Blog Post

What is CTV?

by: Power Digital April 2, 2021

Table of Contents

The past decade has seen a boom in new ways to watch television. While people once relied on cable and satellite companies with clunky equipment and sky-high costs, it’s now possible to customize the way you watch television.

CTV, short for connected television, refers to any “smart” television that can stream content directly from the internet. CTVs are a great way to access TV content from “over the top” (OTT) providers like Netflix and Amazon Prime.

But what’s the difference between OTT vs CTV? What counts as a CTV device? In this short guide, we’ll go over the basics of CTV and its potential value for marketers.

What is CTV?

As we’ve noted, CTV refers to any smart television with internet connectivity. Examples of CTV include:

CTV Devices – When you think of smart devices, the first products that come to mind are likely Roku, Amazon Fire Stick, and Apple TV. Also called OTT devices, these products allow you to stock your library with numbers of OTT apps like Netflix, HBO Max, and Peacock.
Gaming Devices – If you have a gamer in the family, you probably already know that the Xbox, Playstation, and Nintendo Switch are equipped with streaming capabilities. While they come at a higher price tag than CTV devices, they provide access to the same library of OTT apps, along with games.
Smart TVs – Some televisions come with their own streaming platform and WiFi connection. You won’t need to purchase an additional piece of hardware to stream content (although you certainly can if you prefer the interface of your Apple TV or another device).

How much are consumers using these streaming service devices?

Let’s take a closer look.

The Rise of CTV

You’ve probably heard about the “demise of cable.” However, the reality is that 75% of US households still use cable or satellite.¹

However, just because someone uses cable doesn’t mean they don’t have a CTV:

By mid-2020, 37 million U.S. households had some kind of CTV device, up 16% from 2019.²
This figure includes both “cord cutters” who switched from cable to CTV as well as households that use cable or satellite and a CTV device to access additional streaming TV content.
Over two-thirds of households with cable subscriptions used a streaming service to access additional content on-demand.

A Younger television audience may be more inclined to use or make the switch to CTV. Advertising data shows that over half of ads on streaming services reach consumers under 49, with millennials accounting for over half of impressions and older Gen Xers accounting for another quarter.³

This suggests that CTV has more room to grow.

The Draw of CTV

What compels users to make the switch or buy a CTV to use alongside their cable box?

Thanks to the COVID-19 pandemic, Americans sought out more streaming content than ever in 2020. Homebound audiences benefitted from access to flexible streaming content, and some won’t give it up even after their states reopen.

CTV offers advantages not necessarily accessible with a regular cable package. These include:

Unlimited on-demand streaming, with no need to DVR shows or movies
Extensive libraries of content that may not regularly air on cable or satellite channels
Ability to access apps that can also be enjoyed on other devices (i.e., tablet or laptop)
Customizable package (subscribe to only the apps you need)
Free content via some apps
Fewer commercials on some channels and apps

Having a smart tv and a cable subscription can also confer certain benefits. For example, you can watch NBC live as well as use your cable login information to access additional content via the NBC app.

CTV vs. OTT

When it comes to new streaming video providers, acronyms abound. What, exactly, is the difference between CTV and OTT?

OTT refers to any channel that provides content “over-the-top” of traditional television. Popular OTT advertising services include:

YouTube
Vimeo
Amazon Prime
Disney Plus
HBO Max
Peacock

In contrast, CTV refers to devices that are connected to the internet. In short, CTV devices provide access to OTT. However, OTT TV can also be streamed on:

Tablets
Smartphones
Laptop and desktop computers

The Types of CTV Content

Some people switch to CTV because they want to see fewer ads (or at least more relevant ads).

If you’re a current cable subscriber, you’ve probably watched some sixty-minute shows that seemed to be padded with half an hour of commercials.

And unfortunately, close to three-quarters of cable subscribers report that the commercials they see have no relevance to their lives.⁴

Traditional television networks rely on advertising revenue to pay network employees and produce television programs, which makes it impossible to deliver an ad-free experience.

In contrast, CTV devices allow access to numerous different OTT apps with different kinds of content, including the following:⁵

Subscription video on demand (SVOD) – Subscription video apps rely on recurring subscription dollars. HBO Max and Disney+ are two examples of popular ad-free OTT services (although you may see short commercials for other in-app content).
Advertising video on demand (AVOD) – Depending on your Hulu subscription, you may still see ads during some programs. Hulu and other providers use ad revenue to help cover their costs.
Transactional video on demand (TVOD) – Some apps enable you to buy a single movie or television episode for a set fee. In this case, you’ll usually be able to view it without commercials.
Broadcast video on demand (BVOD) – Other channels and Broadcasters make it possible to livestream shows or view them after the fact with commercial breaks that appear exactly as they would in a live broadcast.

While consumers can watch CTV with or without ads (depending on their device and the OTT apps they use) almost all viewers generate data that’s valuable to marketers and SMBs.

Next, we’ll cover how advertising helps power CTV (and vice versa).

Advertising on CTV

CTV advertising presents novel opportunities for traditional networks, new OTT players, and the CTV manufacturers themselves—not to mention their advertising partners.

Some OTT networks provide an ad-free experience. Others allow users to “skip” ads after watching for just 30 seconds. Still others award users points for every ad watched, allowing them to then “spend” those points to watch without ads for a given period.
Unlike traditional TV, CTV can show different customers watching the same show two different advertisements.
Whether or not commercials are aired, CTV manufacturers can sell customer data to marketing companies.
Purchasing a Roku is a one-time cost—but Roku continues to make revenue by creating a marketplace for OTT ads based on its user data collection.⁶

Because CTV devices collect data on customer viewing habits, they provide marketers with the opportunity to connect with specific groups of customers.

Addressable Advertising on CTV

If you’ve ever noticed that you see ads for the same brand on Freeform, Instagram, and CNN, it’s not a coincidence.

Because CTVs use the same wireless network as other devices—from phones to laptops and beyond—the information about users’ viewing habits can be correlated with their web browsing behavior.

Based on browsing history, purchase history, and other factors, advanced data analytics can make assumptions about demographic information including:⁷

Age
Income
Education
Gender
Geographic location
Ethnicity
Interests

And more.

When your marketers bid on CTV, their aim isn’t to pair ads with a particular program or time slot, but rather with a specific kind of viewer.

Through marketplaces like Roku’s, marketers can then bid on ads to target incredibly specific market segments who will find their ad highly relevant. Ads can be targeted based on demographic factors, as well as:

Recent purchase and browsing history
Technological specifications of their streaming device
Geography
Day of the week and time of day (i.e. show more ads on weekends or in the evenings)

If someone’s been browsing for the best plant-based protein shakes, a highly targeted CTV ad could reach them the same evening.

Unique CTV tools

We’ve already noted that you might see the same brands on a CTV as in your daily web browsing. This is because marketers can also retarget users who’ve displayed interest in an advertisement.

CTV is part of a holistic eCommerce marketing strategy. A marketing partner can help you place buys for social and web ads specifically targeted at individuals who have already viewed a commercial and subsequently Googled your website, looked at your social, or visited your page.
When CTV and web browsing take place on the same networks, it’s possible to see exactly how a customer’s journey progresses from viewing an advertisement to searching on the web to eventually making a purchase.
Marketers can closely track the customer journey and see which ads are generating the best ROI. It’s easy to adjust their approach to air a redesigned ad or target a new market segment.

PDM and CTV

Working with CTV platforms can help augment your overall marketing strategy.

However, there are a number of peculiarities to the CTV marketplace, from creating lightning-fast ads that make an impact before users have the opportunity to click “skip,” to filtering out any data from bots to provide an accurate picture of your ROI.

At PDM, we’re experts in CTV, OTT, and other emerging marketplaces. Importantly, we understand that these new opportunities are just one part of a successful overall marketing strategy. Interested in our digital marketing services? Get in touch today to learn more.