Even though Netflix reported a recent loss of subscribers, connected television (CTV) continues to grow quickly. Advertisers who want to get the most out of their use of these various platforms must be vigilant about staying on top of the 5 trends outlined in this article.
What Is Connected TV?
Connected TV refers to any television that has an internet connection. These televisions may be used to stream videos and other content. Connected TV is an umbrella term that includes smart TVs, and televisions that connect to the internet via sticks, set-top boxes, or gaming consoles.
Content that is viewed on a connected TV may be accessed using a CTV platform or an over-the-top (OTT) platform. One example of this is Roku. It may also be accessed using an over-the-top (OTT) platform. These are streaming channels or apps that run over the top CTV platforms such as Netflix, Hulu, and Disney+.
There are 5 major trends in the CTV space that are likely to dominate 2023:
1. Fighting Churn Is a Major Focus
Churn will continue to be a growing concern among CTV and OTT providers. Audiences are embracing connected TV but are also very quick to drop subscriptions when a service no longer meets their needs.
This use modality is especially the case with younger consumers who may subscribe to watch a particular series only to unsubscribe when that’s over. Rising costs and competitive offers can also cause churn.
To combat this, OTT and CTV providers are exploring ways to differentiate themselves from their competitors. This differentiation is likely to be reflected in additional options for viewers, more engaging content, and possibly moving beyond video content. For example, Netflix has purchased three gaming studios.
2. Ad-Supported Streaming Will Become More Popular
CTV and OTT platforms have realized that they are missing a potentially lucrative audience segment — individuals who are interested in streaming content to their connected TVs but don’t want to spend money on premium subscriptions.
As it turns out, there are many people who are absolutely willing to watch ads in exchange for streaming the same content premium subscribers watch ad-free.
In response to this, Disney+ will begin offering a less-expensive tier that will be supplemented with ads. HBO Max is doing the same. Even Netflix executives have hinted that they are not completely against the idea.
3. Targeting Abilities Will Continue to Improve
Advertisers are always looking for opportunities to reduce advertising costs and increase their return on investment. One of the most effective ways to do this is by targeting ads as precisely as possible. In 2023, audience targeting will become smarter and more customizable.
In addition to demographic, location, contextual, and behavioral targeting, brands may also be able to reach customers using technographic targeting.
This type of targeting involves identifying prospective customers based on technical factors like device type and speed. Additionally, time and day targeting will be further refined to place ads in front of audiences when they are most likely to be relevant.
4. Brands Will Spend More Money on CTV than Digital
As marketing teams set their budgets for 2023, many will decide to allocate more money to CTV ads than digital. This year will be the first time this has happened across the market.
There are a few reasons for this. The first is the deprecation of third-party cookies. CTV is a brand-safe alternative that provides access to first-party data for better targeting while also providing better customer data protection.
Additionally, brands are simply following their target customers. If more of them are using CTV, then that’s where advertising dollars will go.
5. Fraud Is a Concern
Advertising fraud is a legitimate concern in both CTV and OTT advertising. This fraud is a problem that publishers are going to have to attack in 2023 if they want to maintain the trust of their advertisers.
Why is this an issue? It’s largely because many publishers haven’t implemented the technological safeguards they need. That can be blamed on the misperception that CTV was relatively “fraud-proof.” However, this presumption is untrue. While fraud may be more prevalent elsewhere, it is certainly on CTV, and it’s growing.
Unfortunately, solving this problem isn’t easy. There have been some attempts to re-engineer methods used to prevent fraud in mobile ads, but those haven’t been very effective.
What will likely work is increasing transparency in the bidding process. This transparency includes adopting the use of tools like “sellers.json,” which helps to verify the identity of advertisers throughout the ad buying process.
Customer Experience: A Common Theme
In CTV streaming and advertising, there are several customers. Viewers are certainly the most important. Both streaming platforms and advertisers need to keep them happy. That’s clear with trends relating to protecting their data and offering them better user experiences.
At the same time, brands are also paying customers that spend money to get their ads in front of relevant audiences, and that expect to do so without losing advertising dollars to fraud.