What Is Connected TV? How CTV Advertising Works (2024)

15 Min Read

In the rapidly evolving landscape of digital marketing, Connected TV (CTV) has emerged as a pivotal player, revolutionizing how audiences engage with content.

This article delves into the intricacies of what Connected TV is and how it’s reshaping the way we think about television viewing. Moreover, we’ll explore the mechanics and advantages of CTV advertising in 2024, highlighting its role in the future of digital advertising strategies.

What Is Connected TV?

Connected TV (CTV) refers to any television set that connects to the internet and can stream digital video content, whether through built-in smart TV functionalities or external devices like streaming sticks, consoles, or set-top boxes.

This technology allows viewers to access a wide range of content beyond traditional broadcast channels, including streaming services, on-demand videos, and internet applications.

What Is CTV Advertising?

Connected TV (CTV) advertising refers to the practice of delivering ads through internet-connected television sets, where viewers stream digital content through apps, either built-in or via devices like Roku, Apple TV, or gaming consoles.

Unlike traditional TV advertising, CTV advertising allows for more targeted and personalized ad experiences, leveraging viewer data such as viewing habits, interests, and demographics. This approach offers advertisers improved measurement and tracking capabilities, enabling more efficient ad spending and the ability to reach specific audience segments with higher precision.

CTV Advertising vs. OTT Advertising

What is the difference between OTT and CTV? OTT and CTV are often used interchangeably and can refer to the same thing. But it’s important to note that OTT is the way in which video content is delivered to viewers and can stream content across all devices— such as mobile and desktop. Connected TV does not, but rather solely streams content onto smart TV screens. This is why it’s also often referred to as streaming TV advertising.

OTT means “Over-the-Top,” which refers to content that goes “over” your cable box to give you access to TV content using an internet connection instead of a cable cord or satellite.

OTT advertising inventory can be quite different from Connected TV’s. Connected TV generally refers to premium network content similar to what you would see on traditional television, while OTT covers a much wider range of inventory.

• Learn More: OTT vs. CTV

CTV Advertising vs. Addressable TV Advertising

CTV advertising isn’t the same as addressable TV advertising. And again, this is another term that can often be used interchangeably—but that’s a mistake. That’s because addressable TV advertising is tied to traditional television (think cable) versus streaming on Connected TV. It does offer better targeting capabilities than traditional TV advertising, but it doesn’t really compare to what CTV advertising platforms can offer.

• Learn More: Addressable TV vs Connected TV

CTV Advertising vs. Linear TV Advertising

Linear TV advertising is what you see when you turn on broadcast or cable television. It’s the traditional, old-school form of TV advertising that has been around for generations. CTV advertising is tied strictly to the new streaming TV landscape and thus offers much better targeting and measurement than cable TV advertising and other forms of Linear TV.

• Learn More: CTV vs Linear TV

Benefits of CTV Advertising

Where to begin? The advantages of Connected TV advertising are numerous, and more and more advertisers are tapping into them every day. That’s because it marries the power and impact of traditional TV advertising—which is considered the most powerful advertising medium on the planet—with the precision and measurement capabilities of a digital ad channel such as Google or Facebook.

Here are the top five benefits of CTV advertising that you need to know.

1. Precision Audience-Based Targeting

Audience-based targeting enables marketers to reach specific consumer demographics, interests, and behaviors, enhancing the relevancy of the ads delivered. Unlike traditional TV advertising, which targets broad demographics based on programming, CTV allows marketers to utilize first- and third-party data to target audiences across several parameters such as age, gender, lifestyle, purchase behavior, and more.

This precise targeting helps reduce ad wastage, increase engagement, and improve the overall effectiveness of Connected TV ads.

2. Hyper Localized IP-Based Targeting

IP-based targeting is a substantial advantage of CTV advertising as it allows marketers to deliver more personalized and relevant ads to specific geographical areas based on the IP address of the connected TV device.

This kind of granular targeting is beneficial for local businesses (like car dealerships) or campaigns with a geographical focus, enabling them to reach their target audience more accurately, leading to potentially higher engagement rates and less wasted ad spend.

3. High Video Completion Rates

CTV advertising typically garners high video completion rates due to the viewer behavior associated with the medium: users are generally more engaged and less likely to skip or close ads when watching TV content, as compared to other digital platforms.

This medium is often experienced in a lean-back setting, with long-form content, which naturally encourages viewers to watch ads in their entirety. For advertisers, this is highly beneficial as it ensures their entire message is seen and heard, potentially leading to better brand recall and engagement, a significant advantage over traditional mediums where ads may be skipped, ignored, or not viewed in full.

4. Accurate, Real-Time Measurement and Attribution

Tracking a wide range of metrics, including return on ad spend, revenue, website visits, and more is another element that helps make CTV marketing an effective performance channel. It allows marketers to track metrics that matter most to their campaign.

What’s more, the metrics are available in near real-time, which gives you an up-to-date account of your campaign performance. And with accurate CTV attribution methods, such as MNTN’s Verified Visits™ technology, you’re able to see who converted on your website after viewing one of your CTV ads, even when they’re using a different device.

5. Automated Campaign Optimization

This is a little tricky since “automated optimization” has become a buzzword in the industry. But not all automation is created equal. Some ad solutions that say they can offer automated optimization use human media buyers behind the scenes, while others focus solely on lower CPMs (and lower-quality inventory) to optimize for reach.

Only MNTN offers performance-driven, automated optimization that balances your ad spend and goals to help you generate results with CTV ads served on premium CTV inventory. It leverages website visits and conversion data from real, verified outcomes to optimize bids in real-time to drive performance. All while evaluating a near-endless amount of variables—from recency windows to underperforming elements—to ensure your campaign is operating at peak efficiency.

It’s this automation that introduces the right amount of efficiency that makes CTV advertising a performance marketing channel.

How Does CTV Advertising Work?

Connected TV advertising allows brands to reach their audience on smart TVs, OTT devices, and various other CTV platforms. MNTN Performance TV gives brands the power to target their audience with Connected TV ads during premium, ad-supported shows provided by top-tier networks.

With MNTN, you can launch your own CTV advertising campaigns from a single platform in just four (4) simple steps. It’s very similar to paid search or social, with a familiar setup.

Step 1: Upload Your Creative

With MNTN just simply drag and drop your video file, or link your Dropbox or Google Drive to upload your ad. It’s completely intuitive and easy to use and allows you to use existing video assets.

Step 2: Select Your Audience

With MNTN, you can build your audience with first-party data or by tapping into thousands of audiences available through our unique integration with data providers (some ad solutions will tack on fees for audiences, but we aren’t about that). Not only can you target new audiences, but you can also retarget your current website visitors to re-engage them and move them further down the sales funnel.

Step 3: Extend Your Campaign

Having an omnichannel marketing presence is vital to any ad strategy. Your audience isn’t spending all of their digital time on one device or channel—rather, they’re streaming TV on their television while browsing the internet on their phone or tablet.

It’s important to reach your Connected TV audience through ads served on any device to help complement your CTV marketing campaign. The MNTN platform lets you launch companion ads that are aesthetically related to your CTV ad, both in look and message, to ensure you reach your audience wherever they spend their digital time.

Step 4: Set Your Budget & Launch

It really is that simple. The MNTN platform allows you to just enter your goal, budget, and start date — no bid required. Why no bid? Because our automated optimization technology handles the heavy lifting for you to determine the optimal bid price for inventory that will reach your targeted audience and hit your goal. You can track your performance at any time with insight into site visitors, page visits, revenue, ROAS, creative performance, and more.

Where Are Connected TV Ads Shown?

Connected TV ads are shown on both paid and free ad-supported streaming networks, and apps, which are accessed through smart TVs and other connected devices. The networks and apps are household names—think ESPN, MTV, ABC, and CBS—while the devices are in almost every living room in America (Apple TV, Roku, Playstation, etc.)

Every major streaming service now—from Netflix to Hulu, Paramount+, and Peacock, offer ad-supported tiers. This is because research has shown that cost-conscious streaming viewers (who often cut the cord on cable due to price) are looking for a lower bill. Ad-supported Connected TV is offered at a lower cost than ad-free, thus more subscribers sign up.

How Are Connected TV Audiences Targeted?

With MNTN you can retarget site visitors, or launch prospecting campaigns that reach brand-new audiences with ads on Connected TV.

First-Party Data

By using your own first-party data, you can leverage your own website traffic and retarget those users with Connected TV ads. You can also upload email lists from your CRM, and target those existing customers with high-impact CTV ads that are served on television screens.

Third-Party Data

Smart TV ads on CTV platforms allow you to use third-party data sources to reach new audiences. Audiences are generally segmented by a number of attributes, including personas, interests, demographics, age and gender, income, household, and intent information.

Frequency Caps

You’ll hear a lot about frequency caps in regard to Connected TV advertising. Frequency caps aren’t necessarily a targeting method, but rather a way of managing the number of times an ad is served to a user. Too many ads served will generate ad fatigue and blunt the effectiveness of your message (and get on a lot of people’s nerves). It’s important to work with a CTV advertising platform that allows you to improve user experience by not serving the same ad to the same person over and over.

IP Targeting

IP targeting is another way to reach specific audiences on Connected TV. This is a method that bypasses the problematic cookies method of many other digital channels. It also allows CTV advertisers to target entire households and the connected devices within them.

CTV Metrics and Measurement

Since Connected TV is a digital ad channel at its core, it uses traditional digital marketing metrics and KPIs as a way to measure performance. Here are a few key ones everyone should know—especially if they are going to use CTV ads for performance marketing campaigns.

Impressions

This is the number of ads served to viewers, and helps you understand the scale of your campaign as it is served out across TV screens.

Return on Ad Spend (ROAS)

Return on Ad Spend (ROAS) is a performance metric that shows you how much revenue your campaign has generated in relation to the total amount of ad spend. The higher your ROAS, the better—that means your CTV campaign is returning exponentially more money than it cost to send out.

Cost per Completed View

This metric tracks, well, the cost per completed view. That means it shows how much of your campaign’s budget is being spent on each completed view. What makes a view “completed”? It generally means that the ad was viewed all the way through, from start to finish. However, on some CTV ad platforms, a completed view can be slightly less than that.

Cost per Acquisition (CPA)

Similar to ROAS, this is another performance marketer metric. It tells you how much your campaign had to spend for an acquisition. This can be a sale, a form signup, or whatever the intended “acquisition” action is for the campaign. This shows how efficient your campaign is in capturing acquisitions, and the lower the CPA, the more efficient it is.

With the digital side covered, we also should explain a few of the more traditional TV metrics that have crept their way into the CTV measurement lexicon.

Reach

Reach is the number of unique people that will be exposed to your Connected TV ad. It’s often shown as a percentage of a specific audience; for example, 75 percent of 18 to 24-year-olds. It indicates the percentage of the targeted population that has seen at least one traditional or Connected TV spot.

Frequency

Just because you delivered one million impressions doesn’t mean that one million unique people viewed your ad. Frequency is the average number of times you’re delivering an ad to a given person. Knowing your frequency means you can prevent the same ad from being served to the same person over and over again. So, if you deliver 3,000 ads to 1,000 unique people (your reach), your frequency is three.

GRP (Gross Rating Point)

GRPs have been around before the internet even existed. It’s used to determine how many people within an advertiser’s target audience saw an ad. For example, let’s say you want to target males between the ages of 18 and 34. You know that 30 percent of viewers in this demographic watch a certain sports game on Sunday night, so you purchase four commercial spots while the game airs. Since you are reaching 30 percent of your target audience, and are serving them roughly four ads each, this would get you to a GRP of 120.

CPP (Cost Per Point)

CPP measures how well, for the price, your ads reach your desired audience. Once you have your GRP, your CPP is simply your total media cost divided by your GRP. It’s what you’re paying per gross rating point.

Cross-Screen Measurement

A slightly self-explanatory term — with cross-screen measurement users can track and measure video metrics across different devices, such as mobile, television, OOH, Connected TV, and desktop.

Target Rating Point

This term is a metric for the percentage of the advertiser’s target audience that actually views its advertisements. These target audiences are the groups of customers most likely to purchase a company’s products and services and can be essential to a successful campaign.

Connected TV Devices

What are Connected TV devices? Well, there are quite a few to choose from, and there are a number of ways to stream CTV or OTT content. These are also the platforms where your CTV advertising campaigns will be shown.

Tablets, Phones, Desktops

You don’t need a TV to actually watch TV anymore. Although traditionally considered OTT devices, household devices like tablets, phones, and desktops have been transformed into mini-television sets that stream content.

OTT/CTV Devices

OTT and Connected TV devices connect to your TV to allow for a continuous stream of content – meaning that as long as your internet connection is not disrupted, you don’t need to wait for an entire piece of content to download before hitting play. Popular examples are Roku, Chromecast, Amazon Fire Stick, Apple TV, and the major gaming consoles.

Smart TVs

If you’re buying a big screen these days, you’re most likely buying a Smart TV. This is a television with a built-in connection to the internet, no sticks or dongles are required.

CTV Marketing Best Practices

Connected TV marketing offers a unique blend of digital targeting and measurement capabilities with the immersive, engaging power of television. Given its rapidly growing user base, it’s crucial to understand and implement best practices to fully leverage CTV’s potential.

• Understand Your Audience: Like any marketing strategy, understanding your target demographic is key to creating relevant and impactful CTV ads.
• Use High-Quality, Engaging Creatives: Due to the high-resolution, large-screen nature of CTV, ensure your ad creatives are of high quality and compelling to keep viewers engaged.
• Leverage Advanced Targeting: CTV allows advanced targeting options similar to digital marketing, use this to your advantage to reach the right audience.
• Make It Interactive: With CTV, you can design interactive ads that allow viewers to click for more information or make purchases, thus enhancing engagement.
• Frequency Capping: To avoid ad fatigue, implement frequency capping which limits how often a particular viewer sees your ad.
• Measure & Optimize: Use real-time reporting and analytics to measure the effectiveness of your campaigns and make necessary optimizations.
• Cross-Device Advertising: Consider implementing a cross-device strategy to reach your audience on different devices for greater impact.
• Incorporate a Clear Call-to-Action: Encourage viewers to take the next step with a clear and compelling call-to-action.

CTV Advertising Examples

There are tons of great connected TV advertising examples out there to help paint a picture of what “living room quality” truly means. Here are a few of our favorites.

MNTN

Our first example is one put forward by MNTN (that’s us), starring our very own Chief Creative Officer, Ryan Reynolds. We admit we may be partial, but it’s for good reason – we deploy our proprietary CTV advertising platform to boost our brand, and it works. Take a look!

Rumpl

Rumpl ventured into the realm of CTV advertising with a remarkable commercial showcasing their incredibly stylish and cozy blanket made from recycled materials. This compelling ad instantly captivates the viewer and deeply resonates with the spirit of the adventurous wanderer.

Replacements

For those who enjoy sophisticated and stylish dining table decorations, Replacements is the perfect fit. This CTV advertisement adheres to a proven strategy, outlining a common issue, offering a resolution, and conveying the value proposition, all within a 30-second window. Right to the point!

1Password

Let’s take a look at another ad featuring Ryan Reynolds. Why not? This CTV example spotlights 1Password, a state-of-the-art cybersecurity password manager aimed at securing all your digital information. It’s another funny and memorable creative that doesn’t beat around the bush.

CTV Marketing With Performance TV

Streaming platforms have officially surpassed traditional broadcast and cable TV in terms of viewership in the United States, marking a significant shift in how Americans consume content. A report from Nielsen shows that streaming platforms accounted for 34.8% of total TV consumption in July 2022, beating out cable’s 34.4% and broadcast TV’s 21.6%. Netflix leads the pack, holding a record 8.0% share of overall TV viewing on streaming platforms.

The dominance of connected TV signifies a natural evolution in television viewing, with advertisers increasingly recognizing its value. Despite economic uncertainty, ad budgets remain robust, with a notable shift from linear TV to CTV. Improved targeting, measurement, and ad delivery technologies contribute to the rising attractiveness of CTV vs linear. As the platform continues to evolve and refine its capabilities, the future of TV advertising seems set to be increasingly driven by connected TV.

There’s a right way to advertise on Connected TV, and it’s with MNTN. Our Performance TV platform transforms CTV into a performance marketing machine, giving you access to all the benefits we listed above. Our automated optimization keeps TV advertising costs affordable while maximizing ROAS.

Connected TV Advertising: Final Thoughts

CTV advertising is claiming more ad budget every day, and it’s a matter of time before it eclipses traditional TV advertising. Knowing the basic terminology, and how best to use it is crucial for any marketer—hopefully after reading this, you’re better equipped to make the most of this opportunity.

Sign up for our Connected TV Report below, a bi-weekly rundown of the latest CTV news, viewership statistics and growth trends, as well as insights directly from MNTN.

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