Local OTT/CTV ads are the fastest-growing local digital advertising tactic, according to revenue projections from BIA Advisory Services. In only one year, it grew by 13.5%, which is astounding in a crowded landscape of digital ad options. With advertisers raising their investment, it’s a good time to review all the CTV options you can offer customers and how targeting works for these ad types.
Why Is CTV Growing?
Several factors are accelerating CTV growth. First, it turned out to be a massive hit for political advertising on the local level in 2022. Prior to this, local OTT/CTV was a very underutilized ad unit. Businesses were unsure of how they could use it to target their market. Because candidates and PACs used it heavily last year, it proved its ability to reach local audiences.
Another reason for its growth is the vast number of streaming services. There’s been an acceleration of FAST (free ad-supported streaming television) channels, which are all ad-supported. Also, almost all major streaming platforms have an option that includes ads in exchange for a lower subscription rate. Consumers are fine with watching ads. About one-third of new subscriptions are ad-supported tiers. A survey of streamers also found that 59% of people are willing to watch ads to save money, up from 57% six months ago.
Important to CTV’s appeal to advertisers is also its unskippable format. Viewers must let the ads play before they view their content. CTV ads running on smart TVs are reminiscent of traditional linear TV ads before the age of recording live TV and fast-forwarding through the commercials!
The other drivers relate to targeting and the ability to reach cord-cutters, who no longer watch TV through a cable or satellite provider. Since OTT/CTV is a digital tactic, it has much of the same targeting capabilities as others, including:
- Behaviors and interests
- ZIP codes
- State
- DMA (designated market area)
OTT can also target household demographics.
When presenting CTV ad options, you can offer various options called CTV blends.
What Are CTV Blends?
Mixing up how these video ads run on premium content gives your customers choices on where they want them to play. This is the “blend,” and there are three options:
- CTV100: 100% of the ads run only on CTV devices.
- CTV90: 90% of the ad buys display on CTV devices and 10% on OTT (e.g., mobile devices, tablets).
- CTV70: 70% of the campaign plays on CTV devices and 30% on OTT.
Depending on the industry and audience, it may be more advantageous to have greater blends or to stick with just CTV. A few ways to determine what the right mix would be include:
- Does your advertiser want to use ads to drive website traffic? If so, they may opt for more OTT, which allows someone to click on the ad. They can’t really do that on CTV, although many advertisers are using QR codes to drive this.
- The desired generational audience could influence the blend. Younger audiences are more likely to stream on mobile devices and on the go versus using a smart TV.
- If targeting by household demographics is a key priority, you’ll want to recommend a 100% distribution to CTV.
- Some advertisers may focus on the big-screen appeal of CTV because it’s less expensive (usually) than broadcast TV ads. If so, then stick with CTV100.
Offering CTV ad options may seem like a small component of selling these to advertisers, but it can be a differentiator for you. Plus, no matter the blend, their ads will play during premium content.
