Considering CTV Advertising? Here’s What You Should Know.

Marketers are increasingly paying attention to CTV (Connected TV) advertising, for good reason. Referring to internet-connected devices allowing viewers to stream content, CTV advertising is booming.

Spend on the channel more than doubled from $6.4 billion in 2019 to $14.4 billion in 2021 and is projected to hit nearly $30 billion by 2024. The sector is not only growing in absolute terms but is also one of the fastest-growing digital sectors, propelled by broader growth in programmatic video.

But the channel’s growth spurt has not come without growing pains. Chief among them are insufficient access to the header bidding technologies that have boosted monetization potential in display advertising, problems with frequency capping that undermine the user experience, and fragmentation across screens that undercuts targeting and measurement.

These problems are urgent for publishers and advertisers, alike. Fortunately, the CTV ad tech industry can tackle them, improving CTV advertising for both publishers and the end users they serve.

CTV publishers need better monetization technology

Header bidding greatly improved publishers’ ability to monetize their inventory on the open web. As those in ad tech know well, header bidding has largely replaced the waterfall method that forced publishers to go from ad network to ad network seeking demand. Unified auctions allow publishers to offer inventory to a wide range of buyers at once, increasing competition and CPMs.

Header bidding is commonplace on the open web, but it has been slower to gain widespread adoption on other channels such as inapp and CTV. On the demand side, this is in great part because the TV ad industry is used to direct deals. The technology and cultural affinity for advanced programmatic solutions such as header bidding have yet to become commonplace in the CTV ecosystem. On the supply side, video ad serving is still complex, requires substantial troubleshooting and expert ongoing optimizations to make the most of CPMs and fill.

But expect CTV publishers to demand better monetization methods and technologies this year. Savvy CTV publishers are adopting emerging solutions that allow them to manage direct deals and programmatic auctions at once, retaining the premium prices deals deliver while opening up the flood of demand provided by programmatic. SSPs will need to educate clients on these possibilities and provide the technology to help them increase demand and maximize the value of their inventory.

Some of the hurdles that the industry must overcome in order to see widespread adoption of programmatic:

CTV has an ad-frequency capping problem

You don’t need to be an ad tech expert to know that another of CTV advertising’s problems is frequency capping. Who else saw that Rob Gronkowski USAA insurance commercial ten times each Sunday during the NFL season? Unregulated ad frequency risks alienating consumers, who may come to remember the advertiser for the wrong reasons and resent the publisher for overexposure.

Historically, publishers have struggled to deliver effective frequency capping on CTV for two reasons. First, ad tech platforms often identify multiple targets for an ad in the same household but do not limit exposure based on that shared viewing experience, leading one household of people to see an ad many times. Second, data is siloed across publishers, so a viewer watching the 1pm Jets game on CBS sees an ad three times that they then see three more times when they watch the 4pm Giants game on Fox’s streaming platform.

SSPs and third-party providers are working on frequency capping tools that allow the publisher to regulate the number of times viewers see the same brand or creative. But to provide better frequency capping on CTV, SSPs will need to offer publishers audience targeting solutions that allow them to adjust individual targeting based on shared household data. Ad tech will also have a role to play in helping publishers access viewer data across publishers to avoid redundancy.

CTV advertising’s challenges go back to identity

As with so many other issues in ad tech, then, CTV advertising’s core issues boil down to problems of audience identity. Without a robust understanding of which viewers they are targeting and what else those viewers have seen, publishers cannot provide the most relevant viewing experience. The channel is reckoning with poor identity resolution at a time when all of ad tech is struggling to shore up identity as privacy changes chip away at cross-platform tracking.

However, publishers who move early on getting attribution and measurement right, will have a competitive advantage and find increased market share. By shifting their view from the individual to the household, publishers will not only improve the channel’s frequency capping problem but also get ahead of privacy changes aimed at diminishing individualized tracking. Publishers should also look to invest in sophisticated first-party data platforms that integrate audience profiles across platforms and screens. NBC has successfully done so, and recently announced a first-party data platform boasting 150 million IDs.

While CTV advertising may be going through its turbulent teen years, it is still the most impactful media format. The ad tech players that equip publishers with header bidding, frequency capping, and the identity solutions they need to mature will gain market share in CTV advertising’s adolescence.