Digital Video Advertising: Exceptional Value of CTV

Industry Insights

Video is the MVP among all digital ad formats, and one of the few ‘classics’ that has been rising for the last 50 years. Technological evolution has led to the point where we consume dozens to hundreds of small videos every day through social media (Instagram, Snapchat, TikTok, etc.) as well as through ads. Browsing through news feeds, websites, and one’s favorite TV programs is all inherently associated with video ad display. Connected TV (CTV) is one of those advertising fields that take the benefits from running digital video ads to another level. Despite this, many advertisers are unaware of the opportunity this simple and well-known format offers on CTV platforms.

What is digital video advertising?

Digital in this context means that this type of ad is designed and distributed through various digital environments like web browsers, CTV devices, or numerous other types of video-powered services. These digital video ads are normally delivered through programmatic platforms, meaning that ad placement purchases and the rest of the ad-exchange negotiation process is handled automatically. It also enables advanced targeting options based on users’ preferences, behavior, and location.

CTV ad formats differ from one to another, depending on the type of channel, content, and your own desire.  These are divided into categories: linear or nonlinear; in-stream or out-stream. Through digital video advertising, businesses reach their goals in building brand awareness or driving increased revenues.

How digital advertising work

Now let’s get technical! CTV is basically a technological shell for Over-The-Top (OTT) services that distribute video content using the internet. That content (as compared with traditional cable networking) is delivered without the involvement of Multi System Operators’ (MSO). Apart from that, most CTV/OTT services resemble the usual media ‘analog’. For an illustration, let’s look at Facebook’s WhatsApp messenger. Technically, it’s a mobile messaging application, but instead of the GSM network and SMS, it utilizes internet-based protocols. That means WhatsApp is an OTT messaging service. On CTV we have Netflix,  Apple TV, and other such platforms as good examples of the transition from traditional TV.

When it comes to video ad tech, apart from the difference in delivery technique, the experience is quite similar to the traditional TV experience from a user perspective. Just like on regular TV, viewers are willing to accept ads to watch their show, especially if it comes for free. Studies suggest, however, that on CTV ad tolerance is significantly higher for free services. Nearly 76% of CTV users don’t mind viewing ads to access free video streaming. CTV typically utilizes pre-rolls, mid-rolls, and (sometimes) post-rolls for video advertising – those ads are played before, during, or after the show, respectively. Nonetheless, the system is not restricted to those types of ads, opening bigger creative opportunities for advertisers.

CTV, OTT, PTV. Can you tell the difference?

CTV is no more than a hardware platform that enables internet-connected video content distribution. For that reason, smart TVs, gaming consoles, and various streaming (or not even streaming) devices are all considered CTV. OTT, though, is on the software side of streaming technology. In other words, OTT is an app that delivers video content through the internet.

Programmatic TV (PTV) is the ad delivery method that places ads inside the CTV/OTT environment, applying user targeting and specific algorithmic setups. It operates through the medium of CTV ad networks or dedicated platforms for advertisers (DPSs). This automates the entire ad exchange, as negotiations no longer involve people. Instead, human operators run their processes via dashboards just like they do with Google ads, for instance. This allows for a more personalized targeting approach based on user data.

Programmatic in video advertising and monetization

Programmatic video advertising is nothing out of the ordinary today. Almost all marketing platforms nowadays utilize programmatic solutions, which means the era of manual deals and processes is gradually ending.

Ad exchange is basically an online marketplace where advertisers and publishers meet to exchange their ad inventories. Ad placements are sold ‘en mass’ meaning that the bidding is carried out automatically.

Ad networks, however, bring a more personal touch to the ad placement process. These networks gather inventories from publishers and then consequently sell them to interested advertisers. If a buyer is interested in placing  ads on a specific website/stream, one goes to ad networks.To have a better understanding of how digital advertising works on CTV, let’s have a look at the main programmatic advertising components first.

Supply-side platform (SSP) is the type of software created for publishers to put up on sale and coordinate ad inventories. The role of an SSP here is to list that inventory on multiple ad networks to secure wide reach. Through offering inventories to a wider range of platforms, SSP increases its chances to find interested buyers and therefore – get profitable deals.

Demand-side platform (DSP) practically works the same way as SSPs do. The only difference is that it serves as an entry point for advertisers. This type of software allows them to compete with each other to purchase better impressions and approach their audience in a more efficient way.

Benefits of digital video advertising on CTV

Digital video ads are great generic tools for growing businesses to interact with their target markets and growing brand recognition for multiple reasons:

  1. Videos ensure more of a personal, comprehensive, and entertaining connection with users, more effectively than other types of ads. The fusion of visuals, sounds, and animations affects multiple sensory inputs and hence increases emotional engagement (if done right).
  2. Millennials love connected television! That’s why it’s a great platform to reach younger audiences. The content promoted on Netflix, Hulu, AppleTV, Disney+, etc. attracts tech-savvy Millennials and Gen Z kids much more strongly than boring old-school shows from cable.
  3. Another reason to jump in the CTV video ad party are the numbers. As the IAB suggests, CTV had 8% growth by mid-2020, compared to the same period in 2019. 2021, in turn, will see the industry rise even higher. In the US alone, media professionals expect a 40% jump in CTV ad spends. This goes to show that the COVID-19 pandemic, despite the disruptions it caused in the creative industry, did not slow, but rather accelerated the global CTV/OTT expansion.

Takeaways

Digital video advertising market is a fast-growing and attractive niche for most modern marketers, as it provides unmatched opportunities for all kinds of businesses. With the further development of networking technology, the evolution of the internet, and improved connectivity around the globe, high-quality video streaming services cannot help but thrive in the near future. The most reliable way to embrace the new advertising paradise we see is to invest in programmatic. With the VlogBox video monetization platform, you can make the whole process much more effective, and, importantly – profitable.