and affinity index. Those metrics help advertisers to know how much of their target audience was reached.
Because CTV relies on more specific data for targeting, metrics are more performance-focused including completion rate, cost per completed view (CPCV), view-through conversions, and return on ad spend (ROAS). Advertisers get a much better understanding of what they’re actually getting from CTV ads.
Leverage Connected TV in Your Advertising Strategy
CTV ads can be more efficient and effective than traditional TV ads. But CTV ads used in a comprehensive precision strategy become even more potent. By using CTV as part of the journey to conversion, Agility is able to serve your precisely targeted customers with ads they care about, on platforms they care about, when they care about them. With precision measurement, the real revenue impact of your advertising efforts is clearer than ever.
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Frequently Asked Questions
What is the difference between CTV and traditional tv advertising?
Traditional TV advertising (also known as linear tv advertising) provides ads to viewers with the only customizability being channel/show and time. As such, your ads might reach some of your target audience, but it’s likely to reach plenty of people outside of your target audience. Connected TV (CTV), on the other hand, uses internet connection and various points of data to provide targeted, personalized ads to your audience. CTV also offers several different ad formats including banner ads, OTT video ads, and sponsored content.
How does Connected TV advertising work?
Like other forms of digital advertising, connected TV (CTV) advertising serves internet-connected TV (also known as smart TV) viewers with targeted ads based on household data including demographics, geographic location, and content interests. It’s yet another place where advertising can reach your specific target audience.
What is the difference between traditional and digital advertising?
Traditional advertising and digital advertising each involve distinct ways to reach your customer and can provide different value. Traditional advertising focuses on mediums like linear TV, radio, magazines, and out-of-homelike billboards or busses. These can create very localized ad campaigns, but result in lower, delayed conversion.
Digital advertising makes use of all new and developing digital formats on websites, apps, social media, and connected TVs. Using various datasets, it can be much more targeted (which makes campaigns generally cheaper), it can reach audiences across the world, and offers a two-way interaction with target customers. The results are more directly attributable and more cost-efficient, however digital advertising can miss older demographics.
Is traditional TV advertising still effective?
In short, it depends on your goals. If you have a local campaign, a campaign focused on an older demographic, or a large-scale broad-reach campaign, traditional TV is a good way to reach your audience. But the benefits of CTV are quickly outpacing traditional TV. Precise targeting, cheaper costs, immediate response, and more accurate analytics are all reasons advertisers are moving their budget to CTV.
