What Is CTV Advertising? A Comprehensive Guide To CTV Ads

January 12, 2024
12 minutes

The way we watch video content has changed significantly since the times people used to gather around the very first TVs in their neighbor's households.

Today, among the traditional choices, we have the flexibility to watch whatever we want and whenever we want, thanks to relatively new, growing channels like connected TV (CTV).

It is estimated that in 2023, the number of CTV households in the US will reach 111 million (out of 132 million households in total), and it is expected to grow to 117 million by the end of 2026 (and 135 million households in total).

It’s clear that millions of people are already enjoying this form of entertainment. For advertisers, this is a huge potential audience they can tap into. 

Let’s dive deeper into CTV advertising, learn what it is, and what opportunities it provides for brands.

Understanding CTV advertising

Before getting into details, let’s go through the basics and learn what CTV advertising is, how it works, and how it looks when you put it into practice.

What is CTV advertising?

CTV advertising is a practice of delivering targeted ads to viewers who watch streaming content using internet-connected devices.

There are different types of CTV devices, including:

  • Smart TVs – TV devices that have a built-in internet connection and usually come with built-in apps and streaming devices. 
  • Gaming consoles – Some gaming consoles like Nintendo, PlayStation, or Xbox can also be used as CTV devices, enabling users to access streaming services and other content on the internet.
  • Streaming boxes/sticks – these are devices that you can plug into a TV’s HDMI port to access streaming services, e.g., Roku, Chromecast, or Amazon Fire Stick.
CTV devices

The rise of connected TV has nearly changed the meaning of “watching TV" from how we engage with the video content to when we watch it. 

CTV advertising example

Yettel, a Bulgarian telecommunications company, used CTV advertising to boost brand visibility and target streamers across popular apps and media outlets. 

CTV ads allowed the brand to get a clearer idea about its audience, what devices and sites their ads appeared on, explore the ad delivery map by hour, and more.

The ad campaign delivered good results in terms of visibility – Yettel’s video ad, which was 17 seconds long, achieved a 94.52% view-through rate (VTR). Out of all served impressions, nearly 78% resulted in a completed view.

CTV vs. linear TV advertising

Let’s begin this comparison with the fact that the average US adult will spend more time watching digital video than traditional – aka linear – TV in 2024, according to eMarketer’s calculations. It is expected that the daily time spent in front of the TV will fall below 3 hours next year.

In comparison, the time spent watching digital videos will increase to 3 hours and 18 minutes, and connected devices will account for the biggest share.

Time spent per day watching TV vs. Digital video in the US, 2019-2024

Linear TV is the traditional way of watching TV, where users watch a predetermined programming schedule on set channels. A TV-watching experience we’re all highly familiar with. 

Meanwhile, with CTV content, the viewer decides what, when, and where to watch, which is the opposite of traditional television.

CTV advertising is often compared to traditional TV advertising as we all know it, but there are actually some key differences between the two:

  • CTV ads are delivered over the internet, while linear TV ads are delivered during commercial breaks of traditional TV programming
  • CTV ads can be interactive, which is not a common practice on linear TV
  • CTV ads can be more targeted and better measurable than traditional TV ads

Even though the number of CTV users is growing and people tend to watch less linear TV, CTV advertising spending in the US is still significantly lower compared to traditional TV advertising ($21.16B vs. $68B in 2022, respectively). 

However, the latter numbers have remained at the same level for years (not growing or getting lower significantly), while CTV ad spending is growing at a steady pace.

Connected TV advertising spending in the United States from 2019 to 2026

From the graph, it’s evident that connected TV and CTV advertising are gaining momentum, and there’s no better time than now for advertisers to hop on this train.

Benefits of CTV advertising

One of the most obvious benefits of CTV advertising is its continually growing reach. CTV usage is at an all-time-high already, and people keep cutting the cord to enjoy their favorite video content at their convenience.

Number of connected TV households in the US 2014-2022
Source: LRG

As people are getting more demanding and “resistant” to advertising, keeping an eye on channels offering relatively new ways of reaching your ideal customers is important. 

Growing CTV audience makes connected TV one of such channels that also comes with other benefits, including:

  • Better control of your ads. Compared to traditional TV advertising, you gain much more control over who sees your ads – so you’re not just reaching the audience, you choose whom to reach and whom to show your ads to.
  • Targeting options. Continuing with the first point, CTV advertising offers precise targeting options that enable advertisers to narrow their audience to the people they want to show their ads to. For instance, CTV supports location targeting, daypart targeting, you can target specific devices based on their type, brand, model, etc.
  • Engaged viewers. CTV users are generally highly engaged, as they actively seek out and consume content on streaming platforms. 97% of video ad impressions viewed on CTV were watched until the end in North America in 2021, and the average completion rate stood at 78%. This is in contrast to traditional TV advertising, where viewers often tune out during commercial breaks.
  • Reach your audience where they are. It’s always more efficient and effective to meet your customers where they are rather than leave them to be looking for you, and CTV can offer this benefit to advertisers.
  • Cost-effective. CTV advertising lets you place your ads on a big screen without spending a fortune on them. It offers flexibility in selecting the pricing structure, lower impression costs, and is more cost effective than traditional TV advertising because of the more accurate targeting of audiences. 
  • The sound is automatically on. In CTV ads, the sound is automatically on, which means that you have an extra “tool” that can help you grab people’s attention and convince them, as viewers don’t have to turn on the sound themselves.
  • Measurable results. CTV advertising can provide you with valuable insights into your campaigns as it includes all standard and video metrics, like impressions, reach, first quartile, midpoint, third quartile, complete, VTR, CPV, views, and so on. You can also get an overview of ad inventory, operators, device price analysis, and more – all in real time.
  • Quick advancements in technology. From highly advanced ways of measuring real impact to performance-based digital reporting, greater ad personalization and audience mapping capabilities, the tech is evolving rapidly.

What’s the difference between CTV and OTT?

OTT, or over-the-top, is another term you can often see alongside connected TV. Are those two similar? Or different? And how?

OTT is the technology that delivers streamed content over the internet across all devices, bypassing traditional broadcast and cable TV channels. Meanwhile, CTV refers specifically to physical devices like smart TVs, streaming boxes, or game consoles that are used to view video content. 

So basically, to differentiate CTV vs. OTT, you can think of connected TV as the conduit for delivering OTT video content.

CTV vs. OTT: what the difference?

Here’s a real-world example of these two methods that should help you wrap your head around OTT vs. CTV.

Suppose you’re using Netflix or any other similar streaming service on your smartphone. Watching such video content on your mobile device means that you are streaming OTT content.

But what if you watched the same content through a physical device, e.g., Roku, that is connected to your TV? In this case, you’d be streaming OTT content over CTV.

Their availability is also another difference between these two terms. While you can “use” OTT across various devices, including TVs, laptops, and mobile devices like smartphones or tablets, CTV is delivered only through smart TVs connected to some third-party device, like already mentioned Roku, Chromecast, Amazon Fire TV Stick, or similar.

How to buy CTV ads

You can buy CTV ads in several different ways, whichever best fits your resources and needs. We like to highlight three possibilities that advertisers use most often.

Different ways of buying CTV ads

1. Programmatic way

The programmatic way to buy CTV ads is often chosen by those making their first steps into the space, as it comes with a broader reach across different platforms, lower spending, transparent reporting, and more. You can also often get support and guidance from the team of the DSP you’re using to ensure a smooth campaign execution.

CTV ad buying through programmatic platforms differs from other advertising types because it mostly happens through PMP deals. PMP is one of the types of programmatic advertising that is based on the auction, which can be accessed only by invited advertisers.

The reason behind it is that for programmatic CTV ads, publishers are selling their premium inventory and are picky about ads that appear there. Therefore, they make their inventory available to exclusive partners that meet specific requirements, which also positively affects brand safety on CTV, ensuring that ads appear alongside broadcast-quality content.

From the technical perspective, launching CTV using programmatic doesn’t differ from launching a regular video campaign – the only difference is that you have to select PMP deals in the campaign setup.

2. Platform direct way

Another option for buying CTV ads is directly on the CTV platform (e.g., Roku, Amazon Fire Stick TV, and others).

These platforms can help you place your ads within CTV content within the platform’s interface, network, and broadcaster apps. Once your campaign is approved, it gets launched on the platform’s CTV inventory, and you can usually track it through the platform’s reporting dashboard. 

Typically, advertising on such platforms is focused on self-service. However, it’s important to note that the process and procedures might vary slightly based on each of them, so it’s always a good idea to refer to the platform’s documentation or support team for guidance.

3. Publisher direct way

Buying CTV ads directly from publishers is another option for advertisers looking to reach audiences on connected TV devices. In this case, you buy ads directly from the OTT service provider, for instance, YouTube, Tubi, or Plex.

It means that you can better control which programs and channels your ads appear in, yet there are also some key things to consider.

The publisher direct way can limit your reach as they typically have their own unique audience segments, so it’s important to ensure that the publisher’s audience aligns with your advertising goals.

Moreover, different publishers may offer different ad formats and placement options, so understanding what’s available and how to use them to create engaging ads is crucial.

While publisher direct can offer a more personalized approach to reaching audiences on CTV, it can also require more time and other resources – so making a pros and cons list is definitely an option here.

CTV ad formats available

Since CTV ads are usually a part of the streaming experience, advertisers should focus on creating an engaging video ad that can grab their audience’s attention.

Instream video ads

Instream ads are placed within video content and are similar to ads that appear on traditional TV, just served digitally. It’s the most commonly used ad format in CTV advertising.

There are 3 different types of them:

  • Pre-roll ads – these ads run before video content, e.g., before a TV show or a movie.
  • Mid-roll ads – these ads run in the middle of the content and look more like an ad shown during a commercial break on linear TV.
  • Post-roll ads – these ads play after the content ends.
Grammarly instream video ad example

Interactive video ads

Interactive video ads allow viewers to engage with the ad content by interacting with the video itself. This can come in several forms, including QR codes that advertisers can include in their ads and encourage users to take action.

CTV ad example
Source: Innovid & Ana

Display ads

If you own a Smart TV, you must have noticed how your home screen looks more like a digital billboard than... well, a home screen.

The thing is, connected TV platforms use home screens to show targeted connected TV ads and promote content, whether within home screen placements or inline placements.

So this is where your display ads go.

Display ad example on CTV
Image: Jared Newman / TechHive

They are usually smaller in size and don’t interfere with the content so much. Besides, since display ads are often static, they’re not limited by length; however, being static can also be a disadvantage as they offer a different experience than video ads.

Are CTV ads clickable?

Unfortunately, most CTV ads are not clickable. However, this also highly depends on the publisher itself, as some already offer interactive features.

For example, YouTube supports interactive features that can help encourage further engagement with the brand, like end screens or call-to-action buttons. 

However, it’s rare. Brands advertising on CTV should consider alternative ways to engage users, for instance, using promo codes in their video ads or adding previously mentioned QR codes that users could scan to learn more about the brand or act on the offer.

How to measure the performance of your CTV campaign?

CTV advertising is different from regular video advertising, but when it comes to reporting and measurement, most of the metrics used for tracking regular video campaign performance apply to CTV as well.

CTV metrics and reporting

Some of the KPIs you should keep an eye on when advertising on connected TV:

  • Impressions represent the number of times the ad is displayed on a viewer’s screen, regardless of whether it is viewed or engaged with. Impressions are often used to measure the overall exposure or awareness that an ad generates.
  • Reach is the number of unique viewers who were exposed to an ad during a given time period. It is an important metric to track to ensure an ad campaign reaches a broad audience.
  • Views. In CTV advertising, a view is typically counted when a viewer watches an ad for a certain amount of time, typically a few seconds. The exact time required to count as a view can vary by platform and advertiser.
  • Frequency measures how many times a viewer is exposed to an ad during a given time period. It is calculated by dividing the total number of impressions by the number of unique viewers.
  • View-Through-Rate (VTR). VTR is a metric that measures the percentage of impressions that result in view of a video ad. It is calculated by dividing the number of completed views by the number of impressions.
  • Video Completion Rate (VCR). VCR is a metric that measures the percentage of video ad views that the viewer completes. It is calculated by dividing the number of completed views by the number of video starts.
  • Video Quartile Metrics measure how far a viewer watches into a video ad, breaking it down into quarters. The metrics include the percentage of viewers who watched the first 25% of the ad, the second 25%, the third 25%, and the final 25%.
  • CPM stands for cost per thousand impressions. It is a common pricing model used in CTV advertising, where advertisers pay for every thousand impressions their ad receives.
  • CPCV (Cost per completed view). CPCV is a metric that measures the cost of each completed view of a video ad. It is calculated by dividing the total cost of the campaign by the number of completed views. It is a more specific metric than CPM because it focuses on completed views rather than impressions.

Besides these, CTV reports often include inventory, operations, device price analysis, and more – which KPIs and metrics to track can depend on various factors and your campaign goals.

Challenges you might face advertising on CTV

Although CTV advertising spending is steadily growing and more brands are starting to notice the potential of this channel, it still comes with several challenges and limitations that you need to know before launching a CTV campaign.

  • The vast majority of CTV ads are not clickable, therefore, the KPIs for CTV campaigns cannot be related to clicks and CTR, CPC metrics.
  • Following on the previous point, CTV ads limit campaign goals to brand awareness mainly, besides, it’s a form of content that viewers watch fairly passively, for example, laying on the couch, which is why it’s not that easy to drive engagement.
  • Some viewers may use ad-blocking software or skip through ads, which can reduce the effectiveness of CTV advertising.
  • CTV advertising still is a popular target for ad fraudsters who want to take advantage of the higher CPMs paid for CTV inventory, e.g., by device spoofing (impersonation).

Where to start?

At this point, you should be familiar with all of the most important aspects of CTV and at least have an idea of whether it’s a good fit for your brand.

If the answer is positive, here are the next steps you need to take to launch a CTV campaign.

1. Set clear goals for your CTV advertising campaign

CTV is no different from any other campaign in terms of planning, and you should do it carefully if you want to succeed.

Ask yourself, what are your main goal for this particular campaign? Whom do you want to reach? What tools, channels, or platforms can bring you closer to your desired results?

This should help you decide on the following steps.

2. Choose a CTV advertising platform

As previously discussed, there are several ways you can buy CTV ads:

  • You can buy them programmatically using demand-side platforms like Eskimi
  • You can go for direct deals with platforms like Roku, Amazon Fire Stick TV, or Chromecast
  • You can buy ads directly on streaming platforms like YouTube, Tubi, or Plex

Choose a CTV advertising platform and method that fits your budgets and advertising goals, as this comes with higher chances of running an effective and efficient campaign.

3. Decide on an ad creative and create a compelling ad

Think of which type of CTV ads can help you reach your goals the most effectively and start crafting your video (or display) ad.

The ad you create must resonate with your target audience so ensure it’s compelling and engaging. Some tips that might help you along the way:

  • Keep it short – CTV viewers tend to have shorter attention spans than traditional TV viewers, so keep your ads short and straight to the point. Aim for a length of 15-30 seconds.
  • Consider visual appeal – use high-quality visuals, vibrant colors, and clear branding to ensure that your ad catches the viewer’s attention.
  • Optimize for the platform – different CTV platforms may have different ad specifications and requirements, so make sure you optimize your ad for the platform you're using. For example, some platforms may require a specific video format or aspect ratio.
  • Don’t forget quality audio – CTV ads run with sound automatically so don’t miss out on this opportunity to use this channel to its full potential.

For the best result, consider working with a professional ad agency to help you develop high-quality video ads that meet your advertising goals.

4. Choose the right targeting options

You will notice that different CTV platforms or publishers will have different targeting options available, so it’s important to clearly define who do you want to reach so that the right people see your ads.

5. Test and optimize

Launch your CTV campaign and monitor its performance regularly.

You can test different ad formats, creatives, and targeting strategies to see what works best for your audience. Track the KPIs you’ve set and use the data you have to optimize your campaign.

Making adjustments based on the performance data you collect can help you improve your results and maximize the return on investment (ROI).

Get ready to launch your CTV ad campaign

The increasing popularity of streaming services and connected devices is driving rapid growth of CTV advertising. As linear TV audience is slowly declining and video entertainment lovers continue to shift to CTV, advertisers are following by investing in CTV advertising in order to reach their target audiences.

The nature of the channel itself and its benefits present a tremendous opportunity for brands to connect with their audience in a more effective and engaging way compared to traditional TV ads and drive business growth as a result.

Looking to start a CTV advertising campaign? Contact the Eskimi team or book a demo for a comprehensive tour of the platform.

Philip is the CMO of Eskimi. When he’s not busy growing the Eskimi brand, he spends his time with family and playing ping pong.
Philip is the CMO of Eskimi. When he’s not busy growing the Eskimi brand, he spends his time with family and playing ping pong.
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