Connected TV… 2021’s Most In-Demand Ad Format?

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Despite the widespread decline in ad budgets during the COVID-19 pandemic, connected TV ad spending is on the up and up. And it’s expected to keep growing.

While an estimated $8.11 billion was driven into the CTV ad market last year in the United States alone, experts believe that this figure will grow to $11.36 billion during 2021, and to a whopping $18.29 billion by 2024. Amazon Advertising’s Joe Pinsky, who heads up the organisation’s Video Advertising Product Management team, is just one industry leader predicting incredible future growth for CTV advertising, stating that ‘advertisers are increasingly turning to Fire TV’s ad-supported content to reach an incremental audience whose viewing behaviours have shifted from traditional cable’.

The big question on every advertisers lips right now is ‘why is CTV advertising so vital for 2021?’. To find the answer to the question, it’s important to start at the very beginning…

What is Connected TV?

Connected TV is exactly what it sounds like; it’s television that’s connected to the web. The obvious example is a smart-enabled TV, although the term ‘CTV’ encompasses all other connected devices that can be used to stream content, including TV sticks, set-top boxes, games consoles, and mobile devices. Hulu and Roku are amongst some of the most well known, along with the Amazon Fire selection of hardware offerings.

Connected TV advertising refers to viewable ads displayed amongst CTV content. For example, an advertiser can use the Amazon demand side platform (DSP) to programmatically purchase CTV ads through a live virtual auction, each of which has its own built in parameters relating to ad space size and positioning. These ads will then be placed in agreed positions amongst the Amazon Fire ecosystem, along with the IMDb network. Ads do not, however, feature on the Amazon Prime video service.

Rising Demand

CTV advertising has been rising steadily over the past few years. In 2018, it was estimated that CTV ads were capturing around 12% of total digital ad spending as more and more advertisers chose to shift from linear TV, particularly for time sensitive messaging. While marketing communications could easily become irrelevant through linear TV should a viewer be watching recorded content at a later date, connected TV completely eradicates this with real time ad bidding; a major draw for advertisers.

And this isn’t the only reason for growth. With connected device usage continuing to increase, CTV advertising has naturally become a more attractive option for reaching audiences. The Interactive Advertising Bureau’s ‘Changing the Channel’ report suggests that 47% of British households now feature a smart-enabled television, while 68% pay for some sort of streaming television subscription. And, as it turns out, ads aren’t a particularly big turn off. Viewers don’t dislike CTV ads quite as much as many think.

In fact, an October 2020 study by Integral Ad Science found that only 55% of ad-supported streaming video viewers choose to skip ads when they have the chance. It’s been reported that viewers actually prefer CTV ads to linear TV ads, mainly because of the greater variety, but also because they feel better able to limit over-exposure.

The Pandemic Effect

Two people holding a covid banner

It’s clear to see that CTV ad spending was already on the rise prior to the global health crisis, but the growth has undoubtedly been accelerated by the COVID-19 outbreak. CTV advertising is rooted in the idea of reaching audiences where they are… and for many people today, where they are right now is at home, streaming video content.

Video analytics firm Conviva states in its ‘Streaming in the Time of Coronavirus’ report that streaming media usage rose by upwards of 20% at the start of the pandemic on a global scale, while a post on Google’s blog confirms that requests for connected TV ads have increased threefold within the last 12 months. These statistics are supported by research showing that the number of connected TV ads rose by 70% between Q1 and Q3 2020. And while some believe that the pandemic effect will only be temporary, all available information is pointing to CTV usage not returning to pre-pandemic levels.

Not Just Any CTV…

The main question this post intends to answer is whether connected TV will be 2021’s most in-demand ad format. But things aren’t quite as black and white as that. Connected TV advertising on a broad spectrum can be beneficial, but 2021’s leading ad format won’t just be any type of CTV advertising… it will be Amazon CTV advertising.

While the ‘State of Connected TV’ report by fraud management firm Pixalate confirms that 49% of all CTV ads currently go to Roku devices, Amazon is expected to knock the American digital media from the top spot on the leaderboard this year… and beyond.

Why? It’s all to do with data.

Amazon’s demand side platform offers something that no other advertising platform can: absolutely masses of in depth first party customer data. Sure, Roku, Apple TV, and all the others have their own data sets, but none has access to the hugely valuable historical browsing and purchasing data that Amazon does through its commerce network. While others can bridge gaps and fit bits and pieces together to form a comprehensive audience overview, only Amazon can do it with 100% accuracy.

Amazon itself claims that over-the-top (OTT) video ads that utilise first party Amazon shopper data drive 44% more page views than OTT ads relying on demographics alone.

That’s the differentiator here. Amazon’s ecommerce platform holds epic quantities of data that show which households are searching for which products, what shoppers are buying what, and perhaps even more importantly, what they’re not interested in. This data is shared with the Amazon demand side platform, enabling advertisers to directly tie their CTV ad campaigns to specific user interactions and on-Amazon purchases to boost conversions and sales. You could say that it’s targeted marketing at its very finest.

Why is Amazon CTV the Hottest Ad Format of 2021?

Laptop displaying a series of charts

Amazon’s wealth of first party data is clearly beneficial to marketers. But why is it even more important in 2021? The answer is simple: today, advertisers must do more with less.

It’s no secret that the pandemic sparked a record decline in marketing budgets. In Q2 2020, the IPA Bellwether Report noted that more than half of all advertisers had had their budgets slashed; the biggest drop since the report was first launched in 2000. With the economic uncertainties created by the crisis means that advertisers need more bang for their buck… they need to drive better results with limited financial resources.

And that’s exactly where Amazon CTV advertising comes in. Amazon’s first party data allows for very precise targeting, providing advertisers with huge levels of confidence that the ads they’re investing in are reaching the right people, at the right time, driving improved results, having a greater impact… all to generate more sales and revenue.

Beyond Fire?

Amazon’s connected TV ads are already on track to be the most in-demand ad format of 2021, but the rumour mill is rife with talk that Amazon could truly solidify itself as the CTV ad leader by expanding beyond the Fire ecosystem, displaying ads elsewhere.

Last year, it was reported that Amazon was keen to form new partnerships with other media networks, enabling businesses to use Amazon’s first party data and demand side platform to bid on CTV ads outside of Fire TV and IMDb. While there are multiple contenders for the alleged partnership, Disney+ is perhaps the most likely following a 2019 deal that saw Fire TV being given the go-ahead to stream Disney+ content.

What Does This Mean for Advertisers?

Couple sitting on a couch while he changes the channel with a TV remote

Ultimately, what all this means is that advertisers should be considering the impact that CTV – and more importantly Amazon CTV – could have on their business, not only during challenging times, but beyond. There are many benefits to choosing this ad format, like:

  • Reaching the right audiences, at the right time. With first party data from the Amazon ecommerce platform, advertisers can hyper target their ad campaigns to ensure that their message is being delivered only to the most relevant people.
  • Driving improved results. The flexibility of Amazon’s OTT ad platform allows advertisers to customise their message for different audiences, sparking action amongst CTV viewers and directing more traffic to existing Amazon listings.
  • Supplementing Amazon display ads. Although Amazon CTV advertising is available to all, it’s best suited to those who already advertise on Amazon, complementing alternative campaigns like Display Ads and Sponsored Brands.

Amazon states that its ads reach upwards of 50 million monthly viewers of ad-supported content, so it’s something that’s definitely worth considering. Advertisers can choose the self-service option through the Amazon demand side platform, just as you would set up any new campaign, or through a paid managed-service option. This can be a simpler way to get started with connected TV advertising, although with a minimum monthly spend requirement of $35,000, self-service is often the preferred option here.

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