Video has become one of the fastest-growing phenomena in digital advertising.
The use of Connected TV (CTV) is on the rise, as evidenced by the fact that 87% of all U.S. households have at least one CTV device. CTV is adopted across all age groups, but it is most popular among those aged 18 to 34, making this audience a prime opportunity for advertisers.
In this article, we'll discuss some basic definitions to understand one of the fastest-growing advertising ecosystems today.
What is Connected TV (CTV)?
CTV refers to the streaming of high-quality video content through an internet-connected smart television. CTV means that our televisions are always connected to the internet.
CTV devices include everything from smart TVs with built-in Wi-Fi and streaming capabilities to gaming consoles like Xbox or Playstation, as well as streaming devices like Apple TV, Google Chromecast, Amazon Fire TV Stick, and Roku.
CTV advertising spending is expected to grow by 33.1% and reach $18.9 billion next year in the U.S.
What is the difference between CTV and OTT?
OTT (Over The Top) refers to video content accessed via the internet.
CTV (Connected TV) refers to smart TVs connected to the internet through streaming devices.
In a nutshell, OTT content is viewed through CTV devices. Some of the most popular OTT services are Disney+, Netflix, Hulu, ESPN+, HBO Max and Amazon Prime.
What does the CTV ecosystem look like?
Samsung is the leading manufacturer of physical televisions, followed by LG, but their operating systems only have 14% and 7% market share, respectively. In the U.S., Roku and Amazon Fire TV together hold roughly the same 60% market share as all smart TVs combined, in an extremely fragmented environment.
This has led to a competitive race for greater adoption of operating systems on smart TVs, streaming devices, and gaming consoles.
Amazon has its Amazon Fire TV line with Alexa integration, Fire OS, and integrated Prime Video, while LG, Samsung, Vizio, and other smart TV manufacturers vie for dominance in our homes.
Today, we can identify eight subsegments in the CTV ecosystem:
Smart TVs with streaming capabilities (Samsung TV, LG TV, TCL TV).
Content broadcasters offering exclusive streaming content (Hulu, Disney+, Netflix).
Advertisers are brands looking for audiences to sell their products or services.
Publishers and networks that sell advertising inventory and include players from the previous categories, such as smart TV device manufacturers (e.g., Samsung Ads, Vizio Ads).
CTV devices offering TV streaming (Roku, Amazon Fire TV Stick).
Mobile Measurement Partners (MMP) that measure campaign performance.
Supply-Side Platforms (SSP) are software solutions that manage ad exchanges from the publisher's side, including selling ad spaces, optimizing bids, and measuring campaign performance.
Demand-Side Platforms (DSP) are programmatic tools that mediate ad buying and provide inventory in a single interface. DSPs also serve advertisers by buying ad impressions at the lowest CPM.
Each inventory source collects data differently, resulting in different insights. This ends up creating an extremely competitive and fragmented market, which can sometimes pose a challenge for advertisers to accurately measure their campaigns across various devices and platforms.