The CTV ecosytem may soon have its ‘year of mobile’

Before Matt White was Vice President, EMEA at Quantcast, he spent more than 10 years working in television at Channel 4, from 1997 to 2008. During that time, he remembers being shown his first smart television.

“I remember my boss taking me into a room and showing a few of us this thing called a smart TV – it was pretty much just a big computer with apps on it. But the fact that TV was being streamed on it, and you could have a selection – was really exciting,” he recalls.

“The chat in those days was – we’ve all been brought up with scheduled TV, linear TV. And there’s going to be a time, coming very soon, when you can watch any content you want, and you can do it on your own schedule.”

It took longer perhaps than those in the late-2000s television industry had predicted for this future to come to life, but now, in the early 2020s, it’s unquestionably here: on-demand television and streaming have become the norm, with entertainment delivered either via smart televisions or through smartphones, tablets, and laptop screens. Advertising for this new mode of TV consumption also has a name: Connected TV, or CTV, advertising.

CTV advertising is the subject of growing interest among brands who are keen to reach audiences as they consume streamed content, but it’s still an emerging channel. I spoke to White about the advertising opportunities present in CTV, the future of the medium, and what might take the growth of CTV from steady to explosive.

A sea change in television behaviour

Linear TV has long been the ultimate mass advertising medium, able to reach millions of people at the same time, making it perfect for brand awareness and brand-building. However, the proliferation of devices with smaller screens and the advent of on-demand broadcast content, YouTube, social video, and streamed entertainment channels like Netflix have eroded away at that dominance and mass reach. “The days of the scale we used to get, where there was one device, have gone,” says White.

CTV is still “nascent at the moment” compared with the more developed market for linear TV, but White anticipates a “sea change in activity” that will see CTV – content and advertising both – become much more prevalent.

“[Broadcasters] are saying [to advertisers], ‘We’ll give you value on linear TV if you buy into our digital CTV – our VOD (video on demand) programmes,’” White notes. “Which is totally flipped…. When I was [in TV], it was, ‘Invest more in linear TV, and we’ll give you some of this VOD.’

“And now it’s tipped the scales. So, they’re doing that because they can see that linear is coming down – and their future is in this [on-demand] side of the house.”

For “linear TV”, White means any kind of scheduled television broadcasting, while “connected TV” or CTV refers to non-scheduled, on-demand TV broadcast content like broadcast video on demand (BVoD) – the likes of BBC iPlayer or All4; and subscription video on demand (SVoD) – like Netflix and Prime Video (not to mention AVoD and FAST – the acronyms mount up).

Some definitions of CTV refer strictly to content displayed on an internet-connected television set, but other more expansive definitions include content that is streamed to devices like smartphones, iPads and laptops (often referred to as over-the-top, or OTT), given that these are often used to access the same services.

White acknowledges that the terminology we currently use to refer to linear and ‘connected’ television may seem outdated in a few years’ time. “I don’t even know if we’ll call it CTV – that might change. It’s like – nobody really talks about ‘broadband’ any more. You’re just online.”

The Fundamentals of Digital Advertising

The language and reach of TV with the precision of digital

These shifting definitions of CTV contribute to some of the hesitancy that marketers experience around connected television as an advertising channel: what exactly is being discussed? What does it mean to invest in CTV?

CTV advertising also occupies a slightly awkward space due to being simultaneously digital and audio-visual: without enough heft to stand on its own, it tends to find itself grouped under one or the other. “There are no CTV buying units in any agency at the moment, that I’ve come across,” says White. “It’s either bought through the AV side of things, or through the digital team.”

More structure is beginning to spring up around CTV advertising, and the language used to discuss its impact is also becoming more standardised, which is important in allowing different parties to be on the same page about performance. “The language used to buy and sell TV is based on reach and frequency; that is starting to come into play for CTV,” says White. “A lot of the time, the conversations we’re having are, ‘We can increase your reach for a certain demographic.’

“That currency is key to people on both side of the fence understanding what that means; more importantly, advertisers, marketing directors understand reach and frequency. So if you’re going in front of them to say that there’s this opportunity to get incremental reach with people aged 16-34 – people will understand that.”

White anticipates that TV language will continue to form the “baseline” for the way that CTV is bought and sold, because, “linear TV is a $3 trillion business and everyone is very comfortable with that – all the way from the advertiser to the agency to the seller.” However, he also anticipates that those organisations that dominate the future of CTV will be able to “repackage” that terminology to reflect CTV’s granular targeting capabilities as well as its reach. “You get the granularity of internet advertising overlaid on the reach and scale of TV,” he says.

“What you’re looking at with CTV is the ability to take the targeting from online with the reach that you get from having a mass media vehicle that’s within everyone’s home, and that everyone understands.”

He gives the example of Pandora, a Quantcast client who used CTV to reach untapped audiences of young women who were fans of awards and reality TV shows such as Love Island, The Real Housewives and Made in Chelsea. As a result of the campaign, Pandora achieved double their target engagement level and beat their cost per completed view (CCPV) benchmarks by 50%.

“With CTV, you can analyse the behaviour [of a desired target audience] – your ideal buyer, we can find her at mass with all of those interests, and we can put a beautiful ad in front of her,” says White.

“That, married with the terminology for TV, is going to become commonplace within CTV.”

CTV’s “year of mobile”

A medium that can combine the best of the digital and TV advertising worlds sounds ideal, but there are downsides currently holding marketers back from investing in CTV. The market is still maturing and coalescing around shared definitions and metrics, and the fragmented nature of ad inventory also makes it difficult to measure and target audiences with confidence. It can also result in a poorer experience on the user end, with users being subjected to the same ads repeatedly.

Despite the growing numbers of CTV viewers, advertisers may also be unsure whether this channel is worth the extra investment. Ofcom’s Media Nations 2022 report found that in 2021, subscription and broadcast video on demand (SVoD and BVoD) made up 23% of UK audiences’ total watching time, while live TV and recorded playback accounted for 55%. (YouTube accounted for an additional 13%).

This is up from 16% in 2019, while the percentage of linear live and playback TV has dwindled from 63% in 2019 – and the size of the overall ‘pie’ has increased, from a total of four hours and 52 minutes of watch time in 2019 to five hours and 16 minutes in 2021, influenced by shifting habits thanks to the pandemic. However, will there be a point at which CTV becomes definitively too big to ignore? White thinks so.

“I worked in mobile before the ‘year of mobile’ and after the ‘year of mobile’,” he says. “The ‘year of mobile’ came when Facebook went mobile – and all of a sudden this ecosystem exploded.

“And I think that’s yet to happen in CTV – but I can see the beginnings of those forces coming together for that ecosystem to erupt and become a reality.”

White predicts that user interface improvements will be key to this ‘explosion’, particularly in terms of the ease of finding content. “I think it’s very much tied to the UI of the device that you’re looking at … the experience is only going to get better.

“We are at the forefront of – Netflix reducing their prices, Amazon coming to market with free content – and I think as the technology gets better, and the UIs get better, there’ll be a breakthrough point where it frankly becomes much more easy to discover what content you’re interested in. The recommendation algorithms will be far better in terms of directing you to content and surfacing that content – at the moment, you have to search far too much on a smart TV to find what you want.

“Once that’s cracked, then you open up for scale,” he finishes.

Programmatic trading is making the process of buying and selling CTV ad inventory more streamlined, with new standards such as OpenRTB 2.6, which introduced ‘ad podding’ for CTV, a process of grouping multiple ads and showing them back-to-back during an ad break: an improvement that makes CTV buying much more akin to linear TV.

Programmatic trading also makes the overall process of buying media quicker and easier, and White reports that “there’s an awful lot of investment going into those interfaces to make it really simple to create, build and execute a campaign on CTV. The more seamless that is, and the more the buying community use that, the wider adoption you’ll have of CTV buying.”

While White sees programmatic buying as an “important driver of the growth of CTV [advertising]”, he believes that the decisive factor will still be ease of use: “Far more important is … that kind of ‘eureka’ moment from a technology perspective about surfacing content – it will gather momentum. At some point, it will just be another line on a media plan against TV: 80% linear TV, 20% CTV, and it’ll be sold on an incremental reach basis.”