The shift from traditional television viewing (linear) to streaming services on your Smart TVs has been underway for several years. Where linear television viewing was once the norm for reaching large audiences, we have seen significant growth in video on demand on various devices over the past 15 years. According to research commissioned by Telecompaper, the share of linear TV viewing is smaller than Video-on-Demand in multiple target groups.
This shift is also visible in advertising, with strong growth in online video advertising once again evident last year, a 7% increase compared to 2022. This is significant as advertising via linear TV decreased by 6%. Dutch broadcasters adopted this trend years ago and automatically schedule space on their digital platforms. Advertisers make extensive use of this, resulting in high prices due to the scarcity of inventory.
The Growth of Connected TV
The Connected TV segment is showing significant growth. An example of this is YouTube, which reaches around five million viewers daily in the Netherlands via CTV. This demonstrates how powerful and widespread the use of CTV has become. The average Dutch person currently uses 2 to 3 streaming services; we haven't stopped "watching TV," but we use it differently. Streaming providers like Netflix (49%), Videoland (20%), and Disney (19%) are also gaining an increasingly larger market share (source: Telecompaper)
The Future of Advertising: Programmatic Advertising on Connected TV
Exciting developments are on the horizon in advertising:
- Disney+ Advertising inventory is already available via its own Adexchange DRAX.
- Netflix has started offering programmatic CTV advertising in the United States.
- AdAlliance will start offering advertising for HBO Max this month.
These developments mark a new phase in the evolution of television advertising, focusing on precise targeting and reaching the right audiences without cookies.
For advertisers looking to capitalize on this growing trend, now is the time to step in. Below are the main advantages and disadvantages of CTV advertising discussed.
Advantages of CTV Advertising
CTV advertising offers advertisers various advantages that contribute to more effective and targeted campaign management. Here are some of the key benefits:
1. Targeted Ads
- Better Targeting: Precise targeting based on demographic data and viewing behavior.
- Granular Data: Detailed insights for campaign optimization.
2. Interactivity
- Direct Interaction: Clickable overlays and QR codes increase engagement.
- Engagement Tracking: Insight into user interaction for real-time adjustments.
3. On-Demand Content
- Non-linear Viewing: Higher chance that ads are fully watched.
- Ad Completion Rates: Higher ad completion rates.
4. Greater Reach
- Broad Audience: Reach a wide and diverse audience through popular streaming services.
- Multiple Devices: Access via Smart TVs, streaming devices, and mobile devices.
5. Measuring and Optimizing
- Real-time Data: Immediate access to performance data for quick optimization.
- A/B Testing: Ability to test different versions of ads for maximum effectiveness.
Disadvantages of CTV Advertising
Despite the many advantages, there are also some disadvantages associated with CTV advertising. Here are the main points to keep in mind:
1. Costs
- High Prices: The costs for CTV advertising can be significantly higher than for linear TV advertising, especially due to the scarcity of available inventory in popular target groups.
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Budget Pressure: For smaller advertisers, it can be challenging to remain competitive within the CTV landscape.
Tip: Pay attention to the intended pressure you want to achieve in combination with your media KPI. Optimize flexibly between providers.
2. Fragmentation
- Fragmented Market: The fragmentation of the market across different streaming services makes it difficult to reach a broad audience without involving multiple platforms.
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Lack of Focus: Spreading the budget too broadly across many platforms can reduce the effectiveness of the campaign.
Tip: Ensure focus within your plan and avoid budget fragmentation to achieve optimal results. Focus on a few major players rather than all providers.
3. Technological Barriers
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Accessibility: Not all households have the necessary technology to use CTV, especially among older target groups, which can result in lower reach compared to linear TV advertising.
Tip: Carefully analyze which target groups you want to reach. While linear TV advertising is becoming less effective, it remains essential for broadly reaching a large number of target groups.
Why Should We Use CTV Advertising Compared to Linear TV Advertising
CTV advertising offers advertisers a multitude of opportunities to reach and engage their target audience more effectively than traditional linear TV advertising. Thanks to precise targeting, interactive features, and detailed reporting, campaigns can be executed much more targeted and efficiently. The ability to tailor ads to the viewing behavior and preferences of individual users not only increases relevance but also engagement, leading to higher completion rates and better ROAS.
Moreover, the flexible and on-demand nature of CTV allows for reaching a broader and more diverse audience, which is essential in an increasingly fragmented media environment.
For advertisers looking for innovative and effective ways to convey their message, CTV advertising offers a powerful and future-oriented alternative to traditional TV advertising.
Take Advantage of the Opportunities of Programmatic Advertising on CTV
At Follo, we are happy to help you make the most of these opportunities. Contact us for a non-binding consultation and discover how your brand can grow with Connected TV via programmatic advertising.
