Connected TV viewership is booming, will CTV advertising follow?

Connected TV viewing accounts for about 20% of total TV viewing time, according to data from Frank Magid Associates, and has grown some 300% over the last year. eMarketer estimates connected TVs are now present in over 70% of US households. Still, connected TV advertising accounts for just 1% of total ad dollars, according to eMarketer. That’s poised to change in the coming months as interest in connected TV advertising is gaining steam among ad tech firms, streaming TV providers and brands.

Connected TV advertising makes the same promises to marketers that digital video advertising does: granular targeting abilities, interactivity within the ad experience, and real-time and automated bidding processes; and unlike mobile and laptop platforms, the majority of content watched on connected TVs is long form content. But for consumers, the experience at present isn’t stellar: viewers are often treated to the same few commercials, over and over and over again – sometimes even in a row.

To date, connected TV advertising has faced three major obstacles in advertising: first, connected TVs don’t use cookies or device IDs, so ad targeting won’t ever be as granular as on a personal mobile device or laptop; second, there aren’t good measurement opportunities for connected TV advertising, so marketers have been more hesitant to buy inventory on connected TV platforms; and finally, connected TV advertising isn’t widely available in programmatic settings.

Most connected TV ad inventory is available in private marketplaces at present, but ad tech firms are jumping in to the space now in hopes of bolstering connected TV programmatic inventory. AppNexus announced recently that the digital advertising technology firm is expanding its connected TV advertising, “as budgets shift from linear TV to digital video,” the company said in a statement earlier this month. AppNexus joins Freewheel, Tremor, SpotX and others that are offering advertising solutions in the still-nascent connected TV space.

“Publishers can’t afford to miss out as advertising dollars follow viewers to digital devices like connected TV,” said Eric Hoffert, SVP of Video Technology at AppNexus. The products will “help advertisers target their audiences in these new environments and help publishers profit in this shift to online video.”

SpotX, one of the world’s largest digital ad tech firms, partnered with BrightLine last year for just that reason. The partnership is “part of a broader strategy to enable dynamic and immersive TV ads to be bought programmatically, making it easier for marketers to engage with US TV audiences on a broad scale,” said Jacqueline Corbelli, CEO and co-founder of BrightLine.

YuMe, meanwhile partnered with Nielsen earlier this year to offer a programmatic measurement offering for connected TV campaigns – an offering that YuMe claims is an industry first.

Over the past year, both publisher and marketer interest in connected TV advertising has ticked up significantly. Videology reports it has seen a 500% jump in connected TV campaigns over the past two years. That spike in interest has also helped to bump up the CPMs of connected TV ad inventory. “Advertisers are seeing the power of this medium,” said Scott Ferber, founder and CEO of Videology.

Connected TV advertising will be a boon for services like Hulu Live TV and Sling TV, whose content is mainly consumed on connected TV platforms through apps. The new streaming TV providers are eager to bring more programmatic and addressable advertising capabilities to their platforms, and they have some data about their subscribers which can help them get around the cookie-less connected TV problem. While Hulu has worked with Brightline, Sling TV just this week announced a new partnership with SpotX to make more of its inventory available for real-time bidding, following a similar announcement Dish made with Adobe earlier this year.

Both ad tech firms and streaming TV providers are hoping that by building out connected TV advertising capabilities, the brands will come. Recent research indicates there are plenty of reasons why brands will want to increase their connected TV ad budgets in the future: a Nielsen study from last month found that viewers are much more attentive to ads on connected TV platforms than on linear TV, or desktop, or mobile. The study, conducted with YuMe, found that 98% of all CTV ads it tested met the IAB and MRC requirements for viewability. And ad recall was highest among connected TV viewers, according to the study.

These developments all point to major growth in connected TV advertising as marketers and publishers alike look for new advertising opportunities to reach consumers that aren’t reachable on linear TV.