Facing a deserted linear TV audience, advertisers are pivoting to the booming growth of Connected TV (CTV) platforms like it’s the next gold rush. By 2027, eMarketer projects that U.S. linear ad spend will deflate by 9.3 percent, or $5.6 billion, while U.S. CTV ad spend will balloon by 72.5 percent, or $17.84 billion. Considering that U.S. audiences’ average time spent on linear TV has cut in half since 2012, according to AdExchanger, CTV isn’t just a golden opportunity for advertisers, it’s a new frontier.
Looking to better understand or even take part in the CTV gold rush? We’ve got you covered. In just a seven-minute read, we'll demystify CTV advertising with clear definitions, key advantages, and a simplified breakdown of how it works. Plus, we'll compare it to other popular content mediums to provide context to the CTV landscape. Timers ready? Let's go.
What is Connected TV (CTV)?
First things first, what is CTV? And why are audiences and advertisers embracing it over linear TV?
CTV definition: CTV stands for "Connected TV," and it refers to any device that connects to the internet and allows users to access streaming content on a TV.
Examples of CTV devices: LG Smart TV, Roku Streaming Stick, and PlayStation 5
CTV opens a world of capabilities to viewers beyond traditional cable or satellite programming, allowing them easy access to their favorite streaming services, apps, internet browsers, and more directly on their TV screen.
More specifically, with an internet-connected television, viewers can do things like stream “Barbie” (2023) on Max, download the Trivia Crack app for family game night, work out digitally with the world’s best physical trainers, and even use Google to fact-check family members during Thanksgiving dinner. It’s essentially everything we love about smart phones, laptops, and tablets, but on the largest screen in the house.
Seeing as 88 percent of U.S. households (that’s about 111 million households) already have a Connected TV at home, according to Statista, it’s apparent that CTV has officially stepped into the spotlight as the preferred, new-age method of at-home entertainment and information. In fact, the number of U.S. CTV households is forecasted to jump by nine percent to 121 million by 2027, according to Statista.
CTV vs. OTT vs. Linear TV
CTV, OTT, and Linear TV often get thrown around interchangeably, but there are key distinctions and overlaps between them. Let’s break them down by basic definitions, examples, and delivery methods to understand each content medium in its simplest form.
OTT definition: OTT stands for "over-the-top," and it refers to any service or platform that delivers streaming content over the internet directly to viewers, bypassing traditional TV providers like cable, satellite, or antenna.
Examples of OTT: Netflix, Max, and Disney+
Linear TV Definition: Linear TV, also known as broadcast TV, refers to the traditional way of watching television through cable, satellite, or antenna.
Examples of Linear TV: Cable, Satellite, and Antenna
Each of the television mediums above offers varying delivery methods, or the tech and infrastructure used to transmit video content from its source to your TV screen.
CTV and OTT both use internet-based delivery, offering flexibility and on-demand content.
Linear TV traditionally relies on cable or satellite infrastructure, often with scheduled programming and less control for viewers.
What is CTV advertising?
CTV isn’t only the new way to consume media. It’s the new way to advertise too. Now that we understand what CTV is and its appeal at the household level, let’s learn about CTV advertising and its appeal to advertisers.
CTV advertising definition: CTV advertising refers to video ads delivered to viewers through Connected TVs, like smart TVs, streaming sticks, and gaming consoles.
Examples of Connected TV advertising:
- Via smart TV, scanning on-screen QR codes during cooking shows to instantly add recipe ingredients to an advertised grocery app.
- Via Google Chromecast, tapping interactive game overlays while streaming live basketball to explore deals on featured sports gear.
- Via PlayStation 5, clicking "shop the look" to shop clothing items featured during a fashion reality TV show.
While cord-cutting — the consumer movement of ditching cable TV and switching to cheaper or free internet media — continues to rise, ad dollars are following suit.
CTV ad spend surged by 21.2 percent in 2023, nearing $25 billion, according to Statista. The growth trajectory shows no signs of slowing — forecasts project a staggering $42.4 billion CTV ad spend by 2027, according to eMarketer.
This exponential rise in ad spend reflects the undeniable shift in viewer preferences, as captivated, increasingly niche audiences move their attention to internet-connected TVs for their highly personalized and interactive content capabilities.
Advantages of CTV advertising
While a sound advertising strategy may include alternative ad formats depending on campaign goals, there are clear advantages that advertisers glean from advertising on CTV. Those advantages include, but are not limited to:
- Precise audience targeting: With traditional cable, ads are bought based on an audience’s age and gender (e.g. Men 18-34 and Women 25-54) or a show’s content (e.g. Sitcom and Political). With Sabio’s advanced targeting capabilities on CTV, advertisers can reach, engage, and understand target audiences beyond these two boxes. Through our targeting capabilities, such as household and audience segmentation, advertisers can create deeper connections with viewers through personalized CTV ads, tailored to resonate like they were created just for them. Because in a way, they were.
- Greater reach to diverse audiences: U.S. multicultural audiences, including Asian Americans, African Americans, and Hispanic Americans, stream more heavily than the general market, according to App Science. In fact, these groups are 33 percent, 17 percent, and 17 percent more likely, respectively, to have CTV streaming apps than the general population. Traditional advertising often struggles to effectively reach these diverse communities, making CTV's targeted outreach even more valuable for brands seeking to connect with a more inclusive consumer base.
- New ad formats and higher engagement potential: Interactive elements like QR codes, clickable overlays, and shoppable features transform passive ad viewers into active participants, boosting recall and brand interaction. Plus, CTV ads may leverage contextual alignment, or the practice of matching ad content and placement to the surrounding program, to tell a more compelling story and connect with viewers on a deeper level.
- Advanced data and measurement: Real-time campaign performance insights allow advertisers to optimize ad placements, tailor messaging, and revisit campaign strategies mid-campaign for maximum ROI. This level of agility and data-driven decision making gives CTV advertisers a significant edge in the landscape of video advertising.
- Access to premium cord-cutters and streaming-first viewers: With viewers increasingly abandoning traditional cable, CTV advertising provides access to an influential, massive, and growing audience. By 2025, Statista predicts that nearly 60 percent of U.S. CTV users will be Millennials or Gen Z.
How does CTV advertising work?
Say you’re an advertiser, you understand the opportunity in Connected TV advertising, and you’re looking to launch your own CTV ad campaign to get in on the action. Where do you begin?
Let’s simplify. To advertise on CTV, you should consider the following components of your ad campaign:
- Objective and KPIs: What is it you’re looking to achieve in your CTV ad campaign? Familiarize yourself with KPIs specific to CTV, such as reach, frequency, and video completion rate (VCR), and define goals related to those markers. From brand awareness to website visits, storefront foot traffic, and product purchases, setting the objective of your CTV ad campaign will help guide your entire strategy.
- Budget: What resources do you have to contribute toward your ad spend strategy? This figure is key to deciding which type of CTV ad partner you’ll be working with, as well as balancing your desired reach, frequency, campaign duration, and optimization potential.
- Target Audience: Who are you trying to reach? With CTV ads, advertisers can pinpoint their target audience with precision. Define your target audience by age, location, content affinities, points of interest, and more. The more specific you are, the more effective your targeting will be. Keep in mind, with Sabio’s diverse audience expertise, your brand can reach diverse audiences precisely and authentically at scale.
- Partner: Who would you like to work with? There are two main types of CTV advertising partners you can choose, each with its own key strengths depending on your experience, desired involvement, and the complexity of your ad campaign.
- Managed service demand-side platforms (DSPs) like Sabio offer complete CTV campaign management, providing advertisers with a hands-off approach through every stage of their ad campaign from campaign strategy to reporting. Managed service DSPs offer deep industry expertise as well as optimal ad placement and performance at a premium price point, making it ideal for those prioritizing expert guidance.
- Programmatic demand-side platforms (DSPs), or self-service platforms, allow advertisers to manage campaigns themselves on platform dashboards. While these platforms sometimes offer lower costs, they require advertisers to possess both expertise and dedicated time for successful campaign management.
- Ad Format: How would you like to engage your target audience? There are a variety of options when it comes to selecting your ad format, including some tried and true options, along with some newer ones.
- In-stream Video Ads: Pre-roll (before content), mid-roll (during content), and post-roll (after content) commercials ranging from six seconds to several minutes with optional interactive elements.
- In-stream Pop-up Ads: Static, animated, or interactive video overlays appearing during content, positioned at the bottom or sides of the video.
- Interactive Overlays: Polls, quizzes, and product displays within the streaming content.
- Shoppable Video Ads: Featured products available for purchase with a few clicks.
- CTV Ad Creative: What will your ad look, sound, and feel like? Create relevant and engaging content supported by eye-catching visuals with a clear call to action. Conveniently, Sabio's award-winning in-house creative team provides unique and custom ad experiences for CTV to drive results with general and diverse audiences.
- Campaign Launch and Optimization: Launch your campaign and track key metrics like impressions, clicks, conversions, and video completion rate (VCR). Monitor your ad’s performance and adjust mid-campaign for optimal results.
- Campaign Measurement and Reporting: How did your campaign perform? Were there any shortcomings? What about strengths and new findings? Take what you learned and apply it to the next CTV ad campaign for even better results.
CTV advertising with Sabio
Sabio is a managed service CTV platform, helping brands reach the right audience on the right device at the right time.
With Sabio, your brand can reach, engage, validate, and understand diverse audiences on a level that resonates. Powered by privacy-compliant mobile app data across 55 million U.S. households, Sabio goes beyond general demographics, weaving location, language, content affinities, and even mobile app ecosystems into our targeting capabilities. Understanding your target audience’s passions, interests, and cultural nuances — that’s the power of Sabio.
Beyond precision, we’re about speed and performance too. Need your CTV ad live in a matter of days? Leverage our high-performing ad units and custom creative services as added value. Our lightning-fast creative turnarounds will keep you ahead of the curve.
Plus, Sabio is device- and platform-agnostic to ensure your campaign reaches the right consumers no matter where they are streaming content. With 55 million households across diverse inventory sources, we ensure your ad finds the right context and avoids overexposure, even when working with other partners.
Ninety-nine percent of Sabio’s campaigns deliver in full, meaning you can be confident your message will reach the maximum number of impressions for campaign success. Our team works with you to customize your inventory lists at no additional charge.
Rooted in diversity since our company’s founding, we offer advertisers expertise in campaigns that resonate with diverse audiences. As a certified minority-owned company, diversity is more than a word: It's in our DNA. We understand the power of authentic cultural connections, and with our data-driven approach, we help you identify, target, and reach precise and culturally diverse audiences across multiple devices and platforms.
Connect with us
Connect with your target audience on CTV with Sabio. Schedule a meeting with our team of CTV experts to discuss your first or next CTV ad campaign.