Just when you think you have all the information regarding media trends, something new pops up. Similar to its ad-tech predecessors, connected TV is taking the market by storm and positioning itself prominently in the digital future. The latest guest to the party continues to be an exceedingly powerful platform for advertisers and is opening the media world to TV by integrating internet and computer technology into new-generation TV sets, or Smart TV’S.

Currently, the Smart TV market is divided between proprietary platforms tied to a specific manufacturer, like LG’s webOS and Samsung’s Smart Hub, or a generic alternative such as Android TV, as found on Sony and European Philips TVs. All are functional and offer exciting features within the CTV environment – and frankly, they are enjoyable to use.

Industry trends and experts are all saying the same thing: smart TVs and streaming media players are majorly driving CTV growth. What came first – user demand for quality content or the immediate access to it? Either way, the people have spoken and the Smart TV market has answered.

What is CTV?

Connected TV is any type of home entertainment device, such as a TV set with built-in internet privileges, video game consoles (Xbox, PlayStation, Blu-ray Disk Player) or streaming video device that is connected to the internet.

What makes CTV different than conventional TV’s is that while older sets mainly focus on broadcast media, Smart TV’s offer features such as interactive media, internet TV, over-the-top content and on-demand streaming media. As if that weren’t revolutionary enough, most of these advancements can be accessed through apps and smart devices.

Connected TVs are essentially becoming an extension of smartphones and tablets. Consumers, already used to watching content anywhere they, now want, or rather demand, quality content with no interruptions and on the TV screen because like it or not – it is the best viewing experience.

What isn’t CTV?

Connected TV is not the only alternative to traditional linear TV, although it is currently the most prominent. Addressable TV and Programmatic TV are easily confused with CTV because they also offer a way for advertisers target audiences more precisely. However, they are not necessarily connected to the internet.

Addressable TV does the exact opposite of traditional linear TV by targeting audiences directly rather than programs believed to be watched by desired audiences. Via dynamic ad insertion, addressable TV essentially aims at playing different ads for different households watching the same program. Addressable allows for more efficient campaigns with less wasted impressions and allows marketers to target on either a national or local level.

Programmatic TV is an automated, data-driven method of outlining and purchasing linear TV advertising which can include TV spots within cable, satellite, and broadcast inventory. For buyers, programmatic TV is an efficient way of monetizing the inventory which is left unsold that adds an accumulative type of revenue source. Programmatic channels not only find buyers for fewer inventories but regularly fetch higher CPM rates.

The History of CTV

As legend has it, in September 1995, ESPN SportsZone streamed a live radio broadcast of a baseball game between the Seattle Mariners and the New York Yankees to thousands of its subscribers worldwide. The company that provided this revolutionary technology was developed by RealNetworks, previously called Progressive Networks.

This is believed by most to be the world’s first live streaming event, although there is speculation that there was a Rolling Stones concert webcast in 1994 but that’s neither here nor there. The rest, as they say, is history. While RealNetworks ushered in the era of online audio only streaming, they weren’t the only company at the time working on this kind of technology. Industry players such as Vivo, Xing, VDOnet, VXtreme and Microsoft were simultaneously developing their own streaming platforms. Xing, which had an MPEG tool suite at the time, launched their StreamWorks platform, which supported not just audio, but video as well, just after RealNetworks.

By 1997, companies realized that streaming media technology and the services that went along with them including encoding, delivery and hardware was going to be a real business. Naturally, competition arose and while there were many battles within the industry the war was between RealNetworks, who had dominated the market up to this point, and Microsoft – both companies fighting for the biggest slice of pie. While the competition did wonders for streaming technology advancements, RealNetworks did not come out on top in the industry that it had initially pioneered. Nevertheless, streaming video was, and still is, here to stay.

Why CTV?

CTV is new for everyone. For consumers, it’s a fresh way to watch their desired content on the big screen, just without the cable subscription required. For advertisers, it’s an innovative way to reach a unique audience and introduce new revenue streams.

For Consumers

Connected TV grants consumers access to all forms of non-linear web content. It allows users to access social networking sites such as Google, Facebook and others through Wi-Fi connectivity. In addition, and in the spirit of instantly viewing content, CTV offers a way to record TV programs. Due to performance and capability, connected TV’s now possess innovative features and have become affordable. As technology increasingly changes, these TV’s are becoming as fitting as personal computers when it comes to web browsing, as well as internet and video browsing. Most importantly, CTV technology is inclusive of most IT support systems such as Ethernet, USB, Wi-Fi, Bluetooth, and flash memory cards from digital cameras and HDMI and other video-audio connections.

Over-the-Top (OTT)
Over-the-top (OTT) content goes “over” your cable box to give you access to TV
content. It delivers content using an internet connection rather than cable or broadcast provider.

Full-episode player (FEP)

FEP refers to TV-like content and is the first thing that comes to mind when you imagine watching TV via the internet. Consumers can watch their favorite shows at full-length, exactly as it would be on the screen. The only difference is ad length and placement. Unlike traditional TV ads which can be back-to-back commercials for several ongoing minutes, FEP ads are short, few, and strategically placed. FEP content is inclusive of things like your daily news, cult classics, comedy, cooking shows, or even your favorite sports.

Live Streaming

Live streaming means that the television content you’re watching is being streamed in real time over the internet. This live content is usually delivered by a paid streaming service or directly by the network. This means you won’t have to miss a single second of the live concert you couldn’t make it to or the live finale of your favorite sports competition.

Video on demand (VOD)

Now a household name, VOD allows users to watch the content they like when they want to watch it, with no hindrance from TV guides. VOD content is available to stream or download after it airs live. Missed an episode? Not a problem – unless it’s Game of Thrones and then you better have some cotton balls handy.

For Advertisers

Informed, tech-savvy audiences hold attractive marketing and advertising opportunities for brands that are looking for ways to increase engagement and raise brand awareness by improving audience targeting as well as deliver direct response messages.

Connected TV has changed the way people consume content and has invariably affected the way TV advertising is executed. Back in the old days, traditional linear TV ad buys were allocated according to scheduled cable and broadcast programming. Via broad demographic targets and on a contextual basis, ads are bought upfront. This means that advertisers and media buyers target certain programs that their audiences watch.

No matter where you look, connected TV is increasingly becoming a valuable addition to a cross-channel marketing strategy. Consumer migration to internet-powered TVs and over-the-top devices offers rich targeting capabilities and imaginative ways to interact with viewers.

CTV ads generate the best results as an extension of traditional television inventory or to complement digital advertising.

Here are some advantages of smart TV advertising:

Ad qualityFirst and foremost, the better the quality of the ad, the more seriously viewers will pay attention. This, in turn, has a positive effect on brand loyalty and brand exposure. Connected TV offers targeted, highly personalized, HD-quality ads with stereo sound, delivered fullscreen.

Ad formats: CTV advertising is in experimental mode meaning whether it’s animated, static, call-to-action and interactive video ads, consumers find ads to be highly entertaining which drives consumer engagement and increases the performance of the video campaigns.

High completion ratesConnected TV’s give viewers who are tired of intrusive, pop-up ads a break with a natural large screen experience. Regarding ads, consumers tend to favor the classic cable TV experience because of the quality, format, and placement. Consumers not only pay more attention to CTV ads but also watch them for a longer time period.

Real-time metricsMarketers can measure ad campaign performance by tracking views, clicks, and conversions.

TargetingAs a marketer, connected TV is a great way to target the audience you want. Since users are required to provide identifiers such as Facebook and Google accounts to access smart TV, advertisers are privy to third-party data based on geos, interests, behavior, device, etc.

Receptive audiences: CTV users are generally more open to ads because of the positive environment on which they are served. The ability to choose the content they want and how to watch it leads to user satisfaction and overall increased audience engagement.

Premium audiencesStreaming opportunities gives marketers access to unique audiences because they are able to monetize live events and not just pre-recorded content.

Many manufacturers have also joined the Smart TV market. Similar to the competition within the smartphone market, the CTV market is providing app developers with huge opportunities in the application ecosystem.

Market Information

According to an eMarketer survey, roughly 62% of households in the US have already adopted smart TV features with connected devices such as Roku, Apple TV or gaming consoles. These 164 million US internet users is predicted to grow upwards of 200 million viewers by 2019.

As consumers continue to increasingly spend on electronic items, the connected TV market is experiencing exponential growth, though it is expected to slow within the following years.

Higher spending on electronic items by consumers and growing demand of web enabled TVs are credited with driving growth of the global connected TV’s market, which is anticipated to bolster until 2025. In addition, growth is influenced by technological advancement and rising purchasing power to emerging economies, such as China and India.

Roku is currently the number one connected-TV device brand in the U.S., closely followed by Google Chromecast, Amazon Fire TV and Apple TV in terms of total users, according to studies. In 2017, 38.9 million Americans will use a Roku at least once per month – that’s up 19% over last year! According to eMarketer, Chromecast comes in second with 36.9 million users, followed by Amazon Fire TV with 35.8 million. Where’s Apple TV you ask? One big barricade for Apple TV is its pricing method. The Apple TV devices currently start at $150, whereas Google, Amazon and Roku each sell streaming sticks priced below $40. Will Apple TV adjust to its surroundings? Only time will tell.

The market is segmented on the basis of resolution, technology, platform, and application.

Resolution

The market is divided into HD, Full HD, 4K and 8K technology. 8K technology is currently under development and is expected to show an extensive growth rate in the coming years.

Technology

Market technology is categorized based on LCD, LED, OLED and QLED. OLED is expected to show a significant market growth by 2023 due to powerful research and technological advancements.

Platform

The market is divided as Android TV & Google TV, ROKU TV, Fire TV (AMAZON), Web OS, TIZEN OS and other. Android, the widely accepted TV platform, is expected to have a considerable market share in the following years.

Application

The market is separated as domestic and commercial. The domestic segment is perceived to have the major market share.

The Future of CTV

First and foremost, the future of CTV is understanding that it is already the present. With CTV users worldwide expected to reach 760 million by the end of this year and with 2018 marking internet reach to 4 billion people – it is safe to say that for as long as the internet is around, the end is nowhere in sight for connected TV.

The future is bright for the CTV market but unfortunately, it is not all rainbow and butterflies for advertisers – the main problem being standardization. CTV targeting and attribution is uncertain and limited in scale due to the degree of separation across platforms, publishers, and data providers. Players from all corners of the digital and television market need to work together to create and achieve a common, CTV-specific audience identifier – one that is consistent and reliable.

From its earliest stages and with minimal adjustments, television targeting relied on demographic and household data. Alternatively, digital advertising is built on a more precise model across computers, tablets, and smartphones. CTV marketers do not have access to an equivalent of a cookie-based universal tracking ability of desktop. Tactics such as frequency capping, viewability targeting, and pixels are currently not stable and therefore advertisers and media buyers are hesitant about taking the jump. In addition, the budget that is allocated for CTV is minimal.

As mentioned above, cookies and device ID’s aren’t currently set up for connected TV. This has made it difficult for advertisers to keep track of individual users, campaign, and segmentation efforts. So far a number of sample-based measurement solutions have been proposed, though none of them offer the level of granularity that advertisers have come to expect from other digital ad formats.

One thing remains clear – CTV players cannot make the same mistake that desktop advertisers did. The shift away from desktop viewing is largely in part of low-quality ads and even lower user satisfaction. When done well, brand lift can be compelling and engaging for CTV users and frankly, that’s where the bar is set with no intention of being lowered. Unfortunately, when the metrics available are essentially the same as for banner ads, that’s not exactly going to encourage advertisers to develop ads that surpass current creative standards.

With that being said, many possibilities exist to create an idea user experience with less ads, improved measurement and targeting, and superior brand lift – and then to be combined with a scalable, normalized and standardized CTV ecosystem. Positive signs include the IAB keeping up with the times and VAST 4.0 evolving to encompass SSAI head-on, pointing to a new version of VPAID that similarly modernizes and enables interactive experiences on new platforms.

Connected TV is a strong solution for consumers, advertisers, and tech providers with the pros outweighing the cons in most categories and increased overall satisfaction. Currently, the CTV market is growing faster than any other vertical did in its infancy. Slowly but surely CTV will no longer be an alternative to television – it will be television.

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