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What is Connected TV? CTV Advertising Explained

Your Guide to the Exciting World of Connected TV Terms

What is Connected TV? CTV Advertising Explained

16 Min Read

Want to know everything there is to know about Connected TV advertising? Well, you have come to the right place. Read on and get a full understanding of the need-to-know info.

What Is Connected TV (CTV)?

Connected TV is television content accessed by apps and streamed over smart TVs, or a connected device such as an Amazon Fire Stick, Roku, or Playstation that is hooked up to a television. In other words, it’s how mostly everyone watches television nowadays.

Connected TV has changed pretty much every aspect of what it means to watch TV—from how we engage with content (hello binge viewing), to when we watch (on-demand to fit our schedules).

Smart TVs vs. Connected TVs

What is the difference between a smart TV and a Connected TV? Smart TVs are the hardware that allows you to stream Connected TV content over the internet. On occasion, Connected TV can be used to describe a smart TV, but Connected TV more often refers to the content versus the actual hardware.

For example, it’s correct to say “You can stream Connected TV content over a smart TV.” But, it would be incorrect to say “You can stream smart TV content over a Connected TV.”

Streaming TV vs. Connected TV

Is Connected TV the same as streaming? Mainly yes. All Connected TV content is streaming, but not all streaming content is Connected TV.

For example, you can stream YouTube content, but it wouldn’t necessarily be considered Connected TV.  In general though, if you hear “streaming TV,” nine out of ten times it is referring to Connected TV. So feel free to ignore the edge cases with this terminology, and know that they are basically the same thing.

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.

Tablets, Phones, Desktops

With the proliferation of Connected TV/OTT apps like Hulu and Pluto TV, these gadgets have been transformed into mini-television sets. You don’t need a TV to actually watch TV anymore.

OTT/CTV Devices

OTT & 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.

What Is Connected TV Advertising?

CTV advertising, or Connected TV advertising, allows brands to reach their audience on smart TVs and connected devices. It’s highly targetable, fully measurable advertising that reaches the right viewers and serves them ads to influence and drive action and support demand generation initiatives.

OTT Advertising vs. CTV Advertising

What is the difference between OTT and CTV? It’s a good question. OTT and CTV are often used interchangeably and can refer to the same thing. But importantly, OTT streams content across all devices such as mobile and desktop. Connected TV does not, but rather streams content onto smart TV screens. 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 won’t always be on the same quality level as Connected TV. That’s because Connected TV generally refers to high-quality, premium network content similar to what you would see on traditional television. OTT covers a much wider range of inventory, and much of it can be lower quality that is served on obscure apps. Read more on OTT vs. CTV.

Addressable TV Advertising vs. CTV 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.

Linear TV Advertising vs. CTV 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.

Advantages of Connected TV 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.

Benefit #1: Automated Optimization and Media Buying

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 top-tier networks. 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 smart TV advertising a performance marketing channel.

Benefit #2: Precision Audience-Based Targeting

Audience-based targeting ensures your Connected TV ads aren’t just limited to one show or network, like a traditional TV media buy, but instead are served as the viewer jumps from one ad-supported streaming service to the next. The CTV landscape is fragmented, and an audience-first approach ensures you reach your audience no matter what they’re watching.

Benefit #3: Accurate, Real-time Measurement

Tracking a wide range of metrics, including return on ad spend, revenue, website visits, and more is another element that helps make CTV an effective performance marketing 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.

How Does Connected TV 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 segments powered by the Oracle Data Cloud, giving you access to over 80,000 audiences at no extra charge (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 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 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.

Important Connected TV Terminology

There are quite a few more terms that anyone interested in Connected TV marketing should know—let’s dive in on the big ones.

Content, Inventory, and Formats

Full-Episode Player (FEP) | “Full-episode player” (FEP) refers to professionally produced, TV-like content that can appear on any device type, across both apps and web browsers. This means that the content is television length, typically 30-60 minutes, with commercial breaks in between. FEP content is inclusive of things like the news, stand-up comedy, cooking shows, etc.

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.

Living Room Quality Connected TV | This is live or on-demand, ad-supported programming through an internet connection (not via a paid cable or satellite provider), from blue-chip broadcast and content companies. This content is primarily viewed on a large screen/HDTV in the living room over CTV and OTT advertising accessible devices such as an Apple TV. This is brand-safe, quality programming served via an IP address and in a format that enables a more personalized ad experience.

Direct to Consumer (DTC) | This refers to delivering content without using a middleman. For example, Netflix serves its content direct to consumers without using a network.

Content Delivery Network (CDN) | Proxy servers in data centers that deliver content to audiences (this one is kind of a no-brainer).

FASTS | Free ad-supported streaming services are, well, streaming services that have users watch ads rather than requiring a subscription. Some examples that support streaming TV advertising include Xumo, Tubi, and Pluto TV.

FNAS | Free network apps allow users to watch free streaming TV content from cable and broadcast networks and offer ad-supported clips of shows for those without a cable or broadcast subscription.

Hybrids | Hybrid subscription and ad-supported apps will allow users to pay for a version of their services with fewer ads. Examples include Hulu or CBS All Access.

vMVPDs | Virtual Multichannel Video Programming Distributors, also called “skinny bundles,” are cheaper digital cable or satellite packages. vMVPDs partner with cable and broadcast networks in order to get a few minutes of content, which they distribute across live channels. Learn more about MVPD and vMVPD.

Similar Offerings

We round out our CTV advertising glossary with a type of marketing that is often confused for Connected TV advertising — Programmatic TV. And while it’s close in practice, it’s not the same thing.

Programmatic TV | Programmatic advertising is a form of traditional TV advertising with a data-driven slant. Certain TV ad slots are made available for programmatic purchase, which is carried out by a DSP (Demand Side Platform). Because DSPs have audience data, they allow advertisers to better target viewers — thus resulting in automatic and efficient TV ad buying. An important distinction is these ads are NOT the same thing as Connected TV. You may see Programmatic TV incorrectly described as “CTV Programmatic” or “OTT Programmatic.”

Advanced TV | Refers to many forms of TV content. This includes Connected TV and addressable TV but does not include any forms of TV not watched through a broadcast, cable, or satellite connection on a television.

SVOD | Subscription video on demand is a streaming video service that allows users to have unlimited access to a range of on-demand programs, all for a recurring subscription fee. Examples include Netflix and Hulu.

AVOD | Advertising-based video on demand is a streaming video service that offers free on-demand programs in exchange for the inclusion of ad breaks. Examples include Fox Sports and Pluto TV. Learn more about SVOD, AVOD, and TVOD.

Multi-channel Video Programming Distributor (MVPD) | This term refers to any service provider that delivers video programming services, and usually includes cable, satellite, and broadcast.

And last but not least, here are some terms that don’t fall into a specific Connected TV category.

Co-viewing | Originally a traditional TV term, co-viewing is when multiple people are watching a program on the same device. This can sometimes make measuring impressions more difficult for advertisers.

Audience-based TV | In audience-based TV,  buyers use data from data-management platforms in order to target TV viewers.

Bitrate | There are two kinds of bitrates, the encoded bitrate, and the available bitrate. In an encoded bitrate, the number of bits (or amount of data) per second that has been used to store a media signal is tracked. Available bitrates are the instantaneous delivery rate of data in bits per second from the source server to the destination device through one or many digital networks. While available bitrate is used for technical purposes, encoded bitrates are more commonly used for business purposes. If you’re not a video person, chances are you won’t have to know too much about this.

CTV Marketing With Performance 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, or smart TV 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.

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